The New York City Seasonal Financing Act of 1975, Public Law 94-143

GAO has been monitoring New York City's financial situation since January 1976, and has issued reports summarizing its views. The city made efforts to design a new accounting system as required by the credit agreement with the federal government. However, requirements for implementation of the system by July 1, 1977, and for producing adequate financial statements for auditing will not be met. An assessment of performance under the financial plan showed some progress and some problems. The city made budget cuts and achieved some success in managing its debt. However, some operations are financed through borrowings, and the 1978 budget calls for an increase of such funding. Thus, deficits are understated and a true balanced budget is far off. Higher budget figures have been proposed for the fiscal year 1978 budget and deficits projected for years after. Additional problems relate to the moratorium debt and the city's ability to meet its needs through the credit market. Prospects for federal loan repayment are good. The city's basic economic problems are considered to be at the root of the fiscal crisis.