Assessment of New York City's Performance and Prospects Under Its 3-Year Emergency Financial Plan

GGD-77-40: Published: Apr 4, 1977. Publicly Released: Apr 4, 1977.

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Although New York City has made progress toward the financial and budgetary goals it must meet by June 30, 1978, uncertainties exist which indicate it may fall short of its target. The outlook points to a continuing crisis for years to come.

It is clear that the city will require substantial short- and long-term financing after the plan period. Should the city be unable to meet its total financing needs in the private market, it will likely seek federal assistance in the form of direct federal loans, loan guarantees, or a combination of the two. Congress could provide for short-term financing by either extending existing legislation along with the terms and conditions associated with the present program or by enacting a loan guarantee program.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: Any program of direct or guaranteed federal loans to New York City or any other local government should carry stringent conditions, including: federal loans or loan guarantees should only be made available after a clear demonstration that the local government has no alternate source for borrowing and the state government is unable to provide the needed financing; any federal loans or loan guarantees should be made through a state board or other appropriate state agency, rather than directly to the local government; financial disincentives should be attached to any program of federal loans or loan guarantees; the period of federal loans or guarantees on specific transactions should be limited; and provision should be made for federal audit and review.

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