New York City's proposed fiscal 1992 budget has $675 million gap, city comptroller says.

New York City Comptroller Elizabeth Holtzman said in a report released yesterday that the city's proposed $28.7 billion budget for fiscal 1992 is $ 675 million out of balance, widening the projected budget gap to $ 4.15 billion.

The city comptroller's latest budget analysis incorporates the $ 3.5 billion budget gap projected by the city's Office of Management and Budget for fiscal 1992, which begins July 1. On top of that, her latest gap projection includes $ 425 million that her office had previously forecast and $ 250 million in state aid that had been earmarked for the city but cut from the state budget by Gov. Mario M. Cuomo two weeks ago.

This latest troubling news was presented against a backdrop of continuing budget confusion. Mayor David N. Dinkins, the City Council, the governor, and state lawmakers continue to combine the awkward steps of confrontation and disagreement with conciliation while lurching toward the city's budget deadline of midnight June 30.

The city council yesterday called for slashing services by another $500 million on top of the $1.5 billion in cuts proposed by Mayor Dinkins in his "doomsday" budget. The mayor 's proposed budget, which requires the approval of the 35-member city council, also calls for laying off thousands of city workers, boosting productivity by $545 million, and raising property and income taxes by some $ 1 billion.

The mayor's tax package calls for raising property taxes by $ 646 million. But the council says it will grant no more than $ 170 million. The council already approved a $130 million property tax increase to partially finance the mayor's newly created criminal justice program.

Meanwhile, Peter J. Vallone, Speaker of the city council, reached an agreement with the mayor on city's tax package, which calls for increasing the city's personal income tax rate to 4.5% from 3.9%, to raise $ 335 million in fiscal 1992. The mayor and the speaker trundled up to Albany on Wednesday to plead for support for the tax increase as well as restoring some $90 million in state aid and mandate relief worth $ 238 million.

Yesterday, Gov. Cuomo offered some assurance of support for their efforts. "I have assured Mayor Dinkins and Speaker Vallone that I support their $ 335 million tax package and will do everything I can to support its passage in the state legislature," the governor said in a statement.

He also noted that he and state lawmakers must meet and exceed the city's request for more relief from costly state spending mandates.

Noting in a glancing reference to the troubles still plaguing the state over his vetoes that slashed $ 1 billion in spending from the fiscal 1992 budget passed by lawmakers three weeks ago, Mr. Cuomo said, "There is no nee for the Legislature to wait for the negotiations on the state budget to resume before considering these bills to help New York City."

Legislative leaders, while listening to the mayor and the speaker, said they would not yet commit to any last minute bailout plan for the city.

A city budget by law is due June 24, but city officials and the city council have until midnight June 30 to pass and enact it. Also, the budget has to be balanced according to Generally Accepted Accounting Principles standards.

If the midnight deadline is missed, then the spending and revenue measures in the fiscal 1991 budget would continue into fiscal 1992, causing cash-flow problems and risking a takeover of the city's finances by the state.

The city comptroller's report is one of several reviews of the city's budget morass released this week by various fiscal Cassandras. Earlier in the week, state Comptroller Edward V. Regan said in a report that if the city's budget is not balanced, it could imperil appropriations for debt service and thus prompt a takeover of the city's fiscal affairs by the Financial Control Board.

The Financial Control Board, a state-created fiscal monitor of the city, said in a report released on Wednesday that the city faced a remaining gap of $47 million fiscal 1991 and could see more budget gaps in fiscal 1992.

And Ms. Holtzman started the week off by releasing a report projecting a remaining budget gap for fiscal 1991 of $95 million.

Although time is running out to assemble a final fiscal 1992 budget, a myriad of uncertainties remain about the budget that could widen the gap even further, the report released by the comptroller yesterday notes.

As a result of a fractious debate on the state and local levels about the revenue and spending contents of the budget, the gap closing plan may be short an additional $1 billion, the report says.

The uncertainties include questions about the city council's opposition to Mayor Dinkins's property tax increase, the state Legislature's willingness to pass the mayor's proposed personal income tax increase to $335 million, and the consequences of possibly violating the Stavisky-Goodman Law, a state law which requires that a certain portion of the city's budget be allocated to the city's Board of Education.

The city comptroller's report forecasts that in fiscal 1992, a weakening economy could mean the loss of $155 million tax revenues. The city could see $30 million less in sales and use taxes, a decline of $70 million in personal income tax collections, and a $53 million drop in real property taxes, the report says.

In addition, the city is expected to spend $157 million more than the administration projected in the fiscal 1992 budget, with medical costs increasing by $33 million and public assistance seeing cost increase of $14 million. The city may also spend an additional $60 million in debt service costs and $50 million more in overtime costs.

The comptroller also noted that the state budget includes an amnesty provisions for parking violators as well as changes in the way parking summonses are issued that may cost the city $60 million. And federal and state aid losses and disallowances will cost the city another $53 million.

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