Midyear revisions to New York City's 1995 budget show that the administration of Mayor Rudolph Giuliani is committed to restoring the city to financial health, according to a credit comment in the week's issue of Standard & Poor's CreditWeek Municipal.
The budget plan, which must be approved by the city council, consists of $800 million of spending cuts spread over nearly every department and program, Standard & Poor's said.
If the city sticks to the plan, the budget gap for fiscal 1996, which begins July 1, will be reduced to about $1 billion, the rating agency said. Assuming the city closes that gap "without significant gimmicks or one-shots," the remaining outyear gaps will be reduced by several hundred million dollars, the agency said.
Most importantly for bondholders, if the city council approves the budget, the city would move close to achieving structural budgetary balance, Standard & Poor's said.
The mayor's plan calls for more workforce reductions, with the board of education taking the biggest hit. The plan would reduce the city payroll by 5,000 positions on top of the ones that were earmarked this spring for elimination.
Standard & Poor's cited the city's reliance on one significant one-shot to close the $1.1 billion gap: the use of $200 million in nonrecurring surplus funds from employee health plans.
