New York City last week made official what most fiscal observers already knew - that the city's budget problems are worse than officials in the administration of Mayor David N. Dinkins were willing to admit.

The change of heart came as Dinkins prepared to turn over City Hall to Mayor-elect Rudolph Giuliani. Last week, finance officials working for Dinkins admitted that Giuliani will be facing a budget gap in fiscal 1995, which begins July 1, of $1.73 billion, about $450 million more than the mayor's people had projected months earlier.

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