New York State Comptroller Edward V. Regan yesterday released his monthly "milestone monitoring" report on New York City, saying that for fiscal year 1991, which ended June 30, the city "should squeak through with a balanced budget."

He said, however, that his office is "troubled" by the city's inability to produce timely reports on the status of its gap-closing program for fiscal 1991 and fiscal 1992. He emphasized that stronger monitoring of the program is needed to close a $3.5 billion gap forecast in the city's $28.5 billion fiscal 1992 budget.

The report also noted that the city is making progress in reducing its work force.

The comptroller's report should come as good news for the municipal market, which is preparing to digest $1 billion of city tax anticipation notes in a competitive auction today. Next week, the city plans to sell $750 million of general obligation bonds through a negotiated offering.

Mr. Regan said in the report that while the city's audited financial statements for fiscal 1991 will not be available until the end of October, "our review indicates reasonable assurance that they will show balanced results."

The city could face a takevoer by the state's Financial Control Board if it has a $100 million budget gap at the end of its fiscal year. But it appears unlikely this will be the case, and the staff of the control board and its seven board members, of which Mr. Regan is one, are expected to say so at a board meeting scheduled for Thursday.

Mr. Regan's report said that although collections of the city's personal income and sales taxes fell short of earlier estimates, recent data indicate that higher revenues from business income and real property taxes will more than offset the shortfalls. Agency spending also was lower than expected, the report says, and the city's budget assumes $25 million in unspecified savings in the area of other-than-personal personal services.

As for the monitoring reports, the report said the city had "intended" to report quarterly on all 1,400 gap-closing initiatives planned for fiscal 1991 and 1992, but instead produced only one report at midyear. A final report is not expected until November.

Without these frequent reports, it is difficult to determine whether the city's budget reduction actions have been implemented properly and if some alternative actions that may have been used instead had a detrimental impact on the city, the state comptroller notes. "Without assurance that the initiatives were implemented as planned, it cannot be known whether these savings will materialize," he adds.

As for the city's work force and efforts to pare it, Mr. Regan said information about job reductions made in June is not available but that the city had been described in previous monitoring reports released by the state comptroller as making progress in meeting its goals.

"Thus we believe that the year-end target of 221,696 city-funded employees will be met," the report says, adding this work force level remains unchanged from the June 1990 level.

The state comptroller's milestone monitoring report is one of two reports the state comptroller is expected to release this week. Today, Mr. Regan is expected to present a report that reviews and comments on the city's fiscal 1991 and 1992 financial plans.

And City Comptroller Elizabeth Holtzman also is expected to weigh in today with her own report on the city's financial plan.

Tomorrow, the Financial Control Board is expected to release its report on the city's plan. The board also is expected to certify that a control period is not needed for the city, according to sources familiar with tentative details of the board's agenda.

Separately, the New York State Local Government Assistance Corp. announced yesterday that it expects to sell $400 million of revenue bonds through negotiation on Sept. 12.

The sale of the long-term, fixed-rate bonds, secured with a portion of the state's sales tax after legislative appropriation, would mark the third offering by the public authority since its creation in 1990. The corporation was created to eliminate the state's annual note borrowing by bonding it out and turning over the proceeds to local governments and school districts.

The corporation was authorized to sell up $4.7 billion of bonds. So far, it has sold about $1.4 billion, reducing its cap to about $3.3 billion.

Goldman, Sachs & Co. and Lehman Brothers will serve as co-senior managers on the offering. Goldman Sachs served as bookrunner on the corporation's first bond sale and Lehman was bookrunner on its last sale. The corporation's board, chaired by Salomon Brother's official Gedale Horowitz, is schduled to meet Aug. 20.

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