Tucked away between the lines of New York City's four-year financial plan are a number of proposals to restructure or lower debt service costs, including two proposed bond refundings of roughly $1 billion each that require a change in the state's constitution to be sold.

Although the refundings were not spelled out in the plan presented last Wednesday, Mark Page, deputy director and counsel to the city's Office of Management and Budget, on Friday confirmed that the city is contemplating these financings.

Those proposed refundings have already raised the hackles of a state fiscal monitor.

"I am concerned that fundamentally the city is saying that even in fiscal 1995 and 1996, they are not able to fund their recurring expenses," said Allen J. Proctor, the executive director of the Financial Control Board. The state panel, empowered to take over the city's finances, is reviewing the plan.

Mayor David N. Dinkins's revised financial plan for fiscal 1993 through 1996 included a number of proposals the mayor velieves will provide structural balance.

But while the financial plan was long on ideas, it fell short on details, a number of fiscal monitors have said. Some of the proposals that were not outlined in the plan include the bond refundings, capitalizing the interest payments on city bonds, and re-categorizing some debt service costs as operating budget costs.

One of the details not clearly spelled out in the plan is how the city would achieve $150 million in reduced debt service costs in fiscal 1995 and 1996 by amending the "50% rule" in the state constitution. If city officials succeed in getting the law amended in time, they would refund about 52 billion of general obligation debt in those years.

A bill that would amend the 50% rule in the state constitution requires the approval of two consecutive Legislatures and a voter referendum.

The rule prevents local government issuers in the state from using a level debt service payment on their bonds.

So, issuers are required to pay a good deal of principal up front, rather than stretching interest and princpal payments out over time. The law was passed in the 1930s to ensure issuers would not structure their debt to unduly burden future generations and avoid payments ballooning years after a bond sale.

The city's plan tentatively envisions passage of the bill by 1994 -- in time for it to take advantage of the new powers in fiscal 1995, when it forecasts $50 million in debt service savings, and fiscal 1996, when it expects $100 million in savings.

If the city succeeds -- state law-makers in the past have not supported this bill enough to pass it -- the plan tentatively calls for not using the powers for level debt service payments on new-money issues. City officials believe the benefits of using the powers for new money would not be seen until fiscal 1997 because a new state law allows them to make the first installment of principal two years after a bond sale.

Instead, city officials are entertaining the ideal of refunding $1 billion in fiscal 1995 and another $1 billion in 1996 to push out the repayment on bonds. Because the Dinkins administration revised its financial plan without large tax increase, the debt service savings are an important part of the budget formula.

City officials have been roundly criticized in the past for including certain refundings in its budgets by the city and state comptrollers, as well as the Financial Control Board.

Commenting on these proposed refundings, Mr. Proctor said, "These refunding are analogous to a repeat of the MAC deal, wherein debt scheduled to be amortized is pushed off into the futre.

"The MAC deal has been discussed as a temporary response to a permanent restructing of the budget," Mr. Proctor said. "These refunding are certainly not transitional or temporary, and they are certainly not part of restructuring the budget."

Defending the refunding proposals, Mr. Page said, "If you are authorized to borrow money on a different principal amortization scheme, it basically makes sense for the borrowed money and the money going forward."

The Dinkins administration also included a proposal to capitalize $50 million of interest payments on city GOs in each of the four fiscal years that make up the 1993-1996 financial plan, as well as fiscal 1992, hich began July 1.

City Comptroller Elizabeth Holtzman has balked at supporting this type of financing in the past. But she recently agreed to allow the city to use only $10 million of the $50 million in proposed capitalized interest financing for certain projects in fiscal 1992.

Mr. Page said, "I don't think we are abandoning the other $40 million."

A source in the city comptroller's office said the Dinkins administration keeps coming back, "hoping the comptroller will have a change of heart."

And to redefine the city's relationship with its Health and Hospitals Corp., city officials propose to rework the city ledger to show as a subsidy to the corporation roughly $150 million in annual debt service payments for corporation capital projects, from fiscal 1992 through 1996. The city would still be obligated to pay the bonds.

"We are trying to sort out the city's economic relationship with HHC," Mr. Page said.

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