Mayor David N. Dinkins of New York City yesterday offerred only a n outline of a revised four-year financial plan due next month, but noted that it calls for paring proposed tax increases and creating a rainy-day fund.
Mayor Dinkins, while delivering his message at a meeting of the New York State Financial Control Board, also presented a contingency plan with $ 20.5 million worth of actions problems in fiscal 1992, which began July 1.
"Our financial plan is being crafted as we speak." Mayor Dinkins said. "But I can outline the guiding principles of the plan -- the five pillars of fiscal reform that are shaping our decisions."
Mayor Dinkins said the pillars are structural budget reform, transitional funding from the Municipal Assistance Corporation for the City of New York, cooperation from the state, a long-term tax policy, and continued workforce reductions.
Mayor Dinkins noted that as a first step in managing the city's resources, he would not use any of the available funds from the Municipal Assistance Corp. to close budget gaps in the current budget. If the corporation soon refgunds about $1 billion of its outstanding first resolution bonds, the city could receive about $1 billion over the next three to five fiscal years -- with about $340 million earmarked for this fiscal year.
To raise at least one of his pillars, Mayor Dinkins will have to once again look to Albany for help. Ironically, the very same state Financial Emergency Act that requires the city to balance its budget annually must be amended to allow the city to have the rainy-day fund to help balance its future budgets. The act was passed in 1975 during the city's last fiscal crisis.
Phillip R. Michael, the director of the city's Office of Management and Budget, said legislation would be required to change the law. He said he hopes the fund will be ready for fiscal 1993. If the fund, which could be used for various purposes, is unused in a given year, it could be rolled into the next fiscal year.
The size of the fund has not been determined, but it could be funded with a portion of the revenues from the proposed bailout by the Municipal Assistance Corp., Mayor Dinkins said later at a press conference in the Blue Room at City Hall.
The city alreasy has a general reserve, which is also stipulated under the Financial Emergency Act -- considered an unspecified annual appropriation in the city's operating budget -- which is required to be expended at the end of the fiscal year. The city is required to keep the fund at $100 million. But with the city's recent fiscal problems, the size of the fund was boosted to $150 million and is expected to increase again to $200 million in fiscal 1993.
Mayor Dinkins declined to provide details of the revised plan, but he noted it was essential to scale back the proposed $500 million-a-year property tax hikes he put forward in his original four-year plan in January.
The contingency plan calls for a 25% reduction in "unencumbered administrative other-than-personel-spending costs" totaling $110 million.
About $20 million would come from a hiring freeze that would only exclude criminal justice agencies, the Board of Education, the Department of Environmental Protection, and elected officials.
Another $35 million would come from cuts to libraries, the Health & Hospitals Corp., and cultural institutions. Another $40 million would come from reducing the Board of Education's budget by 25%. This cut in the board's budget is not expected to violate the state's Stavisky-Goodman Act, which requires the city to allocate a portion of its budget to the board.
Allen J. Proctor, executive director of the control board, said he and the board's staff have been "advocating a rainy day fund."
Mr. Proctor also said the city for the first time has put out a contingency plan before a problem has arisen. He also complimented the mayor and his staff for following through a program to monitor a $2.3 billion gap closing plan for fiscal 1992 and for outlining the revised four year financial plan.
"In that sense, it was a far more forthcoming presentation of policy than what had been done before," Mr. Proctor said. "The mayor deserves a lot credit for that. It does not mean that the mayor is done, but it does mean he has made a good faith effort."
But Mr. Proctor said the control board was concerned about the city's workforce reduction plan and the implementation of cuts in the Board of Education's budget.