New York City is preparing a major policy statement that will address looming billion-dollar budget gaps through a combination of service cuts, privatizations, and possible agency eliminations, a city official said yesterday.

The official, who spoke on the condition of anonymity, said the city could make the plan public during the next week.

The plan comes as the city is preparing to receive a rating decision from Standard & Poor's Corp., one of the two credit companies that grade the city's general obligation bonds. Standard & Poor's will likely update its assessment of city GO bonds today, officials there said.

City officials, many of whom acknowledge a downgrade is likely, have met over the past few days with executives at Standard & Poor's. Agency executives were unavailable for comment.

Standard & Poor's rates city bonds A-minus, with a negative outlook. Moody's investors Service, the other company that assesses city GOs, rates the securities Baa1 and says that rating is secure for now.

Many market analysts say they believe Standard & Poor's will downgrade the city based on problems associated with its fiscal 1994 budget, and the persistence of large budget gaps predicted between fiscal years 1995 and 1997. Officials at Moody's have said the firm's Baa1 rating reflects the condition of the city's budget.

The official said the city Office of Management and Budget and the city comptroller's office are working on the plan that could be implemented in about a month, and that would provide budget savings for a number of years.

The official said the city may make private some city-run agencies. Other actions include cutting personal services such as wages or fringe benefits, reducing the city's capital budget, and possibly eliminating some city agencies.

"There's no question that the city's fiscal 1994 budget is in balance," the official said. "The question is, without further support from Albany and the federal government, what is under the city's control to address the structural budget problem?"

City budget director Philip R. Michael confirmed that the city is working on a plan, but refused to provide any details.

The plan comes largely in response to growing criticism from fiscal watchdog groups and fiscal monitors on the structural, or long-term nature, of the city's budget problems.

The city has received harsh criticism for balancing its fiscal 1994 budget, which began yesterday, using one-shot revenue raisers and without taking measures that produce long-term savings. Some monitors even warn that the city's fiscal 1994 budget may begin to dissolve midway through the fiscal year.

The use of one-shots such as asset sales and some bond refundings do not address the structural nature of the city's budget problem, monitors say.

As a result, the city faces budget gaps of $1.68 billion, $2.24 billion. and $2.6 billion for fiscal years 1995, 1996, and 1997 respectively, according to the official statement for its last GO bond sale.

Rating officials at Standard & Poor's said the gaps could even run higher than the city has indicated.

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