New York City budget officials are scheduled to meet with executives at Standard & Poor's Corp. tomorrow in hopes of resolving questions about a substantial increase in the city's short-term borrowing needs.
The city is planning a $2.2 billion note issue on Wednesday $1.45 billion of revenue anticipation notes and $750 million of tax anticipation notes. according to the city comptroller's office.
Standard & Poor's. which last year gave the city its highest short-term rating, SP-1. on $1.75 billion of notes. is asking the city for additional information on the new level of short-term borrowmg.
Rating agency officials say they are concerned that the uptick in borrowing may be indicative of a problem in the city's fiscal 1995 budget, which totals $31.6 billion. City officials say the borrowing level merely reflects the need for additional cash. The fiscal year began July 1.
Abraham Lackman. Mayor Rudolph W. Giuliani's budget director. and mayoral spokesman Forrest Taylor did not return telephone calls Friday. Executives at Standard & Poor's say that despite the city's explanation. they would like more information about the city's cash-flow needs and the size of Wednesday's scheduled sale.
"The concern is that the note sale is bigger," said David Hitchcock. a director at Standard & Poor's. "It would be helpful to have additional information."
One city monitor said he doubts that the higher level of borrowing will cause a downgrade in the city's short-term credit rating from last year's level of SP-1. "The coverage [on the issue] is superb," the monitor said.
But rating agency officials say they want assurances that the increased borrowing is not related to the city's budget problems. The city's long-term debt is rated A-minus with a negative outlook by Standard & Poor's, and budget monitors say there are too many budget risks in the city's fiscal 1995 spending plan.
Allen J. Proctor, executive director of the New York State Financial Control Board. which monitors the city's fiscal health. said the increase in short-term borrowing is related to the city's poor cash management practices in recent years. and nothing else.
Proctor attributes the higher borrowing to the use of budget balancing accounting devices that do not produce cash. He said that last year's smaller note sale did not fully satisfy the city's cash-flow needs at the time. "They are borrowing what they should have borrowed last year," he said.