“The days of wine and roses are over,” he said.
Several state agencies, municipalities and school districts were perilously close to insolvency. New York City was in dire shape, with $5 billion in debts and no way to borrow money.
Mr. Carey maneuvered the state through a series of tough choices that led to increased taxes, reduced government services and lower state and city budgets, but he managed to keep the city and state afloat.
If he had not succeeded, New York City would have gone into default, leading to possible disruptions in the nation’s financial markets and banking system.
“He saved the city and the state in 1975,” former New York mayor Ed Koch told the New York Times in 1982. “If the city had gone down, the state would have been two days behind. He did it by bringing together the best minds and making everyone work together.”
Mr. Carey, who was considered by turns brilliant, assertive, combative and erratic, had never held an executive position before becoming governor. Early in his tenure, he kept New York City going by transferring a state loan of $400 million to the city.
In May 1975, he and New York mayor Abraham Beame went to the White House to see President Gerald R. Ford, Mr. Carey’s former congressional colleague. They were joined by Vice President Nelson A. Rockefeller, who in his 15 years as New York governor had sponsored many of the ambitious building projects whose bills were coming due.
Mr. Carey and Beame asked for a federal loan of $1 billion. Ford turned them down.
Amid strikes that left garbage piled on streets and fires unattended, New York City laid off 20,000 workers. Seeing no alternative but financial ruin, Mr. Carey took unprecedented steps to manage the city’s coffers and trim its rising deficits. He named investment banker Felix G. Rohatyn his chief lieutenant. Mr. Carey directed the Emergency Financial Control Board, which seized much of the authority for the city’s budgets from the mayor’s office.
He called for higher transit fares, increased taxes and delays in repaying the city’s debt. City-run colleges, which had offered free tuition, were taken over by the state.
Still, the White House was not moved by the city’s plight.
“I can tell you, and tell you now,” Ford said Oct. 29, 1975, “that I am prepared to veto any bill that has as its purpose a federal bailout of New York City to prevent a default.”
The next day, the front page of the New York Daily News ran the memorable headline “Ford to City: Drop Dead.”