NEW YORK CITY apparently survived another financial crisis last week. It needed to raise almost a billion dollars to pay its short-term debt, and it came up with the money through a series of moves that left even some of its own experts gasping. After negotiating at length with his usual partners - the banks and the unions - in solving these all to frequent crises, Mayor Beame gave up on both them, at least temporarily. He then chose to sell $410 million in city-owned mortgages and announced that the city could use $216 million in cash that happened to be lying around in some of its accounts. For the rest of the $983 million, he plans to persuade the owners of some of the outstading bonds not to demand their money just yet.
It was a magnificant performance; as far as it went it was perhaps the mayor's best since the city found itself in such serious trouble more than a year ago.But it had one flaw aptly described by Eugene J. Keilin, executive director of the Municipal Assistance Corp: "The city is like the guy who has done three somersaults in the air but still has to catch the other trapeze."
That other trapeze is a financial plan and a budget that do more than let New York move from one crisis to another. All that the maneuvering of the last two weeks has accomplished is to buy the city some more time and to use up one of its few remaining options. The next time it hits the brink of not being able to pay its debts, it may have no choice but to accept the plan offered this time by the major banks. That is a plan to remove most of the financial control of the city government from the hands of its officials and place it elsewhere in order to reassure those who buy bonds that they have a decent chance to get their money back. While we do not blame Mayor Beame for turning aside this proposal and denouncing it as a plan to end democracy in New York, he or some other mayor may be forced to accept it someday.
Although the fundamental problem of New York - its inability to raise as much revenue as it spends - has been eased somewhat in the last year, but Mayor Beame estimated the other day that to achieve this he will need toclose a gap of $585 to $725 million between planned revenues and expenditures. And Treasury Secretary Blumenthal has said that he sees a "permanent gap" between the revenue the city can raise and the amount of money it must spend to meet basic needs. If this is right, New York has little hope in the long run except that provided by the federal government. The Carter administration is considering various programs, particularly reform of the welfare system, that could aid it and other cities. But until it come up with a plan and then wins congressional approval of it-if that is possible - New York will have to keep on doing somersaults - if that is possible.