The crisis requiring the City to address its budget imbalance stems primarily from declines in economically sensitive taxes and Federal and State reductions in certain kinds of aid to the City. But City residents pay taxes to State and Federal Governments as well as to the City. So while the City's economy is a part of the State's, and the State's is part of the nation's, the budgetary burdens of all three fall on City taxpayers. Gross-product data are converted to current dollars. The cuts are cumulative, on top of FY 1995 cuts.
Cuts take effect immediately and with months rather than years to adjust.
The burden of cuts falls heavily on people who are dependent. Compared to the rest of the nation, the City has far more than its share of dependent people. With a weak economy it is less likely that these dependent people can be readily absorbed by the private sector. The Mayor's Executive Budget assumes that the State will restore aid for these programs. The City's employment rate reached a low of 50.6 percent in 1994, compared to 62.5 percent nationally.