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Causes of NY Financial Crisis

Serial Information: Civil Engineering—ASCE, 1978, Vol. 48, Issue 11, Pg. 89-90


Document Type: Feature article

Abstract:

New York City's recent financial crisis was brought on by several factors. The main long-range cause was the out-migration of middle-income people (taxpayers) and the in-migration of thousands of unskilled rural immigrants from the South and Latin America (service demanders). Further, the Johnson Administration's Great Society program forced NYC to come up with matching funds, which the city got by substantially increasing taxes and borrowing heavily. Finally, the growth of municipal unions led to lavish increases in wages, fringes, and pensions, at levels far above the private sector. The burden of rapidly increasing expenditures overwhelmed the City's capacity to generate more revenues, producing financial crisis.

Subject Headings: Financial management | Employee compensation and benefits | Taxation | Rural areas | Revenues | Private sector | Local government

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