If you ask most New Yorkers about GAAP-balanced budgets, four-year financial plans and the city’s emergency financial control board, you are likely to get only a blank stare. But any city resident who lived through the pain and tumult of the mid-1970s can attest to the anxiety caused by tens of thousands of layoffs, the disruption of city services and the looming fear of municipal bankruptcy.

The city’s Independent Budget Office and the Center for New York City Affairs at the New School organized a gathering of the city’s leading experts in municipal finance — including Mayor Michael R. Bloomberg’s budget director, Mark Page — this morning for a discussion, moderated by Joyce Purnick of The Times. The issue is not a theoretical one, because next year will bring a major change — the first since 1975 — in how the city’s budget works.

A recap: In 1975, the city near-bankrupt and begging for federal aid — think “Ford to City: Drop Dead.” The city’s books were in disarray. Money had been borrowed for operating expenses — “a cardinal sin,” as the budget expert E. J. McMahon, of the Manhattan Institute, called it today. The credit markets all but dried up, as Wall Street and the big banks shunned the city’s requests for new loans.

Albany created the Municipal Assistance Corporation to issue debt on behalf of the city, and of a new position — the special deputy comptroller for New York City — within the state comptroller’s office. But lenders were still unwilling to buy the city’s bonds until the state adopted the Financial Emergency Act. The act required the city to adopt budgets balanced according to generally accepted accounting principles (known as GAAP), restricted short-term borrowing and present a four-year financial plan, updated every three months. The act also created a Financial Control Board with oversight over city finances. The act — and the control board — were set to expire next year. But in 2003, Albany extended the act and the board until 2033.

So far, so good. But Albany didn’t extend one key provision — a provision that allows the control board to, in essence, take control of the city’s financial plans, contracts and borrowing fails to pay its loans on time or ends the fiscal year with an operating deficit of $100 million, among other financial violations. Such a “control period” existed until 1986, during the Koch administration, when the control period entered a “sunset” period. (Today, the control board still exists, but is not very active. Its Web site lists five senior staff members, including Jeffrey L. Sommer, the acting executive director.)

A four-page briefing paper [pdf] by the Independent Budget Office lays out the issues.

At the discussion this morning, Mr. Page, the budget director, argued that it made sense not only to extend the board, as has been done, but to preserve its present powers — including the takeover provisions. In some senses, it was a surprising argument — few mayors want the state to be able to encroach on their cities’ autonomy — but the argument also made sense. Mr. Page portrayed the 1975 legislation as a key bulwark against the temptation to spend too much.

Mr. Page — a longtime budget whiz who is sometimes called the Alan Greenspan of city finances because of his ability to be long-winded without making too strong a point — said the 1975 act had caused the city to provide clear statements, through the updated four-year financial plans, that showed “what’s coming in and what’s going out.”

He said, “A focus on cost is useful. A focus on cost that is fairly simple and is amenable to being watched and adjusted as you move along is extremely important.”

Some skeptics have criticized the GAAP requirement — a requirement that is more stringent than the accounting standards used in most cities — because it prevents the city from carrying an operating surplus or deficit and from having a rainy-day fund. (Instead, when the city has extra money — as it has had in recent years because of the real estate boom — it uses that money to prepay future expenses, a practice known as the surplus roll.” Mr. Page defended the use of GAAP.

“I don’t know if we’re unique, but we’re certainly rare as a municipal entity in that we’re required to meet this standard, not only as a balanced box as you march forth young and naïve on the first of July, but when you gasp your way to the finish on June 30 following,” he said.

Ms. Purnick tried to clarify Mr. Page’s remarks. “You’re saying, I think, that the control board serves as as protection against the political forces that would seek to pull the budget out of whack,” she said. “It’s a strict regulatory protection – it cushions the administration, it cushions the mayor against political pressures. Is that what you’re saying?” Mr. Page suggested he wasn’t trying to go that far — but he didn’t deny Ms. Purnick’s interpretation, either.

The other speakers responded to Mr. Page’s remarks. They mostly agreed with him.

Carol O’Cleireacain, a public finance expert at the Brookings Institution, said the city’s fiscal policies over the last 30 years restored credibility to the city’s finances.

Dall W. Forsythe, a budget expert at New York University, said he respected GAAP but said that the prohibition on carrying over a surplus or deficit made it hard for ordinary people to understand the budget. On paper, the city has a negligible “surplus” of $5 million each year, but in reality, like any other organization, it has deficits some years and surpluses in others. The GAAP requirement obscures the city’s actual operating results, he said. He said the requirements should be eased to allow the city to have a true rainy-day fund — an idea that the City Council speaker, Christine C. Quinn, has embraced.

Robert A. Kurtter, who oversees state ratings for Moody’s, echoed that concern, saying that the city had, in fact, found ways around GAAP, but ways that only “a more astute reader of financial statements” could understand.

John H. Banks III, a former City Council chief of staff, who is now an official at Consolidated Edison, was the lone speaker who favored giving the City Council a greater role in the budget process — which, as he noted, heavily favors the mayor, who alone has the power to set revenue estimates. Dr. O’Cleireacain noted that many mayors have quietly used that power to underestimate revenues, which discourages spending.

It was a fairly serious two-hour discussion, but there were a few light points. During the question-and-answer session, Dr. Forsythe said he believed term limits had been harmful. “I think it’s bad for financial management, because it removes incentives for people to act responsibly at the end of their terms,” he said, adding, with a laugh, “I’d love to be able to vote for all these people again.”

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