The rating on New York City, N.Y.'s bonds reflects: * Improved financial performance, * Continued steady improvement in the city's economy highlighted by strong Wall Street-driven income gains combined with moderate increases in employment; and * Continued production of GAAP balanced budgets that reflect, in part, the city's strong financial control systems. A higher rating is precluded by extraordinarily high debt levels, significant ongoing capital needs, and the city's persistent inability to translate robust surpluses into more lasting budget relief. The city's out-year budget gaps remain large and are ongoing concerns, especially in light of the city's increasing dependence on cyclical financial services and tourism sectors. The outcome of the city's upcoming labor negotiations for contracts beginning in fiscal 2001
