bonds, municipal bonds, debt limit, debt service obligations, New York City, fiscal, budget


Generous spending and, some would add, fiscal mismanagement have been a New York City tradition, putting tremendous pressures on both the City and State budgets. To forestall the deterioration of the City's financial condition and the subsequent collapse of the City itself, the New York State Legislature enacted a series of laws, many of which were feverishly incorporated into the body of State law in extraordinary session. With the creation of public authorities, the authorization of State funds to aid these authorities, and State hindrance of the payment of municipal debt service obligations, came inevitable claims in the courts that the State had attempted to circumvent constitutional debt limitations. The New York Court of Appeals responded to the constitutional attacks on the emergency legislation by manifesting, in a series of critical cases, a pragmatic, public policy attitude aimed at both the bond market and the individual investor. An examination of these decisions and the legislation which spawned the suits evinces the court's result-oriented approach toward what is in effect a bridling of legislative and municipal power.



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