The Limits of State Intervention in a Municipal Fiscal Crisis
![handle is hein.journals/frdurb4 and id is 557 raw text is: THE LIMITS OF STATE INTERVENTION IN A
MUNICIPAL FISCAL CRISIS
I. Introduction
Municipal fiscal crises are becoming more frequent, causing the
tradition of local control to be questioned. The problems plaguing
New York City are but one example of this nation-wide trend.
In order to aid the City in overcoming its fiscal crisis, New York
State has created two novel agencies, the Municipal Assistance
Corporation (MAC) and the Emergency Financial Control Board.2
MAC's major purpose is to aid the City in meeting its financial
requirements,3 while the Control Board's main function is to moni-
tor the City's spending.4 One accomplishment of these two organiza-
tions has been the implementation of drastic austerity measures
that have gone far towards remedying the City's fiscal situation.5
Thus far, both MAC and the Control Board have successfully
withstood several court challenges. However, the powers of these
agencies raise certain questions concerning the limits of state con-
trol over a municipality in a fiscal crisis.7 Furthermore, there is the
additional question of whether the City has the power to implement
certain of the measures ordered by MAC and the Control Board.'
This Note will examine the legal bases for the creation of these
agencies and evaluate the City's ability to comply with their direc-
tives.
1. New York State Municipal Assistance Corporation Act, N.Y. Sess. Laws chs. 168-69
(McKinney 1975) (codified at N.Y. PuB. AUTH. LAW §§ 3001-40) (McKinney Supp. Pamphlet
1975).
2. Act of Sept. 9, 1975, N.Y. Sess. Laws chs. 868-70 (McKinney 1975). [hereinafter cited
as Emergency Act].
3. N.Y. PUB. AUTH. LAW § 3031 (McKinney Supp. Pamphlet 1975).
4. Emergency Act ch. 868 § 7.
5. N.Y. Times, Feb. 2, 1976, at 1, col. 1.
6. Wein v. State of New York, No. 58 (Ct. App. March 23, 1976); In re Subway-Surface
Supervisors Ass'n, 175 N.Y.L.J. 12 (Sup. Ct. March 3, 1976); Flushing Nat'l Bank v. Munici-
pal Assistance Corp., 84 Misc. 2d 976, 379 N.Y.S.2d 978 (Sup. Ct. 1975); Flushing Nat'l Bank
v. City of New York, 174 N.Y.L.J. 8 (Sup. Ct. Dec. 5, 1975).
7. See section II infra.
8. See section III infra.](ViewImageLocal?handle=hein.journals/frdurb4&div=38&collection=&method=preview&ext=.png&size=3)
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The Limits of State Intervention in a Municipal Fiscal Crisis
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