The national economic downturn and the terrorist attack of September 11th have produced New York City's worst fiscal crisis in more than 25 years. New York is going to recover and come back stronger than ever -if we continue to pull together and make the right decisions.

The agreement that Speaker of the City Council Gifford Miller and I reached last week on the City's $42.3 billion budget demonstrated exactly the good sense and spirit of cooperation our City will need to get through these difficult times. That budget, which the entire City Council voted on, is balanced, fair and establishes the right framework for City spending policy over the next several years.

When we started planning the budget for the fiscal year starting July 1st, the City faced a $5 billion dollar deficit. That means that over the next twelve months, if City agencies had continued to spend at the same levels as last year, the City would come up $5 billion short. And unlike the Federal or State governments, the City cannot run a deficit; the law says we must balance our books.

Cooperation has been the key word in closing that deficit. All elements and levels of government have done their part. City agencies will spend billions of dollars less this year than last. And more than one billion dollars of those cuts will be in recurring expenses, which gives us a leg up on closing the deficits that are projected for the next several years. Washington and Albany helped out by loosening the strings that come with State and Federal funds and by permitting the City to refinance its debt. We'll also use the one-time authority the State government granted to borrow $1.5 billion to offset the devastating effects of the World Trade Center attack. Additionally, unions gave us more flexibility in paying fringe benefits to City workers that will save us money.

The City Council also made important contributions to shaping this budget. Council members recognize economic reality. They resisted pressure to overload the budget with spending items or enact tax increases this year that would put a chill on the business growth we need. They helped identify and protect the City's core services. And on issues like curbside recycling of metal, glass and plastic, they showed an ability to forge creative and sensible compromises.

New York City's fiscal problems are not going away any time soon. We face more hard budget challenges on the road ahead. But the agreement we reached on the budget for fiscal year 2003 puts us on the right course toward meeting those challenges.