For the past three years, we have written on numerous occasions, perhaps displaying mild obsession, about the annual agony of amending and adopting the city budget, a condition created by chronic fiscal insufficiency. The first near bankruptcy experience struck New York City in 1974-75, under Mayor Beame, although it had been building up during the late Lindsay years due to excessive spending and ever-increasing short-term borrowing, which the banks eventually refused to roll over, thus precipitating the crisis of insolvency.

Fiscal Crisis II struck in 1991, during the Dinkins administration.

It, too, required many layoffs, and hit the Department of Parks particularly hard. Both crises caused unhappiness and hardship for many New Yorkers, more than 50,000 employees who lost their jobs, and many more for whom services were reduced. The second crisis was more the result of an economic downturn than unusually irresponsible spending.

For the past four years, Mayor Bloomberg, the first businessman-mayor in recent memory, has avoided fiscal meltdown through an adroit combination of cost reductions, borrowing, and one-shots (i.e., revenues that come in for one year but are nonrecurring, which means next year the deficit is even larger, which means you are in a deeper hole).

For his first budget (fiscal year 2003), the mayor secured the consent of the state to allow the city to borrow $1.5 billion on a one-time basis. This is similar to what Governor Schwarzenegger did in his first year, except that the California borrowing was 10 times New York City’s, or $15 billion.

In New York City, the answer for FY 2004 was an 18.5% increase in the real estate tax, which brought in a billion dollars in its first year. The next year, we were fortunate to receive $744 million from the Port Authority for back rent for LaGuardia and John F. Kennedy International airports, and $621 million as a result of the refinancing of Municipal Assistance Corporation, or MAC, bonds. The airport money was splendid, but the MAC windfall came as a result of the legislature extending MAC bonds for 30 years, so in the end, the state will have to pay additional billions of dollars in interest, which is folly.

This year, the booming real estate market has come to the city’s rescue. In addition to taxing real estate ownership, the city also taxes real estate transactions. The upward surge is symbolized by Manhattan’s million-dollar closets, but it is taking place in all five boroughs with the revival of neighborhoods previously red-lined and subject to wholesale abandonment by owners.

The mayor deserves credit, which he has not widely received, for the actions he has taken over the last three and a half years to reduce the expense budget. The Police Department has shrunk through attrition, yet crime continues to fall. Six firehouses were closed, despite the political cost the mayor incurred at the time. City Hall estimates that the budget reductions they initiated total $3.9 billion.

The one-shots have been widely criticized as not being a responsible way to balance a budget. But as long as there is a different one-shot each year, the oft-predicted meltdown may be evitable. The local expert on these matters is Deputy Mayor Marc Shaw, who was the second of Mayor Giuliani’s five budget directors. (In order, they were Abe Lachman, Mr. Shaw, Joe Lhota, Bob Harding, and Adam Barsky, for budget junkies.) Mr. Shaw is known for his reputed ability to pull financial rabbits from hats, although there is annual skepticism as to where he will find the next rabbit.

In the city’s four-year political cycle, we are now in the bell lap. Traditionally, budgets swell as a mayor prepares to face the people. Fiscal bad news usually comes in the first or second year of an administration, when the new mayor is surprised (a la “Casablanca”) to discover that the city has much less money to spend than he was led to believe.

There is no question that good things have happened to New York City in the last four years – for one thing, the real estate boom, whose effect depends on whether you are an owner or a renter. We have made a substantial recovery from September 11, with new construction under way in all boroughs, except at the site of the World Trade Center. There has been a continuing drop in crime, and relative honesty and integrity in local government, especially when compared with our state government.

If the mayor is re-elected, his first test will come next year, say January 2006, when the preliminary budget for FY 2007-08 must be presented. Watching the budget process is like watching Evel Knievel jump his motorcycle over a row of parked trucks. It is remarkable that he does it, since each year another truck is added. Does a day of reckoning lie ahead?

The primaries are 119 days away; the elections will be held in 175 days. These shrinking numbers have had a significant impact on the 2005 budget process. They have already informed the executive budget, which was intended to pre-empt the City Council’s ritual of restoration. An election-year budget tests the limits of restraint and responsibility by public officials. April told us that these limits have been reached; June will show us whether they will be breached.

Mr. Stern is a former New York City parks commissioner and the director of New York Civic.