New York City Loan Guarantee Act of 1978

New York City Loan Guarantee Act - =Title I: Loan Guarantees= - Authorizes the Secretary of the Treasury to guarantee, under stated conditions, the payment of principal and interest on indebtedness of the City of New York. States that the maximum length of any guarantee provided shall be 15 years after the date of the issuance of the city indebtedness involved. Restricts city indebtedness guarantees under this Act to employee pension funds of the city and the State. Terminates such guarantees whenever the indebtedness is disposed of or sold.

Requires the Secretary to assess and collect, at least annually, a guarantee fee of not less than one-half of one percent per year on the outstanding principal amount of guaranteed securities. Authorizes the Secretary to periodically escalate such fee to induce the obligor to enter the public credit market.

Sets forth conditions of eligibility which must be met before the Secretary guarantees or commits to guarantee any city indebtedness, including, but not limited to: (1) the city is unable to obtain credit elsewhere and (2) the city has submitted to the Secretary a plan for bringing its expenditures other than capital items into balance with its revenues for each of the first three fiscal years of the city beginning June 30, 1978, and submits, on or before the first day of each fiscal year thereafter, plans for bringing such expenditures into balance with its revenues no later than the final fiscal year of the four year period beginning July 1, 1978.

Requires the independent fiscal monitor to demonstrate to the satisfaction of the Secretary that it has the authority to control the city's fiscal affairs during the entire period in which Federal guarantees are outstanding. Conditions the making of such guarantees upon the city's agreement to obtain annual audits conducted by independent public accountants of its financial statements and establish an audit committee which shall assist in such audits. Sets forth requirements the State of New York must fulfill to be eligible for such guarantees including assurance that State financial assistance of an equal amount would be provided to the city during the city's 1979 fiscal year. Requires the State to establish a State reserve fund to reimburse the Treasury for paying any interest and principal which the city fails to pay and of which payment is guaranteed under this Act.

Stipulates that a productivity council be established to develop and implement methods to increase employee productivity. Directs the independent fiscal monitor to review and report annually on the work of the council.

Requires the city to offer to sell short-term notes in fiscal years 1980, 1981, and 1982, and long-term bonds in fiscal years 1981 and 1982. List additional terms and conditions including, but not limited to, the agreement by the city to implement a program of refunding any outstanding indebtedness guaranteed under this Act. Limits the total amount of guarantees that may be outstanding at any time to $1,650,000,000. Allows the Secretary to guarantee the payment of principal and interest on city indebtedness issued prior to January 1, 1979, and maturing prior to July 1, 1979, upon the determination that the employee pension funds are not able to provide sufficient amounts of seasonal financing required pursuant to this Act without being considered to have failed to meet the requirements of, or to be in violation of, the Internal Revenue Code of 1954.

Directs the Secretary to enforce any right accruing to the United States as a result of the issuance of guarantees on city-related securities. Authorizes the Secretary to bring a civil action in any United States district court or appropriate court to enforce compliance with this Act, any related agreement, or any provision of State law, by the city, the State, the independent fiscal monitor, or any other official or other party.

Authorizes the Secretary and the Comptroller General to inspect all accounts, books, records, and other specified transactions relating to the city's financial affairs and indebtedness.

Terminates the authority of the Secretary to guarantee city indebtedness on June 30, 1982.

Authorizes appropriations without fiscal year limitation of such sums as may be necessary to carry out the provisions of this Act.

=Title II: Amendments to the Internal Revenue Code of 1954= - Makes interest income received on any obligation guaranteed under Title I of this Act with respect to interest accrued during the period such guarantee is in effect taxable under the Internal Revenue Code of 1954. Stipulates that no provision of law shall be construed as authorizing the Federal Financing Bank to acquire such obligations.