The surplus $1.7 billion we expect to have comes not from tax increases but from real economic growth. The transfer tax, the real estate transfer tax, is due to a lot of real estate activity. That is a positive message. And our obligation is to look carefully at what's fueling that real economic growth in the city and to try to reinforce that.

Over the last 25 years, the securities industry has been responsible for more than half the growth in the New York City economy, so we start with the importance of maintaining New York as the world's financial center. But we have to so some things that are not quite as obvious.

One out of every ten private sector jobs in the City of New York is working for a foreign company. Our relationship to the foreign, international community is something that is deep, that is important and is unique for New York City as compared to the rest of this country. Often that puts us at odds with national foreign policy, trade policy, visa policy and is an important thing to keep in mind.

A second contributor has been a rebound in the travel and tourism industry, reaching record levels. It's creating the most new low-end jobs and entrepreneurial small business jobs in the city. That's something we have to think about how to reinforce

And in 2004-2005 there was a 4.9 percent increase in employment in the science and research sector, which is important to think about.

The threat in terms of the economy comes if we were to say, things are going well, so we'll institute new taxes to pay for additional spending. A threat right now beyond our control is the federal deficit. To the extent that the federal government has to cut back because of their huge deficit, that is going to flow into the city, leave us with some hard choices as the city budget has to pick up the essential services that we rely upon the federal government for.

The second issue is debt. The key to our economic growth is continued reinvestment and upgrading of basic infrastructure. Those are expenditures we have to make. Construction costs in the city have gone up 40 percent in the last two years. This is the challenge facing the redevelopment of lower Manhattan. This is why the Javits Center has got to be designed or refinanced, because the budget that we put together less than two years ago is no longer sufficient to build out the expansion of the Javits Center. So we have got a huge problem in terms of construction costs.

And finally anti-terrorism. The work that was done after 9/11 -- [Police Commissioner] Ray Kelly deserves a huge amount of credit -- really restored confidence. We have made an investment in security. But New York City remains by far the highest risk terrorist target in the United States.

Kathryn Wylde is president and CEO of the New York City Partnership

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