After years of shrinking tax revenues and yawning budget gaps, New York City's finances have improved significantly, according to a report from the city's Independent Budget Office.

“For the current fiscal year, the city is on track to end the year with a modest surplus and is looking at a very manageable shortfall for next year,” said Ronnie Lowenstein, the IBO's director.

She said the change is the result of respectable growth in the U.S. economy, combined with rising employment in New York City.

In the years ahead, the IBO anticipates budget gaps, which Lowenstein described as “manageable”: $811 million in fiscal year 2014, and $1.656 billion in fiscal 2015. Those projections are somewhat more optimistic than the Bloomberg administration’s own numbers.

Lowenstein is warning her positive forecast could be invalidated if gridlock in Congress prevents a deal on the automatic federal tax increases and spending cuts.

Similarly, the city is counting on Congress to supply tens of billions of dollars in aid to recover from Sandy. If that money doesn't come, the city could quickly be faced with a substantial deficit by the end of the fiscal year, which closes June 30.