UPDATE 1-NYC comptroller predicts bigger deficits than mayor

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NEW YORK Dec 15 (Reuters) - New York City may have to close bigger budget gaps than estimated by Mayor Michael Bloomberg, the city comptroller said on Monday, citing Wall Street's continuing difficulties.

"Waves of negative economic developments during Fiscal Year 2008 have given way to a tsunami of financial anxiety and caused us to issue a more pessimistic forecast than was put forth by the Mayor last month," said Comptroller William Thompson in a statement.

New York City's revenues are falling with the decline in its hometown industry, Wall Street, which pays about one-tenth of the city's tax collections.

Bloomberg last week ordered $1.4 billion of additional budget cuts, partly because the economic outlook has worsened since his last forecast. The mayor, an independent, hopes to win a third term in office and he will compete with Thompson, one of several Democratic mayoral candidates.

The comptroller said the mayor might have underestimated budget gaps, offering his own bleaker projections.

Specifically, New York City may have to close a $1.9 billion gap in fiscal 2009, about $600 million more than Bloomberg is expecting, he said. Two years after that, the city may be facing a $5 billion deficit, which would be about $1.3 billion more than the mayor has forecast.

The city starts its fiscal year on July 1.

But Thompson was more optimistic than the mayor when it comes to revenues the city collects from real estate deals. The comptroller said that thawing credit markets and declining housing prices will lead to more deals.

This should give the city almost $1 billion more of revenues by 2012, which will more than offset weaker collections from personal income and business taxes, the comptroller said.

His full report can be found on: here.