NYC mayor unveils $63 billion budget

NEW YORK (Reuters) - New York City Mayor Michael Bloomberg on Thursday proposed a $63.64 billion budget plan for next year, an increase of about $560 million from the current one, saying the economy was not improving enough to avoid layoffs and other harsh cost-cutting measures.

"We haven't seen the end of job losses in New York City and while the city is collecting more tax revenues than we had once forecast, those forecasts are still running well below what we had forecast," the mayor said at a news conference.

Underscoring the city's reliance on Wall Street, Bloomberg predicted that the profits New York Stock Exchange members earn this year will fall to $23.1 billion from $58.1 billion last year because interest rates will rise as inflation heats up.

Bloomberg, a billionaire and former bond trader, predicted that these Wall Street companies' profits will swoon again in 2011, sliding to just $11 billion.

The mayor, who won a third term after switching his political party to independent, had promised not to partly close a deficit -- once estimated as high as $5 billion -- by raising taxes. However, his plan counts on $50 million from the governor's proposal to make cooperative apartment owners pay the same mortgage recording tax as other property owners. For details, see:

Another $169 million would be raised by charging sales taxes on aviation fuels and a 50-cent hike in commercial parking rates would produce $4 million.

As examples of painful cuts in city services, Bloomberg listed in a statement: Closing four pools and shortening how long outdoor pools are open, reducing funds for libraries, cutting the fifth firefighter from 60 engine companies, and taking away nurses from small elementary schools.

Though New York City is home to many of the nation's mega-rich, the city cannot risk driving them out with an income tax hike, Bloomberg said. Just 5,000 people, whose adjusted incomes topped $4 million, paid nearly 39 percent of all of the city's personal income taxes in 2007.

TIME TO SHARE THE PAIN

The mayor also called on New York City's 300,000 or so public employees to share the pain. After warning on Monday that the state's budget cuts were so severe that the city might have to lay off 19,000 workers, Bloomberg's new plan was much milder as it results in laying off only 934 people and shedding 3,352 jobs through attrition.

No police officers, firefighters or sanitation employees will be laid off, but their ranks will fall through attrition.

Signaling its opposition, the Patrolmen's Benevolent Association said staffing was already at "the breaking point," and urged Bloomberg to spend what dollars the city does have "beefing up the fight against crime, terrorism and disorder."

The mayor, who has presided over historic drops in crime, would trim the ranks of uniformed officers to 32,800, the lowest level since 1990. The total rises to 34,475 next year.

Bloomberg repeated that the state's eventual budget remained "worrisome." The state's budget deadline is March 31; the city has until June 30 to enact its accord.

Bloomberg urged teachers -- in return for avoiding layoffs -- to accept less than half the salary increase they expected; he recommended a 2 percent hike for the first $70,000 in salary for two years. The mayor's proposed increase replaces the 4 percent pay increase granted to other union workers, which set the pattern for the rest of the contract talks.

Unions for city employees also will be asked to accept pay hikes based on boosting productivity by relaxing work rules. They will also be asked to pay more for health care. New hires will get lower pension benefits.

For years, credit analysts have criticized the mayor for granting city workers big pay increases. It now is easier for him to take on the unions because he is in his third and final term, and will not need their support to win another election.

While New York state's finances are in worse shape than the city's, Bloomberg issued the most detailed contingency plan seen in recent history to tide the city over if the governor's final budget includes the $1.3 billion cut he has proposed.

That would require the city to cut 8,500 teachers, lay off 3,150 police officers, and eliminate staffing for 42 engine companies. One-fourth of low-income households would lose daycare vouchers, street cleaning would vanish, and 500 soup kitchens and pantries would shutter.

(Reporting by Joan Gralla; Editing by Jan Paschal)