NYC mayor fights $400 property tax rebates in court

NEW YORK (Reuters) - New York City Mayor Michael Bloomberg said he was fighting the city council in court over whether he has the authority to withhold $400 property tax rebates that he says the city cannot afford.

"We are in court right now," the independent mayor told reporters on Thursday. If the court sides with the Democratic-led council, Bloomberg said the checks would be mailed to homeowners.

"We will always obey the law," he said. If the tax rebates are granted, the city will have to make other spending cuts, he said.

New York is under pressure to close a $1.3 billion deficit in 2009. The mayor's fight with the council is unusual and underscores the severity of the budget problems.

The battle may also test Bloomberg's financial expertise, the cornerstone of his campaign to win a third term.

"We will work with the city council to try to get the right balance" of measures, he said.