Bloomberg offers no-tax-hike city budget

New York City won't see any tax increases or lose any teachers under Mayor Michael Bloomberg's proposed $68.7 billion budget for fiscal year 2013, released Thursday.

But lower-than-expected tax revenue and uncertainty about the national economy could mean City Hall will have to take tough steps to deal with projected deficits of at least $3 billion beginning in fiscal year 2014.

Surplus money banked when economic times were good, past budget cuts and money recovered from a court settlement involving the City Time payroll scandal helped the city to reduce a looming $495 million hole in the planned budget, which would take effect July 1, Bloomberg said.

But the mayor cautioned that if the economic recovery slows and causes a drop in tax revenue, there could be belt-tightening and service cuts in the near future. By law, the city must have a balanced budget by July 1 of each year, and earlier surpluses are gone, officials noted.

"You can rest assured we won't hesitate to take the action to keep the city's budget balanced," Bloomberg said at a City Hall news conference. "We are going to have some significant challenges for 2014."

Even Bloomberg's latest budget proposal contains some revenue that is contingent upon agreements with the teachers union and the proposal to raise $1 billion from the sale of city taxi medallions. About $300 million in state aid for education will only be realized if City Hall and the United Federation of Teachers agree on a teacher evaluation system. The medallion plan also is expected to go through a time-consuming legal challenge.

"If an agreement is not reached, amendments to the education budget will be necessary to compensate for the loss of funding," Bloomberg wrote in prepared remarks accompanying his budget presentation.

"We do expect to maintain the schools at a comparable rate," he said in his City Hall presentation.

The city also is experiencing high pension costs. But Bloomberg said recent reforms in the pension system for future municipal workers will allow the city to see some reduced retirement costs beginning in 2015. Those savings will improve markedly in the next decade, Bloomberg said.

Though emergency services and teachers aren't impacted by the budget proposal, save for a plan to cut 20 firehouses, there are cuts planned for day care and after-school programs, which drew criticism Thursday.

"The proposed cuts in day care and after-school programs just underscore how out of touch this budget proposal is with the daily struggles of middle-class and working families," Manhattan Borough President Scott Stringer, a Democrat, said in a statement.

Experts note that Bloomberg's budget plan is a starting point for weeks of negotiation with the City Council, which can fight him on any cuts, including those involving the day care and after-school programs.