New York City Mayor Michael Bloomberg Friday released a $66 billion executive budget for fiscal 2012.

The plan calls for reducing teacher head count by 4,000 through attrition and layoffs to help absorb cuts in state education funding.

The administration needed to account for the loss of $1.8 billion in state funds, including $1.2 billion for education needs, as Albany reduced spending to balance its spending plan for fiscal 2012, which began April 1.

State and federal funds will account for 27% of the city’s fiscal 2012 budget, compared to 36% in fiscal 2002, according to budget documents.

Bloomberg’s spending plan does not include any tax increases. To keep revenues in line with expenditures, the executive budget includes $5.4 billion of savings among city agencies and $3.2 billion of surplus funds.

“We are in better shape than most cities for two prime reasons: we’ve made smart investments in our economy and we budgeted in a responsible way that prepared us for the inevitable downturn in the national economy,” Bloomberg said in a statement. “But we are not an island. We are not immune to the realities in Albany and Washington. And the reality is, both places are keeping more of our tax dollars to close their own budget deficits.”

Bloomberg expects the city will face deficits of $4.8 billion in fiscal 2013 and $5.1 billion and $5.3 billion in the following fiscal years.

The mayor has said that teacher layoffs are needed as the city must adjust to reduced state aid for education. City Council Speaker Christine Quinn and Councilman Domenic Recchia, who chairs the finance committee, said the council will work to avoid teacher layoffs.

“We have grave concerns about a budget that allows for teacher layoffs, which would be immensely damaging to our education system and children’s opportunities for a quality education,” Quinn and Recchia said in a joint statement. “Make no mistake, we will do everything in our power to prevent teacher layoffs.”

The City Council has also pledged to reduce the city’s use of outside contractors to help control city spending. Comptroller John Liu also believes the administration must look at ways to curb such expenses.

“While the mayor’s budget presents a picture reflective of the lingering effects of the recession, it should be noted that throughout the economic crisis, city agencies have spent billions of dollars on high-priced outside consultants resulting in runaway spending on technology-related contracts,” Liu said in a statement following the release of the Bloomberg’s budget. “Unfortunately, the executive budget offers no respite.””

New York City also faces rising pension costs. The budget plan includes $8.3 billion for pensions, up from $1.3 billion in fiscal 2002. That’s an average annual growth of 20%.

The administration projects fiscal 2012 revenue collections will total $46.47 billion, which is $2.22 billion more than anticipated in fiscal 2011. State and federal grants bring total city revenues to $65.7 billion next year, with expenditures totaling the same amount.

The city will pay $5.91 billion in debt service costs on general obligation, lease, and future tax-secured bonds next year, an $877 million increase from the debt service paid in fiscal 2011. Principal and interests costs will increase annually to a projected $7.27 billion in fiscal 2015, according to budget documents.

In February, the mayor announced he would cut his proposed 10-year capital plan to $36 billion from $40 billion to help rein in such spending and control debt-service costs. Water infrastructure needs are exempt from the spending reductions. About $27.8 billion of general obligation and New York City Transitional Finance Authority borrowing and $12.3 billion of New York City Municipal Water Finance Authority bonds will help finance the borrowing plan.

Bloomberg expects a slightly smaller capital plan will reduce debt-service payments by $713 million between fiscal 2011 and fiscal 2021 and reduce borrowing by $2.1 billion.

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