NEW YORK (Reuters) - New York City Mayor Michael Bloomberg on Thursday unveiled a $65.6 billion budget plan for fiscal year 2012 that calls for firing 4,666 teachers and reducing capital spending 10 percent over the next decade.


Bloomberg blamed reductions in aid from the state of New York and the U.S. government for painful cuts that have already provoked a clash with school teachers and are certain to draw opposition from other public sector unions.

"We need help from Albany (the state capital). We need to have the federal government stop cutting us back. The future does have some clouds," Bloomberg, a political independent, told a news conference.

New York City has withstood the recession better than many cities in the country, in part because Wall Street rebounded quickly from the 2008 financial crisis. The new budget plan represents a $300 million reduction from the 2011 budget.

Bloomberg said the city was creating jobs at a faster rate than the rest of the country, had benefited from a record 48.7 million visitors in 2010, and that the commercial real estate market remained the strongest in the country.

That should help lead to an additional $2 billion in revenue over the next year half than had been previously forecast.

Even so, the city plans to lay off 4,666 of its 75,000 public school teachers and reduce a further 1,500 teaching jobs by attrition.

Bloomberg said his plan, which requires City Council approval, closes a $4.58 billion budget deficit without tax increases. Cuts will also affect child care, fire stations, senior centers and other popular programs.

Capital spending, which is separate from the operating budget and financed largely by borrowing, would be cut 10 percent over the next decade, realizing savings of about $6 billion. Bloomberg said he had considered 20 percent but was talked out if it by City Council Speaker Christine Quinn.

The budget battle is a prelude to a separate conflict over which teachers to fire. Bloomberg wants those decisions to be made on merit rather than seniority but state legislature would have to agree.

"His complete insistence on teacher layoffs seems bizarre to us at this point. We think it's more of a political game and scaring people," Michael Mulgrew, president of the United Federation of Teachers, told NY1 television.

Bloomberg suggested he was free to take on public-sector unions now that he no longer will seek re-election.

"I can afford to look at these issues that are politically difficult and take them on. These are always the issues that nobody wants to face. ... I have nothing to lose, I suppose is a nice way to phrase it," Bloomberg said.

"These are problems that never get solved because there is no short-term benefit to solving them. But that's why I ran for a third term," he said.

The mayor also pleaded with state legislators in Albany to allow him to negotiate pension benefits with city employees to slow growth in the city's contribution to the pension funds, which he said would otherwise increase from $7 billion this year to $8.4 billion next year.

City workers negotiate those benefits with the state.

New York City is one of the country's biggest issuers of municipal bonds and its budget tops that of a number of states, yet it pays lower interest rates on its debt than fiscally distressed states such as Illinois, California and New Jersey.

(Reporting by Joan Gralla; Writing by Daniel Trotta; Editing by Chizu Nomiyama)

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