NEW YORK, NY June 29, 2005 —Mayor Bloomberg and City Council Speaker Gifford Miller have agreed on a $50 billion budget. They say it will erase the projected deficit for the new fiscal year that starts on Friday, but does nothing for future multi-billion-dollar gaps.

Higher-than-expected tax revenues this year produced the largest surplus in city history -- $3.2 billion. That money will go toward balancing the books for 2006.

The proposed agreement still needs City Council approval - a step largely considered a formality after the traditional handshake between the mayor and council speaker late last night in the City Hall rotunda.

The new budget includes a 400-dollar property-tax rebate for homeowners and a sales tax cut on clothing purchases under $110. It also restores about $230 million to many services cut last year, including libraries, cultural affairs, programs for the elderly and minority employment initiatives.

Watchdog groups say they are surprised the mayor is spending the surplus all in one year rather than rolling it out to ease fiscal pains in coming years. He has projected deficits of more than 4-billion dollars for both 2007 and 2008.