NEW YORK, NY March 19, 2008 —Despite years of trying to diversify the city economy, Wall Street still accounts for 25 percent of the city's tax revenue.

Ronnie Lowenstein, with the city's Independent Budget Office, says IBO had expected a slow down.

LOWENSTEIN: What we didn't see a few weeks ago is the extent to which the problems in the mortgage security industry and housing in general have effected so many players on Wall Street.

REPORTER: Even before Bear Stearns' meltdown, the city reported Wall Street investment banks had a record decline in profitability.

Despite Bloomberg administration efforts to reduce current and future spending, Comptroller Bill Thompson says a continuation of last year's 7 percent property tax cut is now in jeopardy.

For WNYC, I'm Bob Hennelly.

OUTRO: City agencies have already been cutting back. Mayor Bloomberg called for an across-the-board 2 percent cut last fall. He recently asked for agencies to identify another 3 percent in cuts.