NEW YORK, NY May 20, 2008 —The arbitrated deal to increase police salaries potentially has thrown a monkey wrench into budget negotiations between the mayor and City Council.

A spokesman for Mayor Michael Bloomberg has suggested that the police settlement may endanger plans to extend the break in property taxes.

But Ronnie Lowenstein of the city's Independent Budget Office says the city should be able to afford the added $50 million a year.

LOWENSTEIN: It would appear that based on what the mayor said in terms of the cost of the contract and the productivity increases going forward that have been agreed to, that there's sufficient funding within the labor reserve to cover the cost for the policemen's increases.

REPORTER: Lowenstein cautioned that IBO analysts haven't factored in the additional costs if other uniformed officers try to renegotiate their contracts, as it appears the firefighters intend to do.