Perhaps they will. At the moment, however, it seems more likely that Mr. Bloomberg will be remembered for keeping the city’s treasury on an even keel during two tumultuous economic downturns. It has been a masterful, even historic, performance.

The mayor’s latest budget contains several painful but arguably necessary spending cuts, but in keeping with Mr. Bloomberg’s track record, it contains no plans to increase taxes. The mayor has managed to withstand a series of emergency-level budget crises by demanding creativity from his managers and productivity from the city’s work force rather than by relying on tax hike upon tax hike. His eventual successor will inherit that legacy and will be expected to show similar determination and common sense.

That is not to say that Mr. Bloomberg is a fiscal magician who has been able to close budget gaps like this year’s $2 billion deficit without pain and sacrifice. His new budget, which calls for $68.7 billion in spending in the fiscal year beginning July 1, will cut spending on libraries by over $70 million and slash funding to various cultural institutions by $40 million.

But there are no large-scale layoffs in his plan, no threats to eliminate hundreds of teaching positions in the city’s public schools. He has proposed eliminating 20 fire companies in his endless but clearly doomed effort to restructure the Fire Department to meet 21^st-century realities, but the City Council can be counted on to keep the companies open. One of these years, perhaps, City Hall will figure out how to better deploy the FDNY’s resources at a time of record declines in fires.

Mr. Bloomberg has been in office long enough to have governed through two recessions—the decline that followed the dot-com bust and 9/11 and, of course, the ongoing great recession, which has cast a shadow over budget-making since 2008. There’s no question that the quality and quantity of city services has been affected. But the mayor’s emphasis on innovation, creativity and accountability—not to mention his common-sense approach to taxation—helped to minimize the pain.

In announcing his new budget plan, Mr. Bloomberg noted that “cities across the country have struggled to keep their heads above water—laying off teachers, police officers or firefighters, with a few having to declare bankruptcy. We’ve avoided those painful steps.”

Actually, the city has done more than simply avoid worst-case scenarios. It declined to live large when times were good—it’s hard to remember, but there were a few fat years in the middle of Mr. Bloomberg’s tenure—and it demanded reform and accountability in the face of hard times.

That’s not a bad legacy, even if it’s not the one Mr. Bloomberg prefers to leave behind.

In another era, under different leaders, an unexpected bonanza of nearly a billion dollars would be the very definition of a good-news, bad-news scenario in Albany. The good news: The state collected $800 million more than it expected. The bad news: Same thing. Why? Because legislators and governors invariably used the unexpected cash to avoid hard decisions or to pay off politically wired constituencies.

Those days, we can only hope, are gone—at least for a decade or so. Mr. DiNapoli made that clear as he announced the windfall. The economic forecast over the next few months is iffy at best—especially if Washington can’t get its act together over the debt ceiling. It’s possible, Mr. DiNapoli said, that revenues could plunge over the next six to eight months if the economy stalls. As it stands, the state very likely will have to close a $2 billion deficit next year, significantly less than the original projection of $10 billion, but no small task in any case.

Thanks to the tone that Governor Andrew Cuomo established on day one of his administration, Albany did not conduct business as usual during this spring’s legislative session. Unions agreed to painful concessions involving pay and benefits. Legislators, every mindful of the two-year election cycle, submitted to strict budgetary discipline in the hopes that voters will have short memories come election day next year.

News that there is an unexpected pile of cash in Albany’s coffers could prompt dreams of reversing some of the tough decisions that the governor and legislators made this year. There is no end of causes and constituencies that would love to stake a claim to a few million here and there.

Fortunately for all concerned, it seems like the $800 million will be put aside in anticipation of harder times to come. That’s sensible and wise. If the worst doesn’t happen, however, and if the state cannot resist the urge to spend the extra cash, priority must be given to programs and policies that create jobs and stimulate the private sector. In other words, no handouts to favorite causes, no givebacks to unions, no reversals of hard decisions already in place.

Over the past few months, Albany lawmakers have shown themselves to be responsible and even courageous. If that continues, the Empire State may yet return to its former glory.

Finally, we have a governor who understands that his first duty must be to the taxpayer, not to the unions—even though many of those unions supported his campaign. Governor Andrew Cuomo has decided to face the issue head-on with a broad plan to reform pension benefits in both the state and in New York City. His quote was simple and direct: “The numbers speak for themselves,” he declared. “The pension system as we know it is unsustainable.”

Precisely. He is not the first person to realize this. But there is a difference between spotting a problem and doing something about it. Mr. Cuomo has chosen the latter course. He wants to raise the retirement age for most state workers from 62 to 65, and for teachers from a youthful 57 to a more-realistic 62. State and city workers would have to contribute 6 percent of their earnings to their pensions, up from 3 percent.

Best of all, Mr. Cuomo is moving aggressively against the corrupt but widely accepted practice of pension-padding. That’s when workers run up stunning overtime earnings in the final years on the job. Pensions are then calculated based on the inflated figure rather than on workers’ true salaries. Enough is enough. The governor wants to exclude overtime earnings and unused sick time from pension considerations. Predictably, the union bosses are raising hell about these common-sense solutions. Danny Donohue, who heads the state’s largest public employee union, played the class card by accusing the governor of carrying out the wishes of his “millionaire friends” at the expense of “the real working people of New York.”

That’s curious—does Mr. Donohue believe that public employees are the only working people in New York? If so, he has been in the union business too long. There are millions of real working people in New York who are being crushed by high taxes. They are the people paying for those pensions and health benefits. They’re the people who suffer when public employees work the system to inflate their pensions.

Another union boss complained that the governor was imposing horrendous cuts for what is, in his words, a “transient problem.” Transient? Anybody who follows state government knows that Albany’s finances have been in disorder for years, and all signs indicate that things will only get far worse without true pension and benefit reform. Again, anybody who thinks that the state’s problems are “transient” really isn’t paying attention or simply doesn’t care about the tax burden on other working people.

If anything, the governor could have gone even further with reform. He could have proposed an end to the state’s generous system of defined-benefit pensions, in which many—but not all—state retirees collect a fixed percentage of their salaries until they die. All governments are going to have to shift to 401(k)-style pensions in the coming years. Mr. Cuomo isn’t prepared to that go far, at least not yet.

Still, what he has proposed is revolutionary enough. Early-retirement packages would come to an end. Workers would be vested after 12 years in the system instead of 10 or, in the case of some uniformed workers, five.

The state and city simply can’t afford a pension-and-benefit system designed for another age. The city now spends $8.4 billion per year on pension costs. A decade ago, the figure was $1.1 billion. At the state and local government levels outside of New York City, pension costs have gone from $368 million per year to $6.6 billion over the past 10 years.

Mr. Cuomo realizes that this is simply unsustainable. Luckily for the working people of New York, he is determined to do something about it.

"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. "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. I am sympathetic to their need for budget cuts, but actions taken to close their deficits came without changing the burdens they impose on city taxpayers."

The mayor said that 6,000 teaching positions will be eliminated, and he placed the blame squarely on Andrew Cuomo and the legislature, noting that the state had the largest single year reduction in funding for city education in FY 2012.

"The State continues to disinvest in education in New York City," the mayor said.

The mayor also noted that New York has seemed to recover from the financial collapse of 2008, with business taxes coming in at a higher level than they did pre-crisis. Deficits however are expected to be the norm for the next several years.

Full details from the mayor's office below:

State and Federal Disinvestment in NYC

            The last 10 years have seen the State and Federal governments' share of the City's budget continue to decline.

            In FY 2002, the combined State and Federal share of the City's budget was 36 percent. In FY 2012, the combined State and Federal share of the City's budget will be only 27 percent.

            If the City continued to receive the same percentage of its total budget from State and Federal resources as it did in FY 2002, the City would have received an additional $6.1 billion in State and Federal support FY 2012.

            An additional $6.1 billion of State and Federal resources would have reduced the local tax burden for services or New York City taxpayers by 15 percent, or an additional $6.1 billion in State/Federal resources would have eliminated the need for any of the actions in the 10 rounds of budget saving actions taken since 2008.

State Budget Impact

            Specifically, the State budget for this year alone cut funding to New York City by a total of $1.8 billion that would have flowed through the City's budget. The Executive Budget replaces $1.2 billion of the State cut with City funding.

            The State budget for this year also cut spending on State-provided services in the City - dollars that do not flow though the City's budget - by $2.7 billion.

            Additionally, the State budget cuts triggered a loss of $2.2 billion in Federal matching dollars.

            Those three categories of impact add to a total State budget impact of a $6.8 billion cut for New York City due to the State budget.

Education

            The State budget reduced education funding to the City for FY 2012 by $1.2 billion. This was the largest single-year reduction in education funding to New York City and came at the same time as the City lost $850 million in Federal stimulus dollars used to support teacher salaries.

            To prevent catastrophic personnel losses in the City's school system, the Executive Budget provides a major increase in City funds dedicated to education, with an increase of $2 billion of City funds compared to the prior year.

            The State continues to disinvest in education in New York City. In FY 2002, State and City funding comprised a nearly equal portion of non-Federal spending on education. In FY 2012, City funding will comprise 61 percent of non-Federal spending and State funding will only comprise 39 percent of non-Federal spending.

            If the State had continued to share education costs equally with the City, the State would be providing $2.2 billion more in education funding for FY 2012.

            City-funded spending on education has increased from $5.9 billion in FY 2002 to $13.6 billion in FY 2012.

            Despite the City's continued, strong financial commitment to education, historic State education cuts and the need to balance the budget mean that reductions in the size of the City's teaching force are still required. More than 6,000 teaching positions will be eliminated through attrition and layoffs.

Social Services

            The current State budget eliminated more than $400 million in funding for social services, health and criminal justice, shifting the burden to the City. The Executive Budget uses $121 million of City funds to restore cuts to preserve the most essential services.

            A significant loss of Federal funding and cost increases in the child care system reduced the number of children supported by Administration for Children's Services (ACS) child care program by 16,000 in the Mayor Preliminary Budget. ACS currently provides child care support for 106,000 children, including the 16,000 slots that were slated for elimination in the next fiscal year.

The Mayor's Executive Budget will ensure all children who benefited from child care services this year will be offered a seat in Fiscal Year 2012. The budget will preserve the services by again increasing City funding for ACS child care and funding an expansion of the Department of Youth and Community Development's Out-of-School Time program, with the additional slots created in that program helping to continue service for children currently in ACS child care. Compensating for the reduction in Federal aid and the increased costs to preserve the service for all children in the system will cost $40 million.

The City's Improving Economy

City tax revenues continue to rebound as the City's economy has recovered from the national recession at a faster rate than the rest of the nation.

            Notably, Business Tax revenues - General Corporation, Banking Corporation and Unincorporated Business Taxes - now exceed levels from prior to the financial sector collapse, with Business Taxes in FY 2008 generating $5.41 billion in revenue and a projected $5.75 billion in FY 2012. Business Taxes for FY 2012 are in line with projections from the Preliminary Budget.

Factors contributing to the continued rebound in City tax revenue include:

• Job creation in New York City occurring at a faster rate than the rest of the nation.
• Wall Street profits continuing to exceed expectations.
• A record 48.7 million visitors to New York City in 2010.
• New York City's commercial real estate market remaining the strongest in the U.S.

Capital Spending

            In order to reduce the increasing costs of annual debt service payments, the Executive Budget reduces the City's ten-year capital construction program, excluding water projects, by 10 percent - from $39.8 billion to $36.0 billion.

Headcount

The City's full-time and full-time equivalent headcount currently stands at 295,735, a reduction of 16,069 positions since the start of the Bloomberg Administration. The City's December 31, 2001 full-time and full-time equivalent headcount was 311,804.

Out-Year Gaps

The Mayor also announced today that while the Preliminary Budget for FY 2012 presents a balanced budget, New York City will still face budget gaps of approximately $4.8 billion in FY 2013, $5.1 billion in FY 2014 and $5.3 billion FY 2015.             

New York City's only Repubilcan congressman, freshman Michael Grimm, got a mixed reaction from the crowd in Brooklyn last night, thanks to his vote in favor of the Republican budget plan that severely cut back spending on social programs like Medicaid and Medicare.

"Get it all out Get it all out," he said during one round of booing and heckling. "It's good to get it all out. It's healthy for your lungs."

He has another town hall meeting tonight on Staten Island.

The ad, which is set to air in New York City and the state's major metropolitan regions, ties Cuomo to the Committee to Save New York, the business group which has tried to counter the power of the state's unions.

The script of the ad is as follows:

"Governor Andrew Cuomo says New York's budget crisis demands we all sacrifice for the good of the state. Well, Governor Cuomo doesn't really mean all of us. While pushing to balance the budget solely by cutting essential services that provide care and help to the elderly, the mentally and physically challenged and working families, the governor wants to give $5 billion in tax cuts to the wealthiest New Yorkers, tax breaks that will compound New York's fiscal situation and only benefit the wealthiest 3% of taxpayers. It means while all of us are struggling to shoulder our share of the governor's burden, his special interests--the Wall Street bankers, real estate tycoons and ultra-rich business owners who make up his Committee to Save New York will get a great big tax break. It's not right and it's not fair. Call Governor Cuomo today and tell him to stop benefitting his rich friends at the expense of the people. Now is not the time for tax cuts for the super-rich."

New Yorkers for Fiscal Fairness is an umbrella group of several social justice organizations and unions, including the state's teachers union, Citizen Action and the Alliance for Quality Education.

Support for extending a tax on the state's upper income earners has support in polls, and appears to have growing support in the legislature, with even a number of Republican lawmakers signalling that they are interested in it. 

Cuomo tries to pin the prospect of a government shutdown entirely on the legislature, and says that the threat of one is not enough to derail him from his economic agenda.

"I will not compromise the important work you elected me to do and I will not back down from my promise to the people of this great state. Even if the legislature causes a shutdown of government, it will only be temporary, and it will only delay, not derail our budget's final passage," he said.

Bloomberg's budget outlines a plan to soften the worst of the blows suffered from state funding cuts to education and city services. The plan increases education funding to compensate for some of the loss while relying on modest cuts to city-funded services, changes to the State budget, and a growing economy to make up the difference.

The bright spot on the horizon: the tax revenue, the numbers for which are projected to be higher than originally anticipated. This is in large part thanks to the city's above average rate of job creation, its high number of tourists, and its strong commercial real estate market. According to the mayor's office, these "economically sensitive" tax revenues- which encompass sales and real estate taxes, among others- are approaching pre-recession levels, though they're not quite there yet.

The bad news: education. Bloomberg's budget provides a $1.86 billion increase to help replace the combined $2.25 billion lost in state funding and federal stimulus money. To completely balance the budget, however, 6,166 total teaching positions will need to be eliminated, including the previously reported 4,666 layoffs.

The budget uses some additional city funds to compensate for lost state funding for what it considers to be "the most essential" social, health, and criminal justice services; and the rest of the cuts will come out of a rental subsidy program, money for senior centers, and youth employment positions.

The success of this budget is contingent upon three changes on the state level. In order for the plan to work, the state must provide an additional $200,000 in education funding to New York City, reform a fund that guarantees annual payments to retired NYPD and FDNY members, and a more equitable distribution of state revenue sharing funding. If the state does not accommodate these requests, Bloomberg will have to make further reductions to city services.

The budget plan also reduces the city's ten-year capital construction plan, which is anticipated to save more than $800 million over the course of ten years.

 "Our sound management will help avoid the worst impacts of state cuts, but we can't compensate for the full loss in state funding," Bloomberg said in a statement. "We're ready to do our part to help the state, but we don't deserve to be penalized for our responsible actions. If the state does not come through, layoffs and service cuts will be more severe."

Peter King serves as the chairman of the Committee on Homeland Security, and Lowey is the only New Yorker on the group's Appropriations Subcommittee. Neither King nor Lowey resides within the five boroughs, but both stressed the importance of homeland security and anti-terrorism programs in the New York City metropolitan area, which they called the "nation's most at-risk city."

"A continued federal, state and municipal collaboration in protecting the homeland is absolutely imperative," the letter stated. "We urge you to maintain substantial funding for the state homeland security grant program, urban area security initiative, and assistance to firefighter grant programs, which help bolster our law enforcement and public safety workforce and training."

The letter also urged the president to continue to invest in the Travel Security Administration for air travel safety, and to continue funding for the Coast Guard's Maritime Safety and Security Team, which Obama's budget request for FY 2011 proposed (unsuccessfully) to eliminate.

"It's clear that we have to bring federal spending under control," said King, "but we cannot afford to shortchange our homeland security needs, particularly those of New York City, which remains al Qaeda's top terror target."

President Obama's budget request is due on February 14th.

The Congressional Republican leaders, like their counterparts on the Democratic side and in the White House, all understand that the debt limit must be increased -- just as they understood the imperative of the bank bailouts two years ago. But that won't stop them from indulging in reckless rhetoric -- or from seeking to take advantage of the situation in ways that could result in dangerous consequences, as they vow to hold the debt ceiling hostage to enormous budget cuts. These veteran leaders appear to have learned nothing since the debacle of 1995, when then-Speaker Newt Gingrich told the bond industry that he would allow the country to default on its debt unless President Clinton agreed to his plans to slash Medicare and other federal programs. "I don't care what the price is," he declared.

That was a very different time -- and the price of default would be far higher today, in a world where nations and states on the verge of insolvency continuously threaten to scuttle global recovery. Back in the Nineties, the Clinton Administration was able to outwit Gingrich both politically and fiscally, using tactics that preserved the full faith and credit of the Treasury without capitulating to Republican demands. Clinton forced the Republicans to fulfill their bluff. Now the numbers are bigger, the space to maneuver is smaller, the potential downside is incalculable -- and the nihilistic ignorance of the Tea Party faction is the dominant attitude within the GOP.

Even the merest prospect of default would be gravely damaging to American prestige and prosperity, continuing the apparent Republican project of hastening our national decline that began with the invasion of Iraq under false pretenses (and the refusal to pay for that multi-trillion-dollar disaster). So it is understandable that the Obama administration would want to find some way to lure the Republicans and their fanatical minions back from taking us all over the cliff.

What the Republicans have hinted they must have in order to release the debt hostage is a package of budget cuts amounting to at least $100 billion this year -- or a rollback of spending on discretionary programs (excepting veterans, defense and homeland security) to 2008 levels -- and perhaps a deal to destroy Social Security and Medicare as well. They have carefully refused to offer specific cuts that might anger their own constituencies.

No doubt the Obama White House, which too often prefers "bipartisanship" to principled confrontation, will be tempted to make such a deal. The problem is that cutting the budget so drastically will undo the stimulative effects of the December tax-and-spending agreement -- and plunge the economy back into recession. The President loses either way.

Perhaps the time has come for the Democrats to adopt a different strategy. Let the Republicans govern, or misgovern. Don't rescue them from their own recklessness. Don't vote to raise the debt ceiling unless and until the Republican leadership supports the bill -- and if they refuse, let them take the responsibility for the consequences. Let's see how long they can listen to the screaming of their major contributors on Wall Street as the world economy shudders. Make the hostage takers surrender this time.