Mayor Michael Bloomberg presented a $58.5 billion budget plan Thursday at City Hall for New York City's next fiscal year.

The proposal calls for a lean 1 percent increase in spending, compared to the 8 percent increase in the current fiscal year's budget. Bloomberg warned that multibillion-dollar deficits lurked around the corner, including an estimated $660 million loss to the city based on a decline in Wall Street profits.

Last year, he asked city agencies to make cuts. He said Thursday that many had exceeded their set goals or come close. However, he warned against agencies closing down popular and necessary social programs in order to operate on a tighter budget.

"We have to leave a better New York for our children," Bloomberg said. "These are things we have to reach in our pockets and pay for today."

The administration also raised property taxes.

According to Bloomberg, the belt-tightening measures have resulted in $1.5 billion in savings from the 2008 fiscal year being rolled into the 2009 fiscal year. Bloomberg said lower expenses and higher revenue helped make the $1.5 billion possible.

In the upcoming 2009 fiscal year, the mayor is calling for a continued $400 property tax rebate for single- to three-family homeowners. Owners of larger properties would continue to bear the burden of property tax hikes. Bloomberg is also seeking to extend a one-year, 7 percent property tax cut, which amounts to about $1 billion.

Bloomberg spoke about investing billions in the school system, a wireless Internet system for the city, beefing up the city's infrastructure and the redevelopment of Coney Island, Brooklyn and City Island, Queens.

The City Council must sign off on the final budget plan, which covers July 1, 2008 through June 30, 2009.

For Bloomberg's budget address, go to channel 612 on your iO digital cable box and select iO Extra.

AP wire reports contributed to this story.