Mayor Michael Bloomberg believes York City's finances are stable enough to continue a 7 percent property tax cut for a second year ? but not beyond that.

Bloomberg's remarks were part of his budget update Thursday. A few months ago, he presented his preliminary plan for fiscal year 2009, which begins in July.

At that time, he said the $1 billion tax cut he first implemented last year might not survive another year, given the uncertain economic situation. But after holding the line on spending in the $59.1 billion budget, Bloomberg now says the property tax cut can continue.

The budget also gives the Department of Education a funding increase of about $200 million dollars in the next fiscal year.

Nearly all city agencies were asked to tighten their belts this fiscal year and next, resulting in a savings of $600 million this year and $1.3 billion next year.

Bloomberg said turbulence in the financial services sector is worrisome for the city's economy, declaring that New Yorkers "should pray Wall Street does well." New York City relies heavily on the securities industry, where wages from that sector made up nearly 25 percent of total wages in the city.

He also said the city may end up owing money to many of the major corporations that have overpaid their taxes based on previous years' numbers. The city handles that by crediting them the next time around, creating a decline in tax revenues overall.

Still, the real estate market has not slowed as much as it has nationwide, and foreign visitors have been flocking to the city's tourist destinations and high-end stores as they take advantage of the weak dollar.

Projected deficits total $10 billion over the next three fiscal years.

For Bloomberg delivering his budget speech, go to Channel 612 on your iO digital cable box and select iO Extra.