(Reuters) - Amid an uncertain economic climate, New York City agencies must cut spending by a total of $2 billion in the current fiscal year and the following one, according to a budget memo issued on Friday.
"We will once again need to curtail planned spending, and do so in a way that prioritizes and preserves necessary City services and quality of life," Budget Director Mark Page said in a separate letter to the agencies.
The memo said the city might not get the additional revenue expected from the sale of taxi medallions under a plan to expand taxi service because a court ruled against the plan in August.
The medallion sales were expected to produce $635 million in the current budget, $365 million in 2014 and $460 million in 2015.
The city's economy has outperformed the nation's since the recession, winning back 200 percent of the jobs that were lost.
But Bloomberg has said the loss of revenue might trigger layoffs. The city of 8.4 million people employs over 250,000 workers. The city is appealing the court ruling.
Civilian agencies - except for the Department of Education - which employ non-uniformed workers, such as accountants, were told to cut spending by 5.4 percent in the current budget that ends on June 30, and by 8 percent the following year.
The police, fire, sanitation and correction agencies only have to cut their budgets by 2.7 percent in fiscal 2013 and by 4 percent in 2014.
The reductions for the Education Department were the smallest in the current year at 1.6 percent, followed by a 4 percent cut in the following year.
City agencies have until October 4 to submit their plans for reducing spending by $750 million in the current budget, and by $1.25 billion in the next one.
Though fiscal monitors repeatedly warned Bloomberg against relying on the taxi medallion revenue, he and the Democratic-led City Council in June agreed on a $68.5 billion budget that spared 20 fire companies and increased funding for daycare and after-school programs.
Bloomberg, now finishing his third and final term, will issue new forecasts in August for the budget gaps his successor will face after winning election in November 2013. His budget director warned that those deficits could grow.
The deficit for 2014 was projected at $2.5 billion - before the taxi medallion revenue was lost - with the 2015 and 2016 gaps each totaling more than $3 billion.
(Reporting By Joan Gralla; editing by Carol Bishopric)