According to a report released Monday by New York State Comptroller Thomas DiNapoli, despite steps taken by the Mayor and the City Council to rein in spending, the budget gaps continue to grow. Though the city has enough reserves to ensure the current fiscal year's budget remains balanced, the budget gaps are expected to be $3.5 billion for next year and $8 billion for fiscal year 2011.

DiNapoli's office said that over the next two years, job losses may exceed 225,000 in New York State, including 175,000 in New York City. In November, the job losses in the city were almost 20,000 - the largest one-month decline since October 2001.

Even though the mayor has ordered budget cuts, and persuaded the City Council to allocate billions of dollars to prepay debt and to provide for future retirees' health costs, DiNapoli says additional actions are required in the face of the severity of the economic slump.

The DiNapoli report projects that tax collections could be lower by $575 million in the current fiscal year; by $450 million next year and by as much as $950 million a year after that, with decline in employment and higher losses on Wall Street affecting tax collections from personal income and business earnings. In addition, the weakening real estate market could cause property-tax revenue, by 2012, to fall $425 million short of city forecasts.

In a news release accompanying the report, DiNapoli said: "We don't know how long the recession will last, or how deep it will be, but it's clear that New Yorkers should brace themselves for possibly the worst fiscal crisis since the 1970s."