And it counts on winning $600 million in productivity savings from the city's unions.

Its officials now say it may not be able to pay for all the raises with productivity savings.

Mr. Michael said $132 million in productivity savings had already been identified.

That would have been reasonable, if it had paid for the increase with productivity savings, as the city wanted.

Higher user fees and productivity savings would also improve the outlook.

To close it, the Mayor proposes a package of service cuts, productivity savings and $859 million in higher taxes.

"Giuliani's going to be in a position where he's going to have to get productivity savings from everyone."

To take full effect, the agreement requires several actions by a reluctant Congress, some almost immediately, and calls for "productivity savings" from the workers.

Mr. Michael also said the city could not obtain any productivity savings without the agreement of labor leaders.

He said he had not been told of the fiscal plan's call for productivity savings.