The city will avoid massive teacher layoffs and keep 20 fire companies open under a budget deal reached late Friday night between the mayor and the City Council.
It comes just six days before the deadline.
The $66 billion budget saves some 4,000 teacher jobs thanks to two concessions by the teachers union.
A teacher sabbatical program will be suspended for the next school year, and the city will be allowed to use 1,200 teachers without school assignments as substitutes. However, the city will still lose about 2,600 teachers to attrition.
The move is expected to save the city more than $100 million.
"This budget devotes enormous resources to our schools. And it is an example of how labor unions can work with us to find savings that are good for the city and good for their overall membership," said the mayor.
"We said we would move forward as long as everyone's going to throw something in here, because we don't want the schools to be hurt. So really the big winners here are the children and schools of New York City," said United Federation of Teachers President Michael Mulgrew.
This is the third year that the mayor had insisted that teacher layoffs were unavoidable. When asked by a reporter if that hurts his credibility, Bloomberg said the bargaining table was always open.
"The UFT came through and if you remember back in the executive budget, I said if the union wants to help, we’d be happy to work with them. This is the one union that did," said the mayor.
Meanwhile, 20 fire companies that had been targeted for closure will also remain open under the deal.
The proposal, which was expected to save the city $55 million, was heavily opposed by the firefighters union and other elected officials.
While teachers and fire companies were spared, the budget still calls for a thousand city workers to be laid off, mostly in the healthcare fields.
A formal vote on the budget is due by Thursday.