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The city's agenda is now on the rocks. Mayor Michael Bloomberg warned Tuesday that if state lawmakers don't approve a half cent hike in the city's sales tax, its fiscal bottom line could be on the ropes.

"If you didn't do that it would leave a very large hole in our budget that would be very hard to fill," said Bloomberg.

While the mayor tried to strike a measured tone, an important part of his legacy is on the line -- his control of city schools.

The deadline for the legislature to extend mayoral control expires at the end of the month. If legislation stalls in the state Senate, Bloomberg warns he has no idea what would happen to the school system.

"Nobody knows what to do. The good news is it's the summer. The bad news is we have summer school and the schools system does lots of things during the summer," said Bloomberg. "Nobody knows what would happen. I assume we would continue on with the current management for a short period of time."

While Bloomberg struck a measured reaction to the power struggle in Albany, city comptroller and mayoral candidate Bill Thompson warned it could be disastrous for the city.

"Things are going down the drain right now. It was an absolutely foolish and foolhardy move on every body's part to make change at the last second," said Thompson.

Assuming the Capitol does not get caught up in a long term legal battle, the Republican takeover of the Senate may ultimately be good news for Bloomberg, who's contributed more than $1 million to their political coffers.