After congratulating Barack Obama on his presidential victory, Mayor Michael Bloomberg announced some extreme money-saving measures, including thousands of layoffs, during a budget address at City Hall this afternoon.

The mayor wants to cut the budget by $1.5 billion over the next 20 months, after forecasting that the budget will have a $4 billion deficit by 2010.

Among the measures he announced is the elimination of the seven-percent property tax reduction and not reissuing the $400 property tax rebate. The city says these two actions will generate $832 million in revenue.

"The gravity of the budget situation requires us to make hard choices that will not be popular with everyone," said Bloomberg. " But they’re the right ones to see us through these very difficult economic times and they will help speed our recovery, while continuing to keep our streets safe and clean and keep improving our schools."

Saying the city is facing economic troubles greater than even economists could predict, Bloomberg called for the cancelation of the next police academy class set for January. The move could mean fewer police officers on city streets and some fear its impact on public safety.

"They'll be no immediate impact for six months of 2009 because the officers that we would have hired would have been in the police academy. After that, it remains to be seen,” said Police Commissioner Ray Kelly. ”I think we have the leadership core, we have the experience. And we know taxes and strategies that work to see to keep certain that the city remains safe."

Queens Councilman Peter Vallone, Jr. said that cutting policemen would mean more crime on the streets and that the rise in crime would have its own effect on the city’s economy.

The mayor also wants to cut the length of the Fire Department's training program from 23 weeks to 18 weeks.

Another proposal includes cutting nighttime hours at five engine companies in firehouses that also house ladder companies.

"Any cuts to the operational side of the Fire Department will jeopardize civilian and firefighter lives," said Uniformed Firefighters Association President Jack McDonnell in a statement.

Cuts could also include reducing the number of seasonal Parks Department workers, not replacing certain Department of Sanitation workers, and not filling 127 vacant protective specialist positions at the Administration for Children's Services.

The mayor is aiming to ultimately reduce the size of the city's workforce by 3,000 employee, approximately 600 through layoffs and the remainder through attrition. The city says that more than 200 layoffs will come from the Department of Education, though none would be in the classroom.

Also planned is a fleet reduction, better maintenance, and life cycle management of the city's cars, a move that is estimated to save $20 million.

Finally, Bloomberg said the city will cut subsidies to libraries and cultural institutions by 2.5 percent this year and 5 percent next year.

If the city’s finances do not improve next year, the mayor warned that he may have to ask Albany to raise the personal income tax.

“It's not great for the city to have higher taxes. It's not great for the state either,” said the mayor.

The prospect of higher taxes comes as Bloomberg moves forward with across-the-board agency cuts. He is also looking to cut library hours, and close an East Harlem STD clinic and some dental clinics.

In order to raise revenue, the mayor proposed putting a five-cent fee on plastic bags provided to customers at all stores in the city and placing ads on garbage trucks and wastebaskets.

Council members were briefed on the proposals earlier in the day. Many said they were not happy with the possibility of layoffs and property-tax increases.

Members of the city's fire unions said Wednesday that they did not see the cuts coming.

Sources say both FDNY brass and the unions found out late Tuesday afternoon.

Fire officials say there is a lot to consider.

"We have to do a thorough analysis, we have a little time for that. And when we're done I'm sure we will have selected those that are likely to have the least impact on operations,” said Fire Commissioner Nicholas Scoppetta.

“We empathize with the city's responsibilities to rein in the budget, but we were really hoping all along that unit closures would not be part of that financial plan," said McDonnell.

McDonnell said the closings could come as soon as New Year's Day.

The Uniformed Fire Officers Association plans to explore ways to save money without shutting fire companies.

If the mayor does want to move forward with the property-tax increase he will need the support of the council. So far, 20 council members have signed a petition, spearheaded by Councilman Simcha Felder, asking Bloomberg to not increase the taxes.

“I can't anticipate anyone with homeowners in their districts agreeing to increase the real estate tax or agreeing to say forget about the four hundred dollar check. It's unacceptable,” said Felder.

City Council Speaker Christine Quinn said that beginning on November 18, the council will hold a series of public hearings on every proposal.