Give Mayor Bloomberg at least some credit for yesterday’s budget. It allows the mayor’s tax increases – on sales tax and income tax – to sunset this year as scheduled. It shows at least some restraint on spending, enough to make the mayor’s Democratic opponents yelp. And it finally drops the public relations spin about the presence of the United Nations being an economic advantage to the city, acknowledging that it has cost the city’s taxpayers $32 million over five years to protect the U.N. and foreign diplomats.

Still, the mayor’s plan does little to address the structural imbalance of the city budget and the city’s unusually high tax burden. The effects of that tax burden can be seen in the budget’s projections for the real Gross City Product, which is expected to grow 2.4% in 2005, 2.2% in 2006, and 2.8% in 2007. The real Gross Domestic Product, in contrast, which measures the national economy, is expected to grow 3.5% in 2005, 3.2% in 2006, and 3.2% in 2007, according to the budget document released by the mayor. In other words, Mr. Bloomberg is predicting that under his leadership, New York City’s economy will grow slower than that of America as a whole.

Mr. Bloomberg also relies on some questionable assumptions. “If New York State were to import brand name prescription drugs from Canada for the Medicaid program, New York City Medicaid savings would be close to $168 million in 2006 and grow to over $260 million by 2009,” the mayor’s budget says. But Canada and the American pharmaceutical industry both say they have no intention of allowing that to happen. And it would be a catastrophe to balance the city’s budget by importing Canada’s innovation-stifling price-controls to New York, thus damaging a New York-area industry whose research saves and improves lives. We’re similarly skeptical about Mr. Bloomberg’s claim that debt service is “non-discretionary,” as if the city doesn’t exercise some control over its own borrowing.

“There’s a lot of election-year quality to this budget,” the director of research at the Citizens Budget Commission, Charles Brecher, told us. If Mayor Bloomberg makes it through the election with this budget, he may face larger gaps in the future. After all, a court has ordered additional school spending, and the city’s teachers, police officers, and firefighters are awaiting new contracts. After the last election, when Mr. Bloomberg faced an unexpectedly large budget gap, he ended up raising taxes. As E.J. McMahon of the Manhattan Institute asks, what assurance is there that Mr. Bloomberg won’t do the same thing again?