The $42 billion city budget announced last night, eight hours after it was originally scheduled, passes the buck down a fiscal year, or at least until after the gubernatorial race. It is a midnight budget. In relying on one-time payments from the state and on heavy borrowing, the budget makes it apparent that Mayor Bloomberg and the speaker, Gifford Miller, are betting that the darkest hour is just before the dawn. The city’s ability to retain a balanced budget even a year into the future will depend on an especially bright economic recovery.

New York is spending every cent it can reasonably afford, and about $5 billion more. The city’s payroll and pensions account for about $22 billion, or more than half the city’s total annual budget. The city employs more than 300,000 people, or more than one of every 1,000 Americans. It is a workforce 1/7 the size of the federal government’s. As we recently saw during contract negotiations with the teachers, municipal employees fight tooth-and-nail for the job perks they’ve accrued over time. They oppose attempts to require greater productivity. It is the mayor’s job to gain concessions from the workforce, so that it better serve the city and is less of a drain on its taxpayers. It seems Mr. Bloomberg has gained little on this front, despite having played his best cards by borrowing money to support the workforce.

This budget does not raise taxes generally — with the notable exception of the cell phone “surcharge” and the nanny state excise tax on those pillars of civic life on whom governments are relying ever more, cigarette smokers. It does dig our city into deeper long term debt. The city has issued bonds — which is how cities take out loans — for about $2 billion to help plug the $5 billion hole in the coming year’s fiscal budget. This loan will mean debt service of more than $100 million annually, adding to next year’s projected deficit of more than $5 billion. Almost $4 billion of this debt is plugged with one-time revenue sources. This adds up to a situation in which, absent a strong recovery, the city will start hearing about the “necessity” of new taxes.

We could live with these loans, one time funds, and accounting tricks — there is some of this in every budget — considering the economically devastating terrorist attacks, if Mr. Bloomberg had exchanged these loans for work rule changes or other recurrent savings for the cities from the unions. Instead, the city is one disaster away from bankruptcy, and yet the bargaining pattern has continued as though we were flush. But New Yorkers should realize that if the sun doesn’t shine bright in the next fiscal years, the city’s darkest fiscal days may still be ahead of it.