When Mayor Bloomberg carps about the amount of aid coming to New York City from the federal government, it’s hard to take him seriously. He did this yesterday, just as the city’s Independent Budget Office released a report showing that the mayor’s preliminary budget for fiscal year 2004 would see an increase in city-funded spending of $1.6 billion.

The mayor’s defenders argue that much of this is out of the city’s control. The IBO’s communications director, Doug Turetsky, notes, “The cost of Medicaid, debt service, and pensions and fringe benefits for city workers are driving the increase in spending.” This may sound like absolution to Mr. Bloomberg, but only Medicaid is mostly out of the city’s hands — and even there the city could likely reduce costs by privatizing the 20 city-owned hospitals, clinics, and nursing homes that are set to take a $200 million hit from Governor Pataki’s budget. The other costs sound suspiciously like things that could be reduced by a cut in the most basic measure of the city government’s size: headcount. After all, pension and fringe benefit costs can’t help but vary with the number of workers.

In all of this, it’s worth remembering that the New York City government has a quarter of a million employees and is one-seventh the size of the federal government. Not all of these workers are police, firefighters, or garbage men. Yet, the number of workers is an issue that the mayor has only recently put on the table. Having forgone layoffs in favor of a massive property tax increase last year, Mr. Bloomberg has finally come around and threatened up to 12,000 layoffs. Yesterday, the city’s municipal unions passed the mayor’s deadline to cough up $600 million to help close the budget gap — no one from the unions even met with the city. Instead, the city’s largest municipal union, District Council 37, released a poll supposedly showing that New Yorkers oppose layoffs.

If the mayor is serious about closing the gap, it’s time to swing the ax. He’ll have the chance to do so when he releases his executive budget on April 15. And he might want to swing even harder than he’s threatened, given that billions of dollars in his current budget are out of his control and are unlikely to flow from Albany or Washington, gripe as he may. And that’s not to mention the scenario, not unlikely, where revenues are even lower than predicted. With a heavy debt — and hundreds of millions in debt service bills down the road — from borrowing necessitated by September 11, 2001, this city needs the recurring savings that can only come from smaller government.