Mayor Bloomberg’s fiscal year 2008 budget includes $1.3 billion worth of tax cuts, including an across-the-board 7% cut for property owners.

The $59 billion budget agreement — which Mr. Bloomberg and the City Council speaker, Christine Quinn, announced in the rotunda of City Hall last night — gives property owners more relief than the 5% the mayor had originally proposed. Some say that with assessments driving property taxes higher, the one-year decrease means that tax bills will stay level, not go down.

In 2002, Mr. Bloomberg raised property taxes by 18.5% to deal with soaring deficits; since then, tax revenues from the city’s booming real estate market have poured in, giving the city a current surplus of more than $4 billion.

The ballooning surplus had put more pressure on Mr. Bloomberg to agree to a steeper cut, but until yesterday the mayor had been noncommittal. After announcing the 7% cut, Mr. Bloomberg said he would keep a “close eye” on the city’s finances to determine whether the city could extend the cut another year.

“When the good times are rolling, that’s great, but we have to prepare for when they are not,” he said.

Council Member Michael McMahon, a Democrat of Staten Island, said he would have preferred an 8.5% cut to combat higher assessments, which are driving bills up. “What it means is that we are not cutting, we are holding the line on any increase,” he said.

City Council Member James Oddo, a Republican of Staten Island and a longtime proponent of property tax relief, called the agreement a “great victory for homeowners.” “I know in my district, where people were paying 50%, 60%, 70%, 80% more than they were paying five years ago, this was an absolute necessity,” he said.

The head of the City Council’s finance committee, David Weprin, a Democrat of Queens, said the city will also freeze “class share rates” for this year, a move he said was equivalent to another 1% cut for homeowners.

The budget comes two weeks before the end-of-the-fiscal-year deadline and is the earliest the city has had since 2001.

As part of the deal, the city will also cut sales tax on clothes and shoes, keep libraries open six days a week citywide, give homeowners a $400 property tax rebate, cut business taxes, and pay off $2.3 billion in expenses and debt in fiscal years 2009 and 2010.

The one big-ticket item from the speaker’s agenda absent from the budget was a tax credit for renters.

“Sometimes you put ideas out there and it takes more than one budget cycle to get them implemented,” Ms. Quinn said.