When Mayor Bloomberg releases his executive budget tomorrow, gadflies and other New Yorkers will be watching to see how he tackles the growing City Council slush fund scandal.

The upcoming budget negotiations with the council are providing the mayor with a chance to clamp down on spending by the embattled legislative body, which has been dogged by questions about its use of taxpayer dollars ever since it was disclosed that it had been inserting fake organizations into the city’s budget to hide millions of dollars for later use.

Mr. Bloomberg’s best chance to exert his authority may come in his negotiations over the portion of the budget the council gets to spend on its own each year, a slice of the $59 billion pie that can total around $250 million, but varies from year to year.

Some political observers are insisting the mayor has no choice but to rein in council spending in the wake of the slush fund scam or begin exhaustive oversight of its distribution of public funds.

“Absent an agreement on a clear and acceptable process for how they spend that money, it seems to me it is going to be hard to put very much into that pot,” the research director at the Citizens Budget Commission, Charles Brecher, said.

Mr. Bloomberg, who has a close working relationship with the council speaker, Christine Quinn, has defended her vociferously in the past few weeks, calling her the most honest person he knows and supporting the use of taxpayer dollars to pay for her criminal defense lawyer, at a cost of $600 an hour.

The scandal widened further yesterday, with council staff releasing forms filled out by council members last year, listing any conflicts of interest with organizations they were seeking funding for in the city’s budget. The documents were obtained by The New York Sun under the state’s Freedom of Information Law, and show that some council members may have slipped through this safeguard without notice.

Council Member Kendall Stewart signed a form stating that no one he was associated with had a financial interest in or expected to receive any financial benefit from the organizations he wanted to fund.

Earlier this month two of his aides were indicted for allegedly embezzling $145,000 from a city-funded organization on the list, the Donna Reid Memorial Education Fund. Mr. Kendall’s indicted chief of staff, Asquith Reid, had run the fund, but a spokesman for Mr. Kendall has said the council member was unaware of this.

Another council member, Larry Seabrook, listed no conflicts with any of the groups for which he sought funding last year, but Mr. Seabrook’s district office shares an address with the Bronx African American Chamber of Commerce, which he tried to give more than $900,000 in city funds, according to a New York Post report.

A spokeswoman for Ms. Quinn said that all conflicts disclosed by council members were given to the city’s Conflicts of Interest Board. The city’s charter requires that a council member disclose when they are voting on a matter that could affect his or her interest.

Within the $250 million pot of money the council receives, the speaker has about $21 million in discretionary funding and some $15 million is divided unevenly among council members, who submit lists of local groups they would like the council to fund. $5.5 million is earmarked for senior programs and $7.7 million for youth initiatives.

Mayor Koch put the onus on Mr. Bloomberg to make decisions about the council’s spending and predicted there would be checks on the money to “make sure it goes where it is intended to go.” He said Mr. Bloomberg’s administration has been free of the taint of corruption and he’s certain the mayor wants it to stay that way up until he leaves office.

However, a former top aide to Mr. Bloomberg, William Cunningham, said the council is responsible for restoring faith in local government, not the mayor.

“The council, which is under a shadow, should be seeking to work very closely with the mayor to benefit from the reputation he has for managing the city and fashioning the budget,” he said. “The burden is on the City Council to create the transparency the public wants.”

The Bloomberg administration has partnered with one of Ms. Quinn’s likely mayoral opponents, Comptroller William Thompson Jr., to give his office a more significant role in reviewing contracts funded by the council.

Rep. Anthony Weiner, another likely mayoral opponent of Ms. Quinn, broke his silence on the budget scandal yesterday, saying that there’s reason to believe the budget process at “all levels of government” hasn’t been transparent. Mr. Weiner stands to benefit from the political fallout from the council budget scam, which is being investigated by the U.S. attorney’s office and Department of Investigation.

“I have confidence that now this is being investigated and it will eventually have some information to allow us to draw conclusions,” he said. “But I can tell you the imperative of transparency has to be what drives this and I think it is fairly obvious that this process wasn’t as transparent as it should have been.”