A fight over property taxes is derailing budget talks between Mayor Bloomberg and the City Council, with council leaders walking away from negotiations and insisting they won’t agree to a property tax hike they say the mayor is pushing.

The impasse reflects just how far the mayor and council are from reaching a deal before a July 1 budget deadline, even though both sides are proposing tax increases as a way to help the city through an economic downturn.

Council Member Lewis Fidler of Brooklyn said the council is waiting for the Bloomberg administration “to stop stomping their feet and saying ‘No, no, no’ to every possible alternative and idea that we have brought forward. They are at a place that is unacceptable. It’s unacceptable to the council and it’s unacceptable to New Yorkers. Their solution to everything is: Raise the property tax.”

The tax debate at City Hall stands in stark contrast to that taking place upstate, where Albany lawmakers had been talking about capping property taxes, not raising them.

Instead of the mayor’s idea of rolling back a 7% property tax cut, council members have been promoting an increase to the city’s hotel tax that they say would bring in more than $200 million a year. The increase would raise the city’s hotel tax by 60%, to 8% from 5%.

Mr. Bloomberg has dismissed the proposal, saying it would harm the city’s tourist industry. Raising the hotel tax also would require approval from Albany lawmakers. The city, however, is believed to have the authority to raise the tax to 6% without state approval.

The hotel tax is being touted as a way for the council to restore some of the $1.3 billion in budget cuts to city agencies proposed by Mr. Bloomberg, which council members argue go further than necessary.

“We are not in a crisis mode for this particular budget and we don’t want to hurt seniors, we don’t want to hurt children, we don’t want to devastate cultural institutions. And we don’t want to go into the taxpayer’s pockets unnecessarily, prematurely, to raise property taxes,” a council member who is chairman of the Finance Committee, David Weprin, said yesterday at City Hall.

Cuts that hit the Department of Education have become a focal point in negotiations and have triggered protests on the steps of City Hall. The Department of Education says its budget has increased by almost 80%, or more than $4.6 billion, since 2002, which is twice as fast as the spending growth in other city agencies.

Mr. Weprin said that even without a new revenue source, the city has enough money for the council to restore funding to city agencies.

A spokesman for the mayor, Stuart Loeser, wrote in an e-mail message: “We’re committed to reaching an agreement on a balanced budget that funds the City’s needs in the face of an increasingly difficult fiscal outlook, but we just can’t afford to spend money we don’t have.”

The Independent Budget Office issued a report in late May that said the mayor may be overestimating the economic troubles facing the city and underestimating tax revenues by $1.2 billion. The office says the city will end the year with a $4.6 billion surplus. A new pay raise for city police officers and anticipated raises for other uniformed employees, however, will cost the city an additional $1.1 billion over five years.

Council leaders who called off negotiations yesterday say they are frustrated by the mayor’s refusal to give way on the positions he’s staked out. Council members said Speaker Christine Quinn agreed to the decision, marking a change from her normally close working relationship with the mayor.

The council’s minority leader, James Oddo of Staten Island, said he finds himself in a “no man’s land” when it comes to budget negotiations at City Hall because he disagrees with some of the budget restorations other council members are seeking.

“And I certainly would disagree with the notion of raising taxes to pay for them,” he said.