Even if the city’s “emergency” increases in the sales tax and the personal income tax for high-income households do sunset on schedule, the city is on track to finish the fiscal year with a $470 million surplus, according to the Independent Budget Office’s analysis of the mayor’s latest financial plan.

Mayor Bloomberg’s $48.3 billion election-year spending proposal rolls back the increases in the sales and personal income taxes; provides a $400 property tax rebate, and merely nibbles at the edges of the city’s spending. But the analysis suggests that the financial picture is bright enough that Mr. Bloomberg will be able to make the case that the city has done well under his leadership.

He made that case before reporters at City Hall yesterday.

“Are you better off today than where you were three years ago?” Mr. Bloomberg asked. “The numbers say on almost every single city service the answer is ‘yes.’ Unemployment is lower than it was back on 9/11. Life expectancy is higher today than it has been since World War II. We’re fixing the school system. We’re doing all the things we have to do.”

To do them, Mr. Bloomberg proposed in January only $506 million in cuts from current spending levels, opting instead to depend on an unexpected $1.4 billion surplus from last year to fill the largest part of the $3 billion deficit the city had been facing in fiscal 2006.

He went the rest of the way by asking Albany and Washington for about $750 million in assistance and said he would find about $325 million in savings on health and pension spending. For that money, he will need the approval of the city’s labor unions.

The city comptroller, William Thompson Jr., told a panel of the City Council yesterday that the mayor’s dependence on state funds was one of the weaknesses in his spending plan.

“Many of the city’s proposed actions have failed to materialize in the past, and it does not appear likely that they will receive legislative consideration in the near future,” Mr. Thompson said in his testimony on the budget. “Although my office accepts that some additional state and federal assistance will likely be realized, $550 million of the city’s agenda should be considered at risk.”

The Independent Budget Office, a watchdog agency, expressed similar concerns.

“The city continues to wrestle with an underlying imbalance resulting from a small number of fast-growing expenditures,” it said in its new report. “While the rate of growth of some of these expenditures may be moderating, revenue growth cannot keep pace.”

The concern is widening gaps in 2007 through 2009, analysts said. In particular, the city’s settlements with labor unions and the resolution of a lawsuit against the state for more education spending cast a pall over the city’s economic future, the report said.

Mr. Bloomberg’s budgeteers also gloss over the issue of labor contracts. The budget numbers assume the city’s police, firefighters, and teachers will agree to the same kind of contract accepted last year by District Council 37, a union of municipal workers. Among other concessions, DC-37 agreed that its workers’ future raises would be financed with productivity enhancements. It is unlikely the police – who are now in mediation to settle their contract dispute – the firefighters, and the teachers would agree to that. Absent those enhancements, the city might have to find hundreds of millions of dollars more.

The Campaign for Fiscal Equity sued the state over how much it spends on city students, and a court appointed panel of special referees recommended that Albany be ordered to come up with more than $23 billion over the next five years to make up the shortfall. Governor Pataki has indicated that if the state needs to spend more on New York City’s public schools, then the city, too, will need to pay more.

None of that was reflected in Mr. Bloomberg’s preliminary budget, and it could end up costing the city hundreds of millions of dollars next year alone, although the Independent Budget Office said it was unlikely the lawsuit would be resolved before fiscal year 2007.

The mayor’s decision to accentuate the positive, up to now anyway, has paid off, the report said.

“The city is on surer fiscal footing than just three years ago,” the group’s budget analysis said. “There are still some issues that could cause considerable budgetary pressures … but if these issues are resolved favorably, near-term budget gaps do not appear as daunting as in the recent past.”