Mayor Bloomberg ‘s financial forecasters are predicting that next year’s city budget deficit will be $2.2 billion less than their original calculations suggested because of higher-than-anticipated tax collections on everything from income to real estate transactions.

The quarterly recalculation brings the city’s budget gap down to $2.3 billion from the $4.5 billion that politicians and economists had been citing for months, particularly as Mr. Bloomberg was campaigning for re-election.

While it is not unusual for revenue forecasts to change during the fiscal year, those who closely watch the city’s balance sheet said yesterday that the drop was large and that it would ease some of the pressure during budget negotiations in the spring. It means politicians will have to consider billions of dollars less in potential tax increases or service cuts to close the budget gap.

“It’s a big change on the revenue side,” the director of the Independent Budget Office, Ronnie Lowenstein, said. “If revenues come in this strongly, that would indeed be very good news for the city.”

Ms. Lowenstein said the IBO, an independent city agency that acts as a budgetary watchdog, is finishing its own revenue forecast to be released next month and could come up with a different number, but that revenue collections, particularly for real estate transactions, did appear to be stronger than most economists had been predicting.

According to the city’s financial up date, which was released yesterday by City Hall’s Office of Management and Budget, the closing of the gap is being driven largely by the real estate market, personal income taxes, business taxes, and sales taxes. The new gap reflects revenue increases of $3.4 billion and spending increases of $1.2 billion, mostly for labor contracts and increased energy costs.

The forecasted collection for the real estate transfer tax and the mortgage recording tax increased by $734 million for fiscal year 2006 and by $66 million for 2007.

A spokesman for the mayor, Jordan Barowitz, said the surge in collections in that category is attributed to a real estate market that nobody expected to be this strong, which is fueling more transactions and higher tax collections.

He said, however, that while the decreased deficit was good news, the city still has long-term fiscal challenges to resolve. “There is still a $2.2 billion gap for fiscal year ’07, and there is still a long-term fiscal imbalance in the city’s budget that’s being driven by increases in pension cost, Medicaid expenses, and debt service that need to be addressed,” he said.

Mr. Bloomberg has in the past discussed his concerns with the city’s soaring pension obligations.

Ms. Lowenstein linked the healthy real estate market to interest rates.

“What’s happened is we’ve all expected the market for real estate to cool as interest rates rose,” she said. “The interest rates haven’t gone up nearly as quickly as economists had anticipated … and partly for that reason the real estate market has stayed robust.”

Predictions for revenue from personal income tax collections shot up by $650 million to $6.64 billion for fiscal year 2006 and increased by $860 million for 2007.The new figures, however, include capital gains taxes on real estate transactions and are characterized by city officials as something of a one-shot deal, rather than an indication that New Yorkers will be making more money on an ongoing basis.

Predictions for revenue from business taxes and sales tax were also increased in this latest financial update. The city’s annual budget is more than $50 billion. The deputy director of education, health, social services, economics, and tax policy at IBO, George Sweeting, said the increase in business tax collections could stem from both higher profits and a one-time federal tax offering that allows multinational companies to pay tax in America at a lower rate.

The chairman of the City Council’s committee on finance, David Weprin, said the decreased deficit would “make budget negotiations next year a lot earlier.”

“If it continues at this pace, it could wipe out our entire deficit next year or certainly reduce it to a manageable place,” Mr. Weprin, a Democrat from Queens and one of seven council members vying to become the legislative body’s next speaker, said.

Mr. Weprin said the council was also predicting increased revenues. “It’s always safer to be more conservative,” he said. “We usually are and the mayor usually is, just in case the revenue doesn’t come in the way we hope it will.”

Though the mayor did not propose any tax increases while he was campaigning for office, he did recently reaffirm his support for reinstating a city commuter tax. Mr. Barowitz said the new revenue forecast would have no bearing on his position.

“It doesn’t change his position on the commuter tax, which he sees as a basic question of fairness,” Mr. Barowitz said. “He thinks those people who use city services should help to pay for them.”

Ms. Lowenstein said a shrinking deficit removes the need to contemplate doomsday fiscal scenarios.

“The bigger the gap, the more difficult it is for the city to find ways to close it, and we’re required to close it,” Ms. Lowenstein said in a phone interview last night. “There are only a limited number of ways you can address a gap. You can cut spending, you can raise taxes, you seek additional aid from the federal and state government, or you can borrow.

“They’re not going to be borrowing their way out of the gap, the city doesn’t do that … so it leaves you with the other options,” she said.