New York  - New York Mayor Michael Bloomberg on Friday announced massive layoffs, proposed slashing the city budget by 1 billion dollars and may need to hike sales tax to bridge a 4-billion- dollar deficit for the fiscal year beginning July 1.

"We had prepared for a downturn, but I think it's safe to say nobody prepared for the severity of the downturn that we have been experiencing," Bloomberg said at a news conference while outlining his preliminary budget.

Among the measures would be reducing the government's workforce by 23,000 in 2009. Others expected to join the ranks of the unemployed this year include teachers and firefighters.

"When you talk about reducing city expenditures, you are really talking about reducing headcount," Bloomberg said. "You can only get so much blood out of a stone."

The city that is heavily dependent on Wall Street profits, has been hard hit by the widening recession. Wall Street firms are expected to lose a total of 47.2 billion dollars in
2008, with further losses in 2009, a statement from the mayor's office said.

New York is expected to lose about 294,000 jobs between mid-2008 and 2010, and wage earnings are projected to decline by 39 billion dollars.

Bloomberg's doomsday budget scenario called for raising the city's sales tax for various merchandises, including clothing, to 8.75 per cent from the current 8.375 per cent.

"In the current economic climate, we have no choice but to act, while fiercely protecting the quality of life that keeps New York a city where people want to live and businesses want to locate and expand," Bloomberg said in a statement. (dpa)