NEW YORK (CBS 2/AP) — Mayor Michael Bloomberg warned in his “State of the City” address Wednesday that New York still faces deep budget problems and can no longer afford to pay generous pension benefits to government workers, but promised the city wouldn’t use taxes to close the budget gap.

In his speech on Staten Island, Bloomberg said reforms of the city’s pension system will be his administration’s number one priority in Albany in the weeks ahead.

The mayor said he wants to raise the retirement age to 65 for non-uniformed workers. The change, which would only apply to new hires, would save billions of dollars over the long term, Bloomberg said.

Bloomberg also pledged no new taxes in his address on Wednesday, but his promises did little to quell criticism over recent controversies, CBS 2’s Marcia Kramer reports.

The mayor was hoping New York City voters would let bygones be bygones as far as the botched blizzard response, his controversial pick of schools chancellor, and other recent criticisms.

“Let me be clear – we will not raise taxes to balance the budget,” Bloomberg said.

Bloomberg spent the speech trying to showcase his managerial talents, saying he will deal with budget gaps and expected cuts from Albany without picking taxpayers’ pockets and by finding money in new and creative ways.

He said the city would ask state lawmakers to change the law to allow the city to negotiate pension benefits directly with the unions during collective bargaining. Right now, the state, not the city, sets pension benefits.

1010 WINS’ Glenn Schuck reports on the State of the City address.

WCBS 880 Reporter Rich Lamb with highlights from the mayor’s State of the City address.

Even if the state does not act, Bloomberg said he is dedicated to forcing change in a system that will cost the city $7 billion this year. He vowed not to sign any contract with a salary increase unless it also included benefit concessions that save the city money, including making workers pay for part of their own health costs.

“City workers deserve a safe and secure retirement, but right now, they receive retirement benefits that are far more generous than those received by most workers in the private sector — and that provide for a much earlier retirement age,” Bloomberg said. “It would be great if we could continue to afford such generous benefits, but we can’t.”

Year-end bonuses would also be eliminated, saving about $200 million per year.

“City taxpayers just cannot be expected to give substantial holiday bonuses when so many of them are out of work or having their own wages frozen or cut,” Bloomberg said.

The mayor also wants the state to let the city collect is own income taxes. The state has charged New York City nearly $500 million in the last decade to do the city’s taxes.

“Let us manage ourselves,” the mayor said.

A number of officials, though, panned the mayor for not being publicly repentant about what’s gone on in the city over the last several months.

“I think this would have been an occasion to say, ‘look, we had a bad few weeks, we made some real mistakes here in the city, I’m not going to let that happen again,’” Public Advocate Bill de Blasio said. “I think it would have helped if he had said that here.”

“This has been a rough stretch, and I’m not sure you cure that with beautiful rhetoric of a speech like this,” City Councilman James Oddo said. “It’s going to take hard work.”

In other parts of his speech, Bloomberg said spending cutbacks won’t stop New York from transforming itself into a city of the future.

He says he is still planning development projects and other improvements meant to maintain the city’s status as a world capital. One thing the city will be spending money on is a new counter-terrorism bureau at ground zero to provide added security when the 9/11 memorial opens in September.

Bloomberg said he doesn’t want to see the city repeat mistakes of past fiscal downturns, when vital city services broke down due to a lack of money.

“We won’t forget the single most important lesson of the 1970s: when you stop investing in the future, the future hits the road,” the mayor said. “Jobs, people, capital — they all leave. We didn’t allow that to happen after the attacks of 9/11 and I promise you we won’t allow it to happen now.”

(© 2011 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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