NEW YORK (AP) – Mayor Michael Bloomberg’s proposal to extend a $1 billion property tax cut played well on two fronts Thursday, with analysts judging it to be a sound economic plan and a potentially shrewd political move if he runs for president.

Despite declining tax revenue from New York’s troubled financial sector, the billionaire mayor said in his State of the City address that the tax cut would be included in next week’s preliminary budget plan.

With Bloomberg set to travel to the important electoral states of Texas and California this week, political analysts said his tax-cutting proposal could help his image with anti-tax proponents and show that he has confidence in the city’s economy.

“He would be … wanting to project an image that he’s smart about running economic matters, which he would argue the country is going to be needing very much in the next couple of years,” said Lee Miringoff, director of the Marist Institute for Public Opinion.

The mayor has repeatedly said he is not a candidate for president, but he is engaged in a sophisticated analysis of his chances of running as an independent.

With his liberal stances on issues such as abortion rights and gay marriage, he could be hoping that continuing the property tax cut will help solidify his appeal with Republican voters.

As long as Bloomberg pairs the proposed tax cut with measures to reduce spending, he is unlikely to hurt the city’s fiscal standing, according to economic analysts.

“Our primary concern is that the budget be balanced,” said Robin Prunty, a Standard & Poor’s analyst who follows New York City.

“How they choose to do that are really policy decisions that we don’t get involved with.”

Charles Brecher of the Citizens Budget Commission, a fiscal and government watchdog group, called the mayor’s plan “responsible,” saying that his proposed across-the-board cuts for all city agencies would help reverse recent spending increases.

In recent months, the mayor has been warning of looming, multibillion-dollar budget gaps due in part to declining tax revenues, and the slowdown in the financial sector is likely to only make matters worse.

This week, Merrill Lynch & Co. and Citigroup Inc., both based in New York, each reported a quarterly loss of almost $10 billion, the largest ever in their respective histories.

For every $1 billion in business profits, the city gets $70 million in direct taxes.

In his address, Bloomberg said his administration’s sound fiscal planning had allowed the city to prepare for a less-than-rosy economic outlook. He has already ordered agency heads to cut expenses by 2.5 percent this fiscal year and 5 percent the following year.

“During the sunny days, we prepaid debt, saved for retiree’s health care and budgeted responsibly,” he said. “When clouds started forming last year, working with the comptroller, we began to cut spending and freeze hiring.”

Steven Cohen, a professor of public administration at Columbia University, praised the mayor’s plan, saying taxes should not be raised in an economic downturn. The tax-cut plan should also help the mayor politically, Cohen said, although he does not believe the mayor will run for president.

“For the last quarter century, politicians who advocate raising taxes lose elections,” he said.

Still, Bloomberg sounded a note of caution about his tax-cutting proposal, saying it could still be rolled back if there were unexpected changes in the city’s economy or level of state funding. The proposal must still make it through negotiations with the City Council.

After his speech, Bloomberg was to travel to Texas to meet with seven-time Tour de France winner Lance Armstrong and later, in California, with Republican Gov. Arnold Schwarzenegger. Both states are rich in electoral votes.

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Associated Press Writer Sara Kugler contributed to this report.

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