NEW YORK - (AP) - Mayor Michael Bloomberg and the City Councilreached an agreement Monday on the budget for next fiscal year,raising the city sales tax and cutting hundreds of jobs from theworkforce.

Bloomberg and City Council Speaker Christine Quinn cemented theexpected deal with a ceremonial handshake in the City Hall rotundaMonday, following tradition. By law the budget for fiscal 2010,which starts July 1, must be approved by the end of the month.

The mayor first laid out his election-year budget in January andhas worked for months with the City Council to negotiate thespecifics.

As expected, the budget includes a sales tax increase of .5percent, which officials say will raise more than $500 million infiscal 2010. The city sales tax would go up to 8.875 after theincrease.

The budget also eliminates hundreds of jobs through layoffs andattrition.

The cost-cutting moves and efforts to raise revenue help bridgewhat was a $6.6 billion budget gap in 2010.

The state must approve the sales tax increase, along with a fewother tax measures in the city's budget. A sales tax exemption onclothing is expected to be changed to apply to purchases under$110, and the city also wants to give a tax break to 27,000businesses headquartered in New York City.

The legislature in Albany is in turmoil over which party is incontrol, but officials said they do not believe that will affectthe budget matters that need approval.