By Mara Gay

Mayor Bill de Blasio has proposed adding more than $1.3 billion to New York City's current budget, an increase driven by newly received federal and state funding.

Under the midyear budget modification plan released by the mayor late Thursday, city spending would rise to $83.5 billion in the fiscal year that began July 1, up from the $82.12 billion spending plan the City Council adopted in June.

Federal and state funding that wasn't included in the June budget -- largely for superstorm Sandy recovery -- accounts for most of the new spending. But the new plan also includes tens of millions of dollars in additional funding for pension costs, services for the city's growing homeless population, correctional facilities and education.

City officials said they now expect to collect $127 million less in tax revenue this fiscal year than they had projected in June.

Mr. de Blasio, a Democrat, said the budget modification "proves yet again that we can be both progressive and fiscally responsible."

City officials reported $151 million in debt-service savings under the revised plan from lower than expected interest rates on city debt.

While overall spending from city taxpayer money is flat under the November modification because of savings, the mayor plans to increase spending in some areas he views as critical.

Mr. de Blasio increased funding to the Department of Homeless Services by $52 million, for example. As of earlier this week, more than 60,000 people were sleeping in city shelters, according to city records.

The budget for the Office of the Mayor increased by $29.1 million, a figure that included $8.5 million for the city's Law Department and $4.8 million for the Board of Elections.

The Department of Correction is slated to receive $14.5 million in added funds under the revised budget plan. The Department of Parks and Recreation, the Department of Education and the Department of Design and Construction would receive about $7 million each.

Council Speaker Melissa Mark-Viverito, a Manhattan Democrat, and Council woman Julissa Ferreras-Copeland, a Queens Democrat who is chairwoman of the council's Committee on Finance, praised the administration's efforts to find cost-saving measures but said they remain concerned about rising shelter and pension costs.

"Given the uncertainties facing the state and the federal budgets and in anticipation of slowing economic growth in the city and across the world, it is now more important than ever to carefully plan for the city's future," they said in a joint statement.

By fiscal year 2020, the city budget is projected to grow to $92.9 billion, according to the plan. City officials are anticipating a $2.4 billion budget gap by the same year.

Maria Doulis, vice president of the Citizens Budget Commission, a nonpartisan watchdog group, said the future projected deficits were concerning. But she said the savings and current-year budget plan were largely responsible.

"This is an update that demonstrates some caution, and there are certainly reasons to be cautious with the economic uncertainty in the air," she said.

City officials said they were using some of the savings in the current fiscal year's plan to reduce next year's budget gap by $575 million.

Write to Mara Gay at mara.gay@wsj.com

(END) Dow Jones Newswires

November 18, 2016 13:17 ET (18:17 GMT)

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