Mr. Speaker; Members of the Council; Distinguished guests; fellow New Yorkers.

Everything has its season-including great cities. Right now, it's winter in New York. But today, standing in this beautiful Botanic Garden, I'm here to tell you spring-and a time of renewal-is on its way. There was a time when the very spot where we're gathered was an ash heap. But because the people of Brooklyn imagined something better, it's now a beautiful urban oasis.

There's something else important about the history of this area. We are near the site of one of the worst defeats ever suffered by America's armed forces. In 1776, the brand new Continental Army took 2,700 casualties in the Battle of Brooklyn -- much of it fought in nearby Prospect Park. They barely escaped annihilation. But they not only survived. They ultimately prevailed. And so will we!

Remember how New York felt when we gathered to consider the state of our city one year ago -- The loss... the uncertainty...the lingering anxiety. Look at how far we've come in the last year. New York City has not only recovered -- in spite of a painful current economic slowdown, in terms of long-term trends, we are flourishing.

The diverse communities that make this the world's second home ­ have demonstrated once again that New Yorkers always come together in times of crisis. They've shown the world the true fighting spirit of a united people.

It's because of them that I can report -- with pride ­ that our city is strong, confident, and undefeated. If we keep looking forward and doing the right things, our future is unlimited.

As the elected representatives of eight million New Yorkers, we have the responsibility, and the opportunity, to not only meet the tests of the moment, but also to look further and deeper, imagining and shaping New York's tomorrow. That's what addressing the State of the City obliges us to do.

It requires us to identify and acknowledge the short-term problems still in front of us, and the current choices still to be made. It means we have to be in front of our constituents -even when political expediency says "Don't do it!"

However, it also lets us start the grand projects that are our future.

As to the current challenges: we were elected to lead this city at this time. We must lead by action, and by example. When I said City government had to cut staff and expenses, the Office of the Mayor led the way.

I ran for office promising to bring an outsider's perspective to government. Over the last year, I've gotten to know our government inside out -- and today, I'll describe ways we can do our job better. Many things in our metropolis work well, some require minor improvement, and in some matters, radical change is required.

I also said -- that if there's one thing I would bring to government, it's accountability.

The voters have a right to know what their elected officials said they'd do -- and they have a right to know what they've actually done. The public should hold their elected officials accountable for results. And they can start with me. In the coming weeks, I'm going to release a list of everything I proposed in my campaign, and the status of each proposal: good and bad, big and small, those we've done, and those that are still works in progress. But, in each case, we'll let you know where we stand and what we're doing because that's what accountability is all about.

We are building on a year of remarkable progress.

Today, the employment picture has stabilized in crucial sectors of our economy. The selection of our city to host next year's Republican National Convention reaffirms our status as the premier location for world-class events. And our nomination to carry America's bid for the 2012 Summer Olympics represented an enormous vote of confidence in New York.

So is the fact that more than 3500 additional hotel rooms are under construction or planned here-and that that no major company has headed out of town. In fact, many are coming in the other direction. Even as the crime rate climbed nationally, the NYPD continued to drive crime down. We ended 2002 holding the undisputed title as the safest big city in the nation. We have the lowest crime rate since the early 1960's.

The number of New Yorkers receiving public assistance also continued to decline. It now stands at some 420,000 people, down from 1.1 million in 1996. That's a tribute to our city's commitment to replacing the dependency of welfare with the dignity of work.

Infant mortality -- a bellwether of public health and our success in ending the worst effects of poverty -- fell to its lowest recorded rate in history.

We achieved mayoral accountability for running our public schools ­ the crucial first step in giving all our 1.1 million school children the education they need and deserve.

And during 2002, we reclaimed Lower Manhattan -- the scene of the worst violence in our nation since the Civil War. Far faster than anyone thought possible, we brought the hum of commerce back to our historic birthplace -- and Lower Manhattan has become one of the hottest residential neighborhoods in the city.

We all want to believe there's hope for the future. Let me tell you ­ believe it! It's true.

Short-term budget problems-sure. Potholes along the way-of course, this is the real world. Argument, discussion, controversy-naturally, this is New York! But who among us would want to live elsewhere!

In recognizing our accomplishments, I don't mean to ignore our remaining challenges. They are formidable -- and they will require duty, discipline and sacrifice. But let's keep in mind that New York is far from alone in dealing with such difficulties.

Cities and states across the nation face budget dilemmas that are, in some cases better, and in many cases worse, than our own. But let me tell you something, I wouldn't trade our hand for the cards that any other major city holds.

Because while we have short-term problems in common with other cities, New York has competitive advantages that make our long-term future far brighter than theirs.

Our responsibility now, is to play the cards that history has dealt us boldly when we can, cautiously when we must, wisely at every turn.

Let me suggest four ideas that must guide our actions in the years ahead.

First, in order to continue our recovery, we'll need allies -- in our neighboring counties...in Albany... in Washington...and in all 50 states. Our alternatives, resources and liabilities are not wholly independent of theirs.

While sometimes we compete with one another, we'll seek to build such partnerships on the most logical grounds possible: Shared self-interest, where it applies. Help can go both ways. If they need it, we owe them help as fellow Americans. When we need help, they must be there for us as well. The bottom line is that for our region, state and nation to thrive, New York City must thrive.

Second, let's also expand on what we've proven so dramatically this past year. Just because we're spending less, it doesn't mean that we're doing less. Government should be judged on results, not on the dollars it spends. To date, we've reduced the cost to the public of city services by over two and a half billion dollars. But by most measures, now we're providing better, not worse, services to our citizens.

Some say we haven't done enough. Let's set the record straight. Since last January, we've cut or found alternative non-tax revenue sources for roughly 18 percent of the spending that we have discretion over. We're repeating this pruning process daily --and in a way that lets us continue to provide needed city services --responsibly, judiciously, thoughtfully.

During the fiscal crisis of the 1970s, services were cut so much that crime gripped whole neighborhoods... fires gutted whole blocks... and garbage littered the streets. We haven't permitted... and I won't permit... that history to repeat itself. We'll spend less and simultaneously keep the streets safe and clean...educate our kids...house our citizens...and help those who need our assistance to participate in the American dream. If we don't-we have no city worth living in.

Doing more with less isn't just a slogan; it's our marching orders for today's tough times.

Third, let's remember that even when times are hard -- especially when times are hard -- we must dream and build for the future. Our ancestors left us the greatest city in the world. We owe our children an even better one.

New York remains a worldwide market for the best and brightest. They'll build the prosperity of the next New York; our job is to make a city worthy of their ambitions.

Fourth and finally, let's keep the good of our whole city ahead of any narrow ideological or political interests. Who our parents were... what party we are registered in... or which pew we sit in... are not the test.

When future generations look back on us, we'll be judged by our integrity, our compassion, and our courage. Let's carry ourselves in such a way that history will say, they passed the test.

Guided by that spirit, we can, in the year ahead, continue to reduce crime in our neighborhoods... put our city's fiscal house in order... streamline and modernize city services... spur our economic recovery... and continue the historic transformation of our public schools.

Let's take these in turn. The first responsibility of city government is public safety. The NYPD is simply the best police force in the nation.

Despite a smaller department, the realities of the post-9/11 world, a recession, the NYPD has brought down crime to the lowest levels in 40 years. The NYPD has defied conventional wisdom and everyone's predictions and has done far better with much less.

But let me tell you about an achievement of the police department that hasn't received much attention-but should. Over the past year, the Vera Institute of Justice has asked New Yorkers to rate their level of satisfaction with the police. The results? With no significant racial or gender differences in these ratings, New Yorkers who call the police for help give the NYPD a resounding 8 on a scale of one to 10.

Bottom line: All New Yorkers appreciate what the police do for us every single day.

In 2003, the police and other criminal justice agencies will work to reduce crime even further. They'll use new, innovative strategies that focus on problem people and problem places. This relentless focus is the cornerstone of our administration's crime-fighting strategies. And it's working.

Case in point: Operation Impact. The police department is strategically deploying some 800 police officers in impact zones with high levels of crime. Police are focusing on preventing crime before it happens and on arresting criminals who have outstanding warrants for past crimes. And Operation Impact is already having an impact.

Citywide, crime is down 8 percent this year. In just three weeks, serious crimes have fallen more than 45 percent in the impact zones. Last year, reported rapes and other sex crimes increased slightly.

During this year, we're going to combat sex crimes every way we can. A Specially -- Targeted -- Offenders -- Project ­S.T.O.P.- will concentrate on sex offenders most likely to strike again.

The state registry required by Megan's Law tells us which sex offenders are high-risk-- the worst of the worst. Probation and parole officers will target them for intensive supervision, including home and workplace visits. If these offenders violate Megan's Law, they'll be prosecuted by specially trained Assistant D.A.'s in designated court parts in every borough.

Detectives working on sex crimes will receive new and better training. And a new DNA-case-tracking database will be employed in investigating and prosecuting sex crimes. And we are not stopping there.

Another group where we're having a dramatic impact: criminals who commit misdemeanors over and over again.

During 2002, Operation Spotlight focused on identifying and prosecuting these criminals. The result: More repeat misdemeanants like drug offenders, shoplifters and prostitutes have been detained on bail before trial... and the number of chronic offenders serving jail time -- has increased by nearly 50 percent. The message: If you do the crime, you'll do the time!

In the coming year, we'll continue to focus on known offenders and work with the courts and the D.A.s and the city's criminal justice agencies to introduce new, specialized courts exclusively for repeat probation violators. And rest assured, the NYPD will continue to prevent the quality of life offenses that undermine our neighborhoods and create an environment in which serious crime thrives.

Our successful Silent Night anti-noise enforcement effort will be extended to new neighborhoods. Technology will also be essential to our crime-fighting efforts this year. We'll install 2,200 laptops in patrol cars - giving our frontline officers immediate access to critical law enforcement databases.

Last year, we modernized our 911 operations by installing a state-of-the-art digital recording system. Now, by instantly providing recordings of a battered woman's pleas for help, we've given prosecutors a powerful new tool in domestic violence cases. This year, prosecutors will be able to retrieve all 911 calls in all types of cases in this way. Our city hospitals that treat large numbers of domestic violence victims, will receive high-quality digital cameras to photograph the terrible injuries inflicted by batterers -- making it easier to provide evidence of injuries and win convictions. Rest assured, even though crime today is at record lows, we're not satisfied. Just as we've been doing for the last 12 and a half months, we will continue to use every means at our disposal to drive crime down.

As it has during 2002, the problem of balancing the City's budget will remain our toughest immediate challenge, and is likely to dominate the news. Unlike some states and other municipalities, we must, by law, balance our budget. And we must do it, while not only serving our citizens -- but while continuing to invest in our future.

Some think we can fudge the numbers. But the law is explicit. We can't extricate ourselves with accounting gimmickry. Some think we can use one shots to muddle through until better economic times. But the magnitude of our problem is too great to gamble on a Hail Mary pass to the end zone. No. This time, the reality is our expenses vastly exceed our revenues -- and we must by statute even them out! Over the last year, we've made choices that weren't easy ones. But they were the right ones. First and most importantly, to solve our problems, we have shunned the irresponsible course of making our children pay the price for our mistakes.

We've been down that path before. Every year, the first $500 million of city sales tax revenue still goes to retiring Big MAC bonds issued to bail the city out from the fiscal crisis of the 1970s. And that dead weight of debt will burden the city budget through fiscal 2008.

No, we're not going to repeat that mistake. I have read that history, and it's not pleasant. Like all parents, I love my children dearly. I want to leave them: hope and opportunity, not our problems. We will not borrow our way out this time. I was elected to stand up and face the music now ­and rest assured, I'll do exactly that.

Last month, we took the difficult but necessary step of raising the property tax rate. And let me not just gloss over that. I truly understand that this required New Yorkers to make sacrifices. In an already-difficult economic environment, it has forced hard-working people to dig even deeper into their pockets. I want to assure you I would not have asked the City Council to take these steps if they weren't necessary or if we had any practical alternatives. No one likes the imposition of taxes or budget cuts -- the only choices the law allows. But devastating the very services that make this the world's second home -- is far worse than paying more and doing with less.

Taxes and frugality are far better than crime, filth and abandonment.

And as to the short-term political fallout, I would rather be less popular, knowing that New Yorkers are safe, than promise a rose garden I know we can't deliver. The law that requires us to balance our budget is harsh. The Council has done its part to date. Now we need others to step up to the plate. Failing that, the Council will be forced to cut services and raise taxes some more. But I don't think that will happen.

Albany, Washington and the municipal workforce have been there for us in the past-and will be there again in this, our hour of need. President Bush, Governor Pataki, Speaker Silver, Majority Leader Bruno, our municipal labor leaders -- have been there when we've needed them in the past-and they will be there again.

First, we'll ask the State Legislature to conform the city's personal income tax to the way taxes are imposed by the state itself. And that is -- to tax all who work in our city at the same rate. To those who say taxing people who work here but live elsewhere is unfair, remember their livelihoods, property values, and standard of living are to a large extent a function of their proximity to New York City. And when our police officers and firefighters respond to calls, residency doesn't matter -- and it shouldn't.

Everyone should pay equally for the police, fire, sanitation and other services they benefit from. It's really just that simple.

We also need relief from Medicaid costs that are growing at a rate of 10 percent each fiscal year -- and that in fiscal 2004 are projected to grow to $4 billion. We're not alone. While not as large in numerical terms, the Medicaid problem for suburban and upstate counties is just as vexing to them in percentage terms as it is to us. So we'll join all county executives and legislators in calling for State action. Medicaid relief is an issue where we and our colleagues throughout the Empire State are on common ground -- and where we can realize common benefits.

We'll also ask Federal and State leaders to loosen categorical restrictions on funds we now receive. Without any additional cost to them, this will significantly help us in balancing our budget. We need State and city tort reform to stop the waste of tax dollars in exorbitant and often absurd civil judgments. We spend $500 million annually -- much of it unjustified, and all of it, monies we don't have.

I call upon the City Council to take the lead and pass the tort reform bill now-and show Albany the way!

And the aid we seek from Washington includes monies to improve our counter-terrorism capabilities -- something we just have to do. Providing such help is reasonable, fair and in everyone's interest because ensuring the security of our city -- the financial capital of the nation -- benefits everyone in our state, region and country.

We also need partnerships with our municipal unions to make the city workforce more productive and flexible. I was elected largely on the basis of my business background.

I think New Yorkers expect me to run City government in much the same way I ran my company. I am doing exactly that. I built a successful, worldwide media company by making employees part of the team -- with the incentives and desire to do more, do it better, and do it with less.

The same holds true for our municipal workers. They have a right to share in the good times - and have been. And, like the rest of our eight million citizens, they must shoulder part of the burden when things are tough. In order to balance next year's budget, we need to negotiate hundreds of millions of dollars in productivity gains in all municipal labor contracts.

This is not a bargaining ploy; it's a fact.

We'll go into more detail about these productivity measures later this month, when we present the preliminary budget for fiscal 2004. But let me be clear: I know we have the greatest workforce in the nation. They're hard-working men and women -- trying to give their families better lives.

Still, everyone in this chamber and this city should also understand. Without productivity improvements, we will simply not be able to support the current labor force -- and will have no choice but to reduce our workforce faster than attrition and early retirement programs will accomplish.

Further, no matter how much we'd like to pay our workforce more, the stringent budget we're proposing assumes no compensation increases whatsoever. Those will only come after the budget is balanced --and only from efficiencies over and above those we currently need for budget-balancing.

Government improves not just from workforce productivity, but also from cross-pollination of ideas and practices from the business world including innovation, better management, and citizen service.

By implementing such ideas, city agencies are not only doing more with less, they're already doing better with less.

Exhibit A: Our public hospitals.

They're not only competitive with our voluntary hospitals, including the city's great teaching hospitals -- but, as a recent survey showed, they outperform them in many cases. And in this time of austerity, I take great pride in telling you that the Health and Hospitals Corporation hopes to break even on a cash basis this fiscal year.

Exhibit B: 311.

In a matter of a few weeks, we'll launch the first phase of the 311 system. Simply put, this is going to revolutionize the way that New Yorkers interact with city government. The people of New York are the customers of city services; we work for them. That means that when you need help or have a question, your requests should be treated promptly and with respect.

That's why we're instituting 311. It will be a one-stop center for questions about any city service or program, 24 hours a day, seven days a week. More than that, it'll be a 21st century management tool that lets us track and quantify just how well we're serving the people of New York.

We're also going to streamline government. Last month, I proposed merging the Departments of Correction and Probation -- and I hope the Council and the State Legislature will approve that idea. In the months ahead, I'll recommend more such mergers, because services to citizens have to reflect their needs -- as opposed to political and funding constraints and divisions of the past.

Structuring ourselves to solve problems -- as opposed to maintaining the bureaucracy -- is a necessity with today's limited resources and complex inter-agency services.

Despite recent improvements, the city's $7.5 billion contracting and procurement system is still too constricted, expensive and antiquated.

Within a few weeks, I'll name a commission that will review the City Charter to study and pursue efficiencies that will modernize and streamline city government.

Then, there's our long-term needs. Important as they are, these efficiencies and programs I've mentioned won't end the city's budget problems.

The solution there can be summed up in two words: economic growth.

New York is in a fierce, worldwide competition; our strategy must be to hone our competitive advantages. We must offer the best product -- and sell it, forcefully. When funds are scarce, investing in our future becomes a tough challenge-but one that we can and must meet, by stretching every dollar -- and by finding innovative ways to fund our investments. During 2002, we've proved we can do this-and do it well.

We've begun a five-year, $3 billion housing initiative that leverages the assets of the Housing Development Corporation to build 65,000 units of new and renovated housing. This will address one of the city's biggest problems: lack of affordable housing. And it will create nearly 67,000 full-time construction and construction-related jobs.

Our unique value added is our diverse eight million citizens and workforce. It's what makes us the best city to live in and do business. To capitalize on that strength, we'll continue to transform New York physically -- giving it room to grow for the next century--to make it even more attractive to the world's most talented people.

We'll invest in neighborhood livability, cultural organizations, education, research and medicine. And we'll market our advantages aggressively and globally. We'll find the money to advertise our strengths-and tell people around the world, NYC is the place to be! Right now.

Acting now will ensure that when the economy rebounds, we're ready to welcome it -- with office space for jobs... housing for residents... and revenues for critical services. And that means starting today to expand and develop business districts in all five boroughs.

During 2002, we made enormous progress in reviving Lower Manhattan. Over the next year, we'll work with the State, the Port Authority, the Lower Manhattan Development Corporation and others to begin implementing the vision for a 21st Century Lower Manhattan that we presented last month. This week, I asked the head of the real estate division of the Economic Development Corporation, Bob Balder -- one of the best in the business-to lead our efforts in creating parks, public places and new residential neighborhoods downtown.

Now we can, and must, focus our efforts more broadly. And our first priority will be to build momentum for redeveloping the Hudson Yards area on Manhattan's Far West Side. This is a tremendous opportunity to take the public actions that will spur private investment and help secure the city's future. Even in the midst of an economic downturn, New York's commercial vacancy rate is half that of other major cities such as San Francisco, Chicago, Dallas and Atlanta.

The Far West Side is the only large, underutilized area where Midtown can expand without encroaching on densely built-up residential communities. It's an area occupied by parking lots, storage facilities and only 150 housing units. During the 1990s, when the city's economy and population soared, employment and tax assessments in the Hudson Yards area actually declined.

Why? It lacks access by public transportation, and it's zoned mostly for low- and medium-density manufacturing. By extending the #7 subway line... by modernizing the area's zoning to allow for 21st century residential and commercial development... and by making a public investment in open spaces... we will give Manhattan a vital midtown, river to river. And in doing so, we can create a new area focused on tourism, sports, and entertainment.

In addition to more offices, housing, and open space, New York City urgently needs an expanded convention center complex --one meeting modern exhibition requirements, and one that has a multi-use sports facility that can support our bid for major world-class events.

New York's $25 billion tourism industry plays a pivotal role in our economy. There are more than 250,000 jobs directly and indirectly supported by tourist dollars. They provide hard-working New Yorkers, from all five boroughs, with the kind of opportunity to climb the ladder into the middle class that manufacturing jobs once did. But currently, New York doesn't even rank among the nation's top ten cities in convention business. And unless we act, we'll fall even further behind. Chicago is already building an addition to its McCormick Place facility -- that is nearly as large as the Javits Center itself. The city's role here is critical.

When we lead with public infrastructure... the private market will follow. The investment will be substantial -- but the value created will be far greater. Here, as in few other places, the public sector can pay for improvements -- with revenues generated by future economic activity. In other words, this is a project that pays for itself without detracting from our other priorities. And it will produce jobs. The task of extending the #7 alone will create 15,000 construction jobs, and that many more jobs for vendors and suppliers. It will generate an estimated two and a-half billion dollars in economic activity. In the next two months, we'll release a detailed design plan for the Far West Side. It will include an innovative system of new parks and a nucleus of major public buildings. It will be guided by environmentally sustainable design principles. It will identify the route that the #7 extension will take. And it will provide both for a healthy residential area, and commercial and retail space. With a plan and the funding in place, over the next year we'll move to lay the groundwork for an incredible new addition to the heart of the greatest city in the world.

Together with the City Council, our Administration will develop business districts in all five boroughs. For example... in 2003, with Borough President Helen Marshall's and Queens Community Boards continued help, we'll move forward with the traffic and other improvements that have attracted Met Life, the Museum of Modern Art and other businesses and cultural institutions to Long Island City and Queens Plaza.

And with the help of Borough President Marty Markowitz, we'll launch the Downtown Brooklyn Development Plan - a comprehensive rezoning of the city's third-largest business district. When completed, it will make Brooklyn a rival of Los Angeles for office space. Take that for stealing our Dodgers!

New York is the city where the world's best and brightest want to live and work. That gives us an unmatched competitive edge -- one we'll sharpen with investments in neighborhoods, parks and housing. For too long, too much of our 578 miles of riverbank and coastline has been inaccessible and neglected. We're changing that.

During 2003, we'll begin construction on the north end of Brooklyn Bridge Park, creating a continuous stretch of parkland between the Manhattan and Brooklyn Bridges. We'll release a plan for new open space and thousands of new waterfront housing units along the East River in Greenpoint/Williamsburg, just as we're rezoning areas across the city to make more land available to drive the cost of housing down.

With the help of community leaders and Brooklyn's residents, we're creating the Coney Island Local Development Corporation. It'll strengthen the local economy, develop the waterfront, and attract new affordable and market-rate housing.

By the end of the year, there'll be an interim continuous 32-mile pathway all the way around Manhattan, a project Borough President Virginia Fields has helped realize. Soon cyclists and walkers will be able to enjoy that island's entire waterfront.

In Staten Island, we'll form a task force with Borough President James Molinaro and local citizens -- to work on reusing one of the city's most impressive assets -- the Homeport complex. And soon we'll break ground on badly needed new recreation space for the fastest-growing neighborhood in the fastest-growing part of New York: Bloomingdale Park on Staten Island's South Shore.

In Hunts Point -- where the future home of the Fulton Fish Market will bring some 600 permanent jobs to the South Bronx -- we'll work with Borough President Adolfo Carrion and the community -- on plans to create waterfront access and green spaces. We also plan to break ground for two commercial development sites in the Hub, creating new office space and catalyzing business growth. And let's agree that this year we'll break the 30-year impasse over the Bronx Terminal Market and open up the waterfront near Yankee Stadium to shoppers and visitors.

I'm pleased to announce that Randall's Island, which is easily accessible from Queens, the Bronx and Manhattan, will host 90 performances of a brand new show by Cirque Du Soliel this spring. To support it, we'll launch our first-ever ferry service to Randall's Island.

The ongoing WinterFest showcases cultural attractions in parks throughout the city. We'll work to create other major cultural events next year and in the years ahead. That's for reasons that are both economic and aesthetic.

Parks and cultural institutions create jobs and economic opportunity throughout the city. For example... the Bronx Zoo purchases more than 400,000 hamburgers and hotdogs a year from suppliers in the Bronx. The jobs and dollars generated by the Brooklyn Academy of Music, the Queens Hall of Science, and Staten Island's Snug Harbor, are vital to the economies of their home boroughs.

Yesterday's announcement of the Gates in Central Park by the artists Jean-Claude and Christo, will bring tourists from around the world to visit and spend here. And that's also because in an era of retrenchment, creating new parks and open space and supporting our cultural institutions sends an important message: That the city not only asks for sacrifices, but also provides unequaled amenities. We're also going to imaginatively, aggressively and relentlessly market our cultural attractions and all our competitive advantages. To oversee our promotion and marketing efforts, we'll establish a Chief Marketing Officer for the city. A road show organized by our Economic Development Corporation will promote our city worldwide. Their sales pitch in cities around the globe will be that New York is the world's second home -- a place where people from literally anywhere, if they have a dream, and are willing to work - can succeed. That's the message that won us the right to represent the United States in the international competition for the 2012 Olympics. We're confident it will win us attention from businesses around the world that are looking for new markets and opportunities for growth. And we'll take advantage of our brand.

New York is the best-known city on the planet. Our skyline is recognized worldwide. News from our streets reaches homes around the globe. At last count, more than 340 songs have been written about New York. Yet, as a city, we've never taken direct, coordinated custody of our image. By changing that, we can realize additional city revenues immediately. Many companies are interested in sponsorship agreements, similar to their sponsorship of major sporting and charitable events. We'll do this in a way that protects the integrity of our services and that creates financial returns benefiting all New Yorkers.

As we end today, however, let me focus on one government function. The best advertisement for our city will be when we're able to say that all 1200 of our public schools are success stories. Last week, we outlined the next steps that Schools Chancellor Klein and his team at the Department of Education will take to make that happen. We focused on creating a new and accountable administrative structure... instituting a standardized curriculum for more than 80 percent of our schools... and making the school system parent-friendly.

I spoke to thousands of New Yorkers face-to-face last weekend and during the celebration of Dr. Martin Luther King, Junior's birthday. And believe me, they're eager to see this plan move forward. We're not going to let them down. We've already created an office to improve student health and discipline. This week, Schools Chancellor Joel Klein announced the new citywide student curriculum.

For twenty years, efforts to reform the schools were stymied by politics as usual -- by the narrow but powerful interests with stakes in maintaining a failed status quo. Last year, though, our Legislature and Governor ended that status quo. Many people thought that was tantamount to achieving the impossible. In fact, it was the easy part. Now comes our real test: giving all our students the education they need and deserve. And I believe we're ready to pass that test.

We'll meet all of the challenges ahead of us... because New Yorkers can. We will never accept defeat. Never have. Never will. And the events of 9/11 proved that. The attack buckled New York's knees-but it stiffened our resolve.

We've begun the task of preparing a fitting memorial on the site of the attack. In firehouses and police precincts throughout the city, a new cadre of gallant men and women have filled the ranks of our Bravest and Finest.

We've laid the foundation for New York's recovery. The task hasn't been painless. Nor will the course ahead be easy. But the sacrifices we've made-the determination, discipline and resilience we've shown-have already taken us far.

The story of New York has been a story of ceaseless change --from colonial outpost to mercantile center... from industrial metropolis to capital of the world. Over the centuries, New York's story has been punctuated by pain -- as well as crowned with triumph. Seven years of British occupation during the Revolutionary War left New York a crumbing and impoverished shambles... Periodic panics and depressions in the 19th century produced widespread destitution and unrest... During the Great Depression of the 1930s, breadlines snaked along our splendid avenues, and shantytowns sprang up in Central Park.

New Yorkers overcame each of these setbacks, and in the wake of each -- created a more prosperous, more just, and more humane city. From each tragedy emerged the next New York. Our sense of shared purpose and mission... our willingness to do whatever it takes... our resourcefulness and our refusal to give up... pulled us through the darkest days in the nation's history.

Animated by that spirit... guided by our love for this city and what it means to us, to the world, and our posterity...let's continue to build the next New York.