New York City is in the odd position of having both $500 million of cash reserve and a multibillion-dollar deficit, which Mayor Michael Bloomberg plans to close partly by laying off workers.

The cash reserve, called the Health Insurance Stabilization Fund, was set up over two decades ago to help deal with a spike in healthcare costs for city workers.

"There's $500 million sitting in the fund and there's no prospect it's ever going to be used for anything. It just sits there," Bloomberg said on his Friday WOR radio show.

New York City tapped the fund a couple of years ago partly to avoid layoffs.

One notable feature of the current budget battles being waged by governors and mayors around the country is clashes with public workers' unions which are fighting layoffs and cuts in wages, health and pension benefits.

Tax revenue has risen from recession-era lows, but deficits and long-term problems, such as pension shortfalls, remain. State and local politicians of many stripes are wary of raising taxes after the success of the low-tax, limited government Tea Party in November.

New York City unions suggested tapping the health reserve as an alternative to layoffs. "We wouldn't have to close some fire companies, we wouldn't have to lay off teachers" and could avoid letting go other workers too, the mayor said.

But after members of an umbrella union group, the Municipal Labor Committee, met on June 15, Chairman Harry Nespoli in a statement said, "I can tell you that there is a lot of mistrust of City Hall based upon the way we have been treated in the last eight months or so." He has declined further comment.

Bloomberg, who in the past has warned that thousands of layoffs would be needed only to scale back or drop such plans, also suggested an impasse had been reached.

"Somehow or other, one or two of the unions said we're not getting enough, so we're not going to vote for it," he said.

Asked if plans to tap the health reserve could be revived, he said, "Nothing's dead, dead, dead until it's done."