By Hilary Russ

(Reuters) - New York City Mayor Michael Bloomberg on Tuesday proposed a $70.1 billion budget for fiscal 2014 -- his last as mayor -- that closes a $1.1 billion deficit without tax hikes or layoffs.

The mayor's proposed budget calls for the city to spend $50.7 billion in fiscal 2014 on fire, police, health, education, pension and healthcare costs.

Of that, expenditures over which the city has control would drop 1.1 percent, or $254 million, next year from the current fiscal year, which ends on June 30.

The budget is the last one Bloomberg, a political independent, will present to city lawmakers before his third and final term expires at the end of this year.

The gap would be closed in part by rolling over a $500 million cushion the city had set aside this year for legal claims, and a $200 million rollover from the city's reserve fund.

Bloomberg's plan also would reduce the number of New York City teachers by 1,800 in fiscal 2014 through attrition, the fallout from the potential loss of $474 million of state aid next year because the city and teachers' union have so far failed to agree on a system to evaluate teacher performance.

A 2010 state law tied education funding to teacher evaluations. About 99 percent of school districts in New York state have complied with the new law.

(Reporting by Hilary Russ; Editing by David Gregorio)