NEW YORK (Reuters) - Mayor Michael Bloomberg is sparking controversy with his reported plans to seek a change in the city’s term-limits law so he can run for a third term and shepherd New York through the financial crisis.

New York City Mayor Michael Bloomberg testifies before the Senate Committee on Banking, Housing and Urban Affairs about the condition of the nation's infrastructure on Capitol Hill in Washington June 12, 2008. REUTERS/Kevin Lamarque

Bloomberg, who was elected in 2001 and re-elected in 2005, is expected to announce on Thursday that he backs a City Council bill to lift the term-limits law and allow him to seek re-election again next year.

The move was welcomed by business leaders, who have supported the former Wall Street bond trader at the city’s helm, but was finding a less-than-warm reception among civic groups and, not surprisingly, the mayor’s rivals and critics.

“It’s an outrage. It sends a terrible message to New Yorkers that their votes don’t count,” said Gene Russianoff, lead attorney for the New York Public Interest Research Group.

Voters in New York approved the law, which limits the mayor, City Council and other officials to two four-year terms in office, in 1993 and again in 1996.

This decision would be made by the City Council, as it is too late to be placed on the ballot on November 4 election day.

The city’s Public Advocate Betsy Gotbaum, who has clashed often with Bloomberg, called the suggestion “an insult to the democratic process and a slap in the face to New Yorkers.”

“This is a decision for the people, not for incumbents, not for editorial boards and not for a few wealthy and powerful individuals,” Gotbaum said in a statement.

Supporters say Bloomberg, who founded the financial news and data company Bloomberg LP, a competitor to Thomson Reuters, is the ideal leader for New York as it faces the fallout from the meltdown on Wall Street.

CONTINUITY NEEDED?

“New York City and the country face a serious economic crisis, and continuity in leadership is crucial at this time,” said Kathryn Wylde, head of the Partnership for New York City.

While in City Hall, Bloomberg, a multi-billionaire, has reined in spending with small across-the-board cuts and was salting away surpluses when Wall Street was riding high.

Wall Street makes up about a third of the city’s wage base, and each financial sector job creates roughly three service positions in industries from law offices to small shops.

Bloomberg was unavailable for comment, and a spokeswoman would not discuss his plans. News of his plans was first reported by The New York Times.

A number of likely candidates for mayor in 2009 blasted the idea, including Democratic Councilman Tony Avella who said: “The worst thing an elected official can do is change the law to stay in office.”

Bloomberg’s predecessor, Republican Rudy Giuliani, also sought to stay on as mayor as his second term was ending in 2001 after the attacks of September 11. But his proposal proved unpopular, and its lack of success cleared the way for Bloomberg to run for the job.

A longtime Democrat, Bloomberg switched parties in 2001 in order to run in the less crowded Republican mayoral field. He has since become an independent.

Bloomberg weighed a bid as an independent candidate for U.S. president this year but opted against it.