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The Department of Homeland Security cut New York City’s federal funding by 40 percent in its most recent budget, the agency announced Wednesday, leading to an outcry from elected officials worried about terrorist threats facing the city.

New York City will receive $83 million less than it did in 2005, down to $124 million from $207 million. Funding to New York State will be reduced an additional $114.67 million.

The money was taken from a grant called the Urban Areas Security Initiative, a $757 million fund dedicated to protecting the cities most at risk. UASI funding has shrunk almost $100 million since last year’s budget.

Although most municipalities received less funding than in 2005, cities such as Milwaukee and Charlotte received greater than 40 percent increases. Buffalo, on the other hand, lost almost half of its federal security allocation.

Reaction to the announcement was immediate and angry. Within an hour, politicians rushed to hold press conferences and inundated media outlets with press releases blasting the federal government for slashing funding to a city under constant terrorist threat.

“This administration’s approach to Homeland Security can be summed up in one word: incompetence,” said U.S. Rep. Carolyn Maloney (D-Astoria) “Earlier this year they were promising smarter funding. It goes to show you that you can’t trust this administration to get anything right.”

U.S. Rep. Joe Crowley (D-Jackson Heights), who lost a cousin in the Sept. 11 attacks, stood near Ground Zero and condemned the administration’s decision.

“This drastic cut to keep New York secure from the horror of another deadly attack is an absolute outrage,” Crowley said. “I am amazed that after we in Congress have successfully fought to boost funding for terror grants to American cities, the Bush Administration has chosen to reduce the ability of the city that experienced the single most horrific act of terror on American soil to protect itself.”

The shift in funding comes as the DHS adopts a new “risk and effectiveness based” approach to allocating resources, department officials said. Based on discussions with security professionals around the nation, DHS appropriated federal grants to generate the highest return on its investments in the country’s level of overall preparedness.

“Preparedness must be a shared responsibility,” Tracy Henke, assistant secretary for grants and training at the DHS, said in a statement.

But while the new system recognizes that areas with higher risk deserve more money – a concept New York officials have been calling for – the formula takes into account factors such as natural disasters in addition to terrorism, according to City Councilman Peter Vallone Jr. (DAstoria), chairman of the Council’s Public Safety Committee. As the entire pie grows smaller, that means cities like New York are snubbed, he said.

Vallone said he spoke with Police Commissioner Ray Kelly over Memorial Day about their shared weariness of possible cuts in federal aid. Still, when he learned of the grant reduction from a reporter, he was at a loss for words.

“Washington already failed to protect New York City once and 3,000 of our citizens died,” Vallone said in a later statement “You think they would have learned from their past mistakes.”