Lawmakers may pass budget bills, but not Paterson's

ALBANY - Lawmakers are expected Monday to pass their own budget bills instead of Gov. David A. Paterson's emergency spending bills - but the move is unlikely to shut down state government.

The legislature's Democratic majorities are poised for a showdown with Paterson by attempting to supplant the emergency bills he has used to compel adoption of 70 percent of this year's $136-billion state budget. Opposing the property tax cap and school aid cuts in the bills, lawmakers filed rival proposals that restore some of the cuts and reject the governor's push to give SUNY and CUNY greater freedom in setting tuition rates.

The alternative bills were submitted late Friday, making them eligible to be voted on Monday without Paterson's help. In turn, he vowed Sunday night to use his line-item veto if the legislature fails to address the prospect that New York may not receive $1 billion in additional Medicaid funds from Washington. His vetoes probably won't be overridden because Republicans in the State Senate are not expected to cooperate with the Democratic majority.

"Without it, I will veto everything," Paterson said, referring to the need for a Medicaid reserve fund. "The legislature hasn't addressed this. . . . It's as if they just stuck their heads in the sand."

Still, he and lawmakers agreed state government would not shut down by them passing their own budget bills because they include sufficient funds to pay employee wages and other costs. As of Monday, the budget is 89 days late.

"There is no shutdown," said Assembly Speaker Sheldon Silver (D-Manhattan).

The legislature Sunday also unveiled $950 million in taxes and other revenue to pay for restoring $600 million of Paterson's more than $1 billion in school aid cuts and reductions to higher education, especially the Tuition Assistance Program. This year's budget has a projected deficit of $9.2 billion.

"The proposed revenue actions eliminate tax breaks New York cannot afford without hurting businesses we need to attract and create jobs," said Senate Democratic chief John Sampson of Brooklyn.

Much of the legislature's new revenue is derived from a two-year suspension of the tax exemption on clothing and shoe purchases under $110. It also places limits on STAR property-tax exemptions for wealthy suburbanites. These revenues would be eligible for a vote by lawmakers at 12:01 a.m. Tuesday.

Sunday night, the Senate and Assembly ignored Paterson's agenda for the special session. They refused to consider his plan giving SUNY and CUNY more autonomy over tuition, building projects and other fiscal matters. He also had sought action on the Medicaid reserve fund.

Both houses convened for less than 10 minutes. Later, they refused to accept Paterson's emergency bills.

Sampson insisted there was "no confrontation" with Paterson and that three-party negotiations are continuing.

But veteran observers of the Capitol said the dueling budget bills and Monday's expected action are reminiscent of standoffs between then-Gov. George Pataki and lawmakers earlier this decade. On one occasion, the legislature passed its own budget, Pataki used the line-item veto and many of his vetoes were overridden.

PAYING THE BILLS

The State Legislature's Democratic majorities have agreed to $950 million in new taxes and other revenue to help pay for restorations to spending cuts proposed by Gov. David A. Paterson. Most were initially proposed by him. They include:

Suspend the sales-tax exemption on clothing and shoe purchases below $110, starting Oct. 1; it would be fully restored on April 1, 2012 ($330 million in revenue to the state).

Reject Paterson's proposal allowing wine sales in grocery stores and a tax on sugary beverages to fund obesity prevention programs. ($0)

End the STAR property-tax exemption for homes valued at $2 million or more and then in 2011-12 elimination of the STAR exemption for homeowners earning more than $500,000 a year ($20 million).

Limit the personal income tax reduction for New York City residents to the first $500,000 of income ($120 million).

Cap and defer business tax credits ($100 million).

Limit the tax deduction on charitable contributions for multimillionaires ($100 million).

Expand the operating hours of slotlike gambling machines at horse racing tracks ($45 million)

Allow state and local governments to borrow from the state pension plan to make required contributions to it; the money must be repaid over 10 years with a 5 percent interest rate. Governments would be required to establish reserve funds to address fluctuations in contribution amounts. (About $200 million).

- Compiled by Albany bureau chief James T. Madore

SOURCE: NYS Legislature's Democratic majorities