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STATE FURLOUGH REMAINS OBSTACLE IN BUDGET TALKS

ALBANY -- Legislative leaders reported some progress Tuesday in negotiating cuts in school aid and hospital reimbursement, but not enough to keep most state legislators from heading home.

Officially, the Legislature will meet today in private party caucuses. But many, if not most legislators, are going home because there is no legislation for them to consider, lawmakers said.

They will not return until negotiators are closer to reaching an agreement on Gov. Cuomo's proposal to cut $1 billion in state spending to avoid a deficit this year. That agreement will probably not occur until next week, legislators and other sources predicted.

One of the sticking points remains Cuomo's proposal for all state workers to take a five-day unpaid furlough, to save $135 million.

With the state's largest public employee union rejecting the governor's furlough plan, Cuomo said unions would now have to live with more layoffs than the 2,000 he has proposed for this year and 10,000 for next year.

"The realities are that if they do not do the furloughs, then I have to lay off more people, and I have to start that right away," Cuomo told Albany public radio station WAMC.

"The unions are saying, in effect, 'As far as we're concerned, let everyone else in the system make a sacrifice, we're not going to,' " Cuomo said. "That's regrettable."

But the governor's threat is not being taken seriously in the Legislature since more layoffs would not produce the immediate savings that a furlough could achieve.

On Monday, Civil Service Employees Association President Joseph McDermott said talks with the Cuomo administration over furloughs had collapsed. He said Cuomo's plan for all workers to take five days off without pay amounted to a lockout.

Without the furloughs, though, Cuomo aides say as many as 40,000 state jobs may face the ax. With furlough talks at a standstill, Cuomo has asked the Legislature to approve a bill that would impose the plan.

But Senate Majority Leader Ralph Marino, R-Muttontown, said Tuesday that the issue was between Cuomo and the unions and that the Senate would not get involved. Cuomo said Tuesday that no furloughs would only mean more pain.

"I'll lay off more than the 2,000 I intended, many more, and then we'll have to find the rest of the $135 million out of education, out of Medicaid, out of local assistance, out of all the other things we've already proposed to cut dramatically," Cuomo said.

Cuomo aides said pink slips would be sent to 730 state prison workers Thursday in the first wave of layoffs, which will be effective the day after Christmas. About 300 of the fired workers would be prison guards.

Many of Cuomo's proposed cuts, such as reductions in state aid to municipalities and worker layoffs, are not opposed by most legislators. But the largest cuts involving the furlough, hospitals, schools and Medicaid are still being negotiated.

In a meeting Tuesday, Assembly Speaker Mel Miller, D-Brooklyn, and Marino said they were closer on the proposed $200 million cut in school aid, as well as reductions in hospital reimbursement.

Marino and other Republicans want to reduce the impact on wealthier school districts. A number of proposals are being discussed, including lowering the school aid cut to $190 million.

For Senate Republicans, it is a virtual rerun of the school aid debate of 1987. That year, Long Island senators delayed passage of the state budget, demanding more aid for their districts.

Marino led that effort and is now holding out for a better school aid package than the one offered by Cuomo.

This time, however, several upstate senators, such as Sen. John Sheffer II, R-Williamsville, agree with Marino's concern that wealthier school districts would lose too much money under Cuomo's proposal.

Negotiations also are progressing on Cuomo's plan to impose a new 1 percent tax on the revenues of hospitals and nursing homes. In exchange, the governor has offered to drop his original plan to scrap the $425 million benefit package granted to hospitals earlier this year.

But the governor's 1 percent tax would cost many hospitals more than his proposed cuts, according to Dan Sisto, president of the Hospital Association of New York State.

Legislators agree and are discussing a smaller tax on health-care providers.

The hospital question has produced the most partisan debate. Sen. Dale Volker, R-Depew, and other Republicans are criticizing the hospital tax, noting that Cuomo promised to balance the budget without any new taxes.

Aides to the governor and Miller have denied that the proposal is a tax. They say hospitals would be better off accepting the assessment and avoiding the original cuts in Medicaid and other reimbursements originally proposed by the governor.

Republicans also were miffed at Cuomo's suggestion early Tuesday that legislators would be irresponsible if they left Albany during the negotiations.

News wire reports were used in this story.

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