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State legislative leaders reached a tentative agreement Wednesday to cut the state budget by nearly $1 billion this year, including a $300 annual increase in state university tuition.

However, a new package for taxing hospitals and nursing homes to reduce the cut in their state aid could block the deal, which is subject to the approval of the legislators.

The hospital package is expected to eliminate the $1.8 million loss originally projected for Erie County and Erie County Medical Center under Gov. Cuomo's budget-cutting plan.

In all, the Legislature's budget-cutting plan will mean a loss of about $2.2 million in state aid to Erie County in this fiscal year, not the $3.7 million under the governor's proposal. The county had expected to lose $9.2 million in 1991, but that is now estimated at between $5 million and $6 million.

Assembly Speaker Mel Miller, D-Brooklyn, said he hopes to start passing budget legislation later today -- one day before new tax figures are released.

The Legislature appears anxious to approve the budget package before those figures reveal that a deficit will occur despite $1 billion in cuts.

Legislators are ready to approve an immediate $150 per semester increase in State University of New York tuition, as well as a $200 annual increase for the City University of New York. The plan also calls for a reduction of up to $100 in tuition assistance scholarships. Half of the SUNY increase
would take effect in January and would raise $16 million. Tuition is now $1,350 a year.

The possible stumbling block involves a new tax package for hospitals and nursing homes designed to save the state $317 million.

The package includes a variation of the 1 percent tax on hospital and nursing home revenues recently proposed by the governor.

The tax for private hospitals and
nursing homes would be based on a sliding scale tied to the number of Medicaid patients at the institution, with more Medicaid patients meaning a lower tax. The range of that tax has not yet been established.

The tax for public hospitals and nursing homes would be six-tenths of 1 percent.

The tax would supposedly last only 15 months.

Despite that provision, Dan Sisto, president of the Hospital Association of New York State, said he is concerned that the tax establishes "a dangerous precedent."

The sliding tax for private institutions and lower tax for public facilities were made possible by October's federal budget compromise, which changed Medicaid eligibility standards so that hospitals may be able to claim more Medicaid patients and an additional $170 million in Medicaid funds.

The proposal will not be finalized until later today when negotiators decide on the range of the new tax on private hospitals and nursing homes.

It's possible that the package could fall apart at those talks or that the state will not win the federal government permission to use the $170 million in additional Medicaid funds.

Before that money was discovered, hospitals and nursing homes would have been taxed up to 1 percent of their revenues. Part of that assessment would have been used to reduce the governor's proposed cuts in Medicaid aid to municipalities, especially New York City, and to public hospitals that have large numbers of Medicaid patients.

Another possible roadblock to a budget agreement involves the governor's proposal to cut state aid to municipalities by $58 million, which Senate Republicans and State Comptroller Edward Regan are resisting. The proposal would cost Buffalo more than $876,100.

Still, an agreement has never been closer since Cuomo called for severe budget cuts Nov. 17, sources in the Legislature and governor's office said. Legislators who left here Tuesday are expected to return today as staff negotiators complete work on the budget-cutting deal.

The agreement calls for a one-week delay in the state's payroll instead of the week-long furlough proposed by the governor.

In addition, the Legislature is expected to go along with most of the 2,000 layoffs proposed by Cuomo.

The plan also includes a 25 percent or greater cut in "member items," local projects sponsored by individual legislators.

Groups that have signed contracts and those facing serious financial problems will be given their money before the end of the fiscal year. Other groups may never get the money they were promised in this year's budget, although that won't be known for several months, sources said.

Area legislators said they were pleased by the proposed compromise in terms of its treatment of private versus public hospitals. An example cited by Assemblyman Robin Schimminger, D-Kenmore, is the elimination of a proposed $1.5 million loss in aid to X-ray and major equipment operated by Buffalo General Hospital.

Deputy Assembly Speaker Arthur Eve, D-Buffalo, said he cannot support the agreement until he is satisfied that special health programs, designed largely for the black community, will not be eliminated.

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