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HOSPITAL TAX PLAN HINDERS BUDGET TALKS; STATE LAWMAKERS REACH IMPASSE

Cuts in aid to hospitals remained the main obstacle Tuesday to legislators reaching an agreement on the governor's plan for cutting state spending by $1 billion to balance this year's budget.

Although legislators were expected to stay here today, they may not be able to vote on any legislation before Friday.

Legislative leaders want to reach an agreement and pass a new spending plan before Friday because that's when state Comptroller Edward Regan releases figures on state tax collections from last month.

Those numbers are expected to show that the state's deficit is up to $500 million deeper, a hole that the Legislature may not be able to fill with cuts in state spending, sources said. The Legislature and Gov. Cuomo have vowed to close the budget gap without raising taxes or borrowing money.

Regan's figures also are expected to show that next year's deficit will be between $3 billion and $4 billion, not the $2 billion to $3 billion recently projected.

Meanwhile, the strain of the two-week stalemate over the governor's budget reduction plan was beginning to show among state leaders and legislators.

Senate Majority Leader Ralph Marino, R-Muttontown, and other Senate Republicans were annoyed with the governor's suggestion Tuesday that the Legislature was not yet willing to make "hard decisions" in dealing with the potential $1 billion deficit.

One of the main sticking points remains the fact that the Legislature and Cuomo cannot agree on how hospitals and nursing homes should share in the cost-cutting effort.

Cuomo has proposed a 1 percent tax on hospital and nursing home revenues. In exchange, the governor has offered to withdraw a proposal to slash about $400 million in additional Medicaid and other payments to hospitals.

The issue pits public hospitals, such as the Erie County Medical Center, which tend to have more Medicaid patients and would lose less under the 1 percent tax, against many private hospitals, such as Mercy Hospital, which have fewer Medicaid patients and would lose less under the Medicaid cuts.

Hospitals with fewer Medicaid patients say the new tax would drain their revenues. So far, their case has been supported by the Senate Republicans.

A spokesman for the Senate GOP portrayed the hospital stalemate as pitting upstate against downstate. Ed Martin said the original hospital aid package benefits New York City hospitals primarily just as the governor's new 1 percent tax would.

But the Erie County Medical Center also would benefit from the governor's proposal to let the Medicaid increases stand if the 1 percent tax is approved, according to Erie County Executive Gorski who lobbied state legislators Monday and Tuesday.

"Don't be, if you will, selfish," Gorski said he told the private hospitals. "Sustain your public hospital for once . . . If you're going to eat at the heels of the public hospital, you're going to defeat the whole purpose of the health-delivery system in Western New York."

The Medical Center "is a hospital of last resort," he said. "It's an indigent hospital, but nevertheless a quality hospital with the burn treatment center, with a trauma center, which quite frankly, nobody else wants" to operate.

Meanwhile, some upstate assemblymen, like their Senate counterparts, are concerned that the governor's tax plan may be unfair to the privately run hospitals in their districts. Assemblyman Richard Keane, D-Buffalo, spoke on behalf of Mercy Hospital Tuesday, while other legislators say they are being lobbied intensely by private hospitals.

One problem in resolving the impasse is the lack of any alternative plan from the Senate, according to aides to the governor. Senate Republicans deny the charge but offer few specifics on an alternative plan.

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