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SECRET TALKS SPUR OPTIMISM THAT STATE BUDGET ACCORD MAY BE NEAR

A strange sense of long-awaited optimism spread through the State Capitol Thursday, as secret talks over the state budget apparently began to go so smoothly that the sides were thinking out loud that a deal could be in the works by the weekend.

Then again, as has happened so often over the years, the whole thing could break down again, leaving school districts, cities and not-for-profit organizations waiting even longer for news of their funding.

The hope for a deal on the budget, now 116 days late, began to surface on Wednesday, when Gov. Pataki and legislative leaders stopped verbally bashing each other and began giving "no comment" answers to the horde of reporters staked outside the governor's office.

By Thursday afternoon, when Assembly Speaker Sheldon Silver canceled his scheduled trip to Buffalo for a Democratic fund-raiser in order to attend a closed-door negotiating session in the evening with Pataki and Senate Majority Leader Joseph Bruno, the signs of an imminent budget deal appeared in the making.

But it wasn't to come Thursday night.

The meeting among the three men focused on criminal-justice issues, sources said. The governor, who wants to increase sentences for violent felons, has proposed 7,000 new prison beds; Silver has offered 800.

Sources say the Republicans, not content with the one prison Silver's offer would lead to, were pressing to get him to agree to two prisons.

Such a deal would, they said, go a long way toward resolving the overall budget talks. Staffers to the governor and legislative leaders held talks into the night on the prison issue.

"I still remain fairly optimistic this thing will wind up being concluded in a relatively short time," Silver, D-Manhattan, said after the Thursday night meeting. He said it was "possible" an agreement could come as early as today. In fact, staff members were already preparing for an announcement today just in case the deal actually comes together.

The budget, now the latest ever for New York, was due April 1.

Most of what will be a more than $67 billion budget has, in fact, already been agreed to, though the details have not yet been made public.

"I know there are rumors out there . . . and it's true that some things are tentatively agreed on, but they are subject to an entire agreement, so consequently it is meaningless to talk specifics," Bruno, R-Brunswick, cautioned.

Word already has spread that school districts will receive some $650 million in additional school aid, the largest funding hike for schools in a decade. Also, it appears increasingly likely the sides will agree to an Assembly Democratic initiative to place a bond proposal on the ballot this fall. The money, which the Assembly wants at the $2 billion level, would go to school districts around the state to fix crumbling buildings.

"It's going to be a very good year for schools," one legislative source said.

In order for the bond question to be on the ballot this November, the negotiators say the measure has to be passed by the Legislature by Aug. 4.

Also possible in the new budget will be money to expand prekindergarten education for 4-year-olds. Meanwhile, a property tax cut has been proposed by both the Republicans and Democrats, and some version of the two plans will almost certainly be included in the final product.

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