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Adopting a new state budget, due four months ago, has run into a wall erected by one of Albany's most potent special interests: public-employee unions.

For several days, talks to resolve the budget have centered on how the state will require welfare recipients to work for their benefits under new federal guidelines. State and local government-worker unions, concerned their members could lose their jobs to workfare enrollees, have turned up their considerable political muscle since Sunday to try to block portions of Gov. Pataki's welfare plan.

At issue is whether public employees should be guaranteed that their jobs will be protected if a government agency hires workfare enrollees, how much the welfare recipients will "earn" in their workfare jobs and how long they can continue on workfare before they are considered public employees.

"We won't have a budget unless this gets resolved," Edward Cleary, president of the state AFL-CIO, said following a meeting Monday with Assembly Speaker Sheldon Silver.

And Cleary said Silver "is staying put with his position," which largely backs union workfare demands.

In closed-door talks with Pataki, Silver is pushing that those workfare enrollees placed in government agencies to work off their benefits be considered public employees after six months, sources close to the talks said. The Senate has put the time at three years. In an interview, Silver said the governor, meanwhile, is opposing any job-title status for workfare recipients.

The distinctions are major; if a workfare recipient became classified as an "employee," a whole range of benefits and rights -- potentially including union membership -- would be available. Three states, including California, give "employee status" to workfare recipients, union lobbyists say. Pataki administration sources say the governor is firmly opposed to workfare recipients ever becoming public-employee union members.

The sides are also split over workfare benefits. Under federal law, enrollees must be in 20 hours of job "activities" each month. Unions and the Democrats want workfare enrollees to be paid at higher "comparable wage" rates. That means workfare recipients doing cleaning work for a government agency can make, for instance, $10 an hour if county employees doing similar work make $10 an hour.

The higher wage than what Republicans want to pay -- which is more like minimum wage or even lower -- would result in workfare enrollees working fewer hours in a month because they would have their welfare benefits "worked off" faster.

"We cannot undermine workfare. We cannot make it impossible for it to succeed," Pataki said following one of the budget meetings he held Monday with Silver and Senate Majority Leader Joseph Bruno.

At the heart of the debate for unions are concerns that public-sector jobs will be lost to workfare participants.

"I thought we were taking a step in a brighter direction, but we're not," said John Orlando, president of an American Federation of State, County and Municipal Employees local union that represents 2,000 blue-collar Erie County government workers.

Besides questioning the low pay and types of jobs workfare recipients are being put into, Orlando and others fear government agencies will steer away from hiring new employees if cheaper workfare recipients are available.

In Erie County, 5,000 people are in workfare; of those, 730 work for county agencies in a variety of jobs, from cutting grass to cleaning office buildings, said Scott Brown, a spokesman for County Executive Gorski.

Brown said workfare enrollees are additions to county workers. But he said the county does not back workfare recipients becoming classified as public employees.

"The whole point of welfare reform is to reduce costs to taxpayers, not increase them, so it's pretty safe to assume we won't be hiring workfare recipients," he said.

The fight at the Capitol involves a host of political considerations. For starters, Pataki critics say, the governor is trying to forge a conservative welfare agenda to help his political future, be it on a state or national stage -- a claim Pataki supporters dismiss.

Nonetheless, it is a fight being waged at the behest of some of the top political donors at the Capitol. For years, public-employee unions have been among the leading campaign contributors to Assembly Democrats as well as to Senate Republicans. In 1996, according to a recent study by a coalition of government reform groups, four of the unions involved in the workfare battle -- representing state and New York City workers -- gave $630,000 to various political interests in New York. That placed them among the top 14 political action committees in Albany.

The Assembly also is backing a union demand that government agencies notify labor groups whenever they take on a workfare recipient. Unions say without that, they cannot keep track of whether paying jobs are being lost or cut back due to workfare enrollees.

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