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STATE BUDGET ACCORD REACHED DEAL WOULD CUT TAXES, INCREASE FUNDS FOR SCHOOLS

With one-third of the state's fiscal year already over, Gov. Pataki and legislative leaders wearily agreed Tuesday night on a new $67 billion state budget that will sharply boost education spending, slash a host of taxes and prod thousands of welfare recipients into workfare.

A cornerstone of the budget is the beginning of a program to reduce property taxes by $2.2 billion when fully in effect in 2002. Officials say the average tax bill will drop by 27 percent.

Details on local funding, however, were sketchy, as Pataki; Senate Majority Leader Joseph Bruno, R-Brunswick; and Assembly Speaker Sheldon Silver, D-Manhattan, put out only news releases -- and not the actual budget bills -- to describe the deal.

But preliminary figures for Buffalo were not good.

The city was seeking an additional $8.4 million in state aid to balance its budget. The budget deal, however, calls for only an additional $5 million, according to Pataki's budget division.

"That really hurts," Mayor Masiello said. "I'm not happy about that at all, and it's going to cause some serious service delivery problems. I hope it's a mistake."

Masiello declined to say what kinds of cuts might be needed if the state aid isn't increased. But since the city's fiscal year already is a month old, he said it's too late to find new revenue sources.

"Either we have to make up that loss in service cuts, which means personnel cuts, or find some other way to meet that gap," Masiello said.

With the fall mayoral race under way, the fiscal news from Albany clearly poses political pitfalls for Masiello. The mayor said he wasn't sure if he would speak today with Pataki, who will be in Buffalo and other upstate cities selling his budget plan.

"If I get the chance, I'm going to tell him about it," the Democratic mayor said.

An Assembly spokeswoman said the budget adds $5.8 million for Buffalo, which is still short of what Masiello had budgeted.

The governor's budget division said funding amounts for local school districts were not yet available.

State officials, however, did say that the budget deal includes $70 million in funding for Roswell Park Cancer Institute as part of an agreement to make the hospital more competitive by turning it into a public benefit corporation.

But several details of the Roswell Park deal still were under negotiation.

The overall budget deal calls for eventually offering prekindergarten for all 4-year-olds across the state, constructing 1,550 additional maximum-security prison cells and cutting sales taxes on clothing purchases under $100.

The budget agreement -- the most elusive, and latest, in state history -- follows several days of frantic negotiations by the governor and legislative leaders.

Rank-and-file members, as usual, largely were cut out of the process. They will get their first full briefing Friday when the Legislature is scheduled to return to Albany.

The budget could be adopted by Sunday, though most observers see plenty of room for major blowups that could delay it.

As is usual in the past 13 years of late budgets, the sides put their best political spin on the tardiness. They said the extra time was worth the agreements that resulted.

"This is a great budget," Bruno said.

Austere the budget is not. General fund spending -- the part of the budget paid for mostly by state taxes -- will rise 4.9 percent, the sharpest increase since Pataki took office. He, however, said the plan includes putting more than $500 million into a reserve fund to help deal with any future deficits. Democrats claim he wanted the money in case it's needed next year, an election year.

Statewide, education spending would rise $750 million, the largest increase ever. A $2.4 billion bond act to pay for school construction projects will go on the ballot this November.

Besides expanding prekindergarten K opportunities, the deal will make all-day kindergarten available for all youngsters over the next several years.

Pataki dismissed criticism that the state will be unable to fund the school property tax-cut plan if it faces an economic downturn.

"Today, we take the first step toward guaranteeing no child in this state receives less than the very best education we can provide," Silver said.

In all, the state will spend $11 billion on aid to local school districts.

Money to purchasing textbooks and computers for schools also will increase sharply. A new scholarship program will offer up to 2,000 annual awards of $1,000 for "outstanding high school scholars."

State university tuition will not rise, and the state's Tuition Assistance Program won't be cut.

State sales taxes on clothing purchases, excluding footwear, under $100 will be suspended for one week around Labor Day this year.

By December 1999, the clothing tax on such items will be eliminated.

To comply with federal guidelines, the state's welfare program also will change dramatically, "ending welfare as we know it in this state," Pataki said.

Workfare will expanded, a move that critics say will put some disabled people who can't work into jobs.

The agreement's welfare plans clearly will be among the most controversial for many Assembly Democrats, particularly the more liberal wing of the conference from New York City, where 70 percent of the welfare recipients live.

The long-standing Home Relief program will end, and welfare recipients will receive a mix of vouchers and cash benefits to meet their needs.

Cash benefits will be limited to five years, as required by federal law.

Drug testing will be required for all welfare recipients. And, in an effort to keep poor people from coming to the state for welfare benefits, such individuals will be able to get only half of the state's benefit level or the amount given by their former home state.

Unions also complained, in a series of last-minute meetings with Pataki and the legislative leaders, that workfare enrollees will end up displacing state and local government employees.

The deal also allows one new, 750-bed maximum-security prison to be built somewhere in the state. Another 800 so-called "drop-in" beds for maximum-security inmates will be constructed at established prisons to help ease overcrowding.

Payments also will jump for county governments able to hold state inmates in their jails.

The prison construction figure is far below the 7,000 beds Pataki had insisted was needed. But Assembly Democrats say falling crime rates reduced the demands for new cells.

"We were looking for 3,500 beds, but it's certainly a very positive step in the right direction," said Richard Abrahamson, a former corrections officer at the Attica Correctional Facility and now president of Council 82 of the American Federation of State, County and Municipal Employees Union, which represents corrections officers statewide.

In addition to property taxes, the politically popular budget will begin cutting taxes for everything from nursing homes to vending machine operators to circuses. A new college savings plan also will begin next year.

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