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PATAKI, LEGISLATORS TOUT BUDGET AS 'THE BEST EVER'

Rushing to complete passage of a state budget by Sunday, Gov. Pataki and legislative leaders spent Wednesday spinning the more than $67 billion proposed spending plan as, in the words of one, "the best-ever" budget in state history.

In particular, they pointed to the plan's reduction in property taxes that, by 2002, will cut average property taxes across the state by 27 percent. In Erie County, property taxes would dip, on average, by 38 percent under the deal that is part of the overall budget agreement reached Tuesday night in the Capitol.

Including the property tax reduction, the agreement calls for cutting $11 billion worth of taxes over five years, on everything from farms to clothing purchases and airport luggage carts.

But fiscal analysts cautioned the massive tax cuts and an even bigger spending binge in the proposed budget could spell financial trouble if the state's overall economy, led by a booming Wall Street, takes a dip.

"I would say it's Cuomo-esque. Actually, I think it's worse," Cynthia Green, a vice president of the Citizen's Budget Commission, a private budget watchdog group, said of the budget that boosts spending at twice the inflation rate.

"Given that it took them a third of the fiscal year to agree to this, it's unfortunate that it appears to be fiscally irresponsible," Ms. Green added of the plan, which she maintains sets in law bigger tax cuts and spending than the state can afford.

Pataki and legislative leaders, however, insisted they are not being overly optimistic about the state's fiscal picture. Pataki, who flew around the state Wednesday in a campaign-like promotion of the budget, vowed that all the tax cuts in the plan for the next five years will not be delayed.

But fiscal conservatives, who had counted Pataki as among their group, said the property tax cut plan will not lead to the savings being touted out of Albany.

They say the governor abandoned his demands for a cap on local school spending that had been intended to ensure property taxes actually do fall.

"The governor will get short-term benefits of having property tax rebate checks going out around election time next year, but in the long term, we're going to be back where we started with property taxes," said Thomas Carroll, a former Pataki administration official and president of Change-NY, an anti-tax group that helped Pataki's 1994 campaign efforts.

Senate Majority Leader Joseph Bruno, R-Brunswick, Pataki's chief ally in the Legislature, said the budget he negotiated with the governor and Assembly Speaker Sheldon Silver, D-Manhattan, guarantees sharp property tax cuts.

"They're absolutely going to get it," Bruno said of the 27 percent average cut for most homeowners and 40 percent tax reduction for senior citizens.

And he dismissed the fiscal critics.

"I think we ought to accentuate the positive," Bruno said.

The property tax cut plan is expected to cost the state government $2.2 billion a year when fully implemented by 2002. By that year, homeowners will receive a $30,000 exemption from the full value of their houses for school tax purposes.

That means, according to the governor's budget office, the median home priced at $83,167 in Erie County would have an assessed value, for tax purposes, of $53,167. That would drop the yearly property tax would drop to $615 from $965. School districts would get additional state aid to make up for funds lost through the property tax cut.

Originally, the governor had insisted that any property tax plan include limits on school district spending. The agreement, however, contains a so-called "conditional cap," that, in essence, puts the burden on taxpayers not to raise their own property taxes.

Under the plan, school districts would be limited to two public votes on their budgets. If the second vote fails, a contingency budget is automatically approved that caps spending at the lesser of a 4 percent increase, or 120 percent of the consumer-price index.

The initial vote for all school districts across the state will also be held on the same third Tuesday in May.

Critics say that without the cap, there is nothing in the new property tax cut agreement that guarantees to push tax levels down to the levels Pataki insists will occur. Instead, tax-cut levels will depend on which city or town people live in and how much discipline to hold the line on spending their school districts have.

"The governor just threw in the towel on the cap," said Carroll, the fiscal conservative. He said the tax plan is good in that taxpayers will get a property-tax rebate from the state. "The bad part is you'll end up paying for it out of a different pocket. . . . My fear now is that, depending on the independent actions of 700 school districts, after they give out the state rebates, will they cap themselves? My hunch is, given the way school districts have acted over the past decade, none of them will."

"I think we're going to look back five years from now and say it was an election year gimmick," he added.

While schools were originally fearful of what the property-tax plan could do to their budgets, education officials Wednesday backed the proposal.

"We think they've done it the right way," said Dan Kinley, deputy executive director at the state School Boards Association. He noted there is nothing in the plan that stops local districts from raising property taxes higher than envisioned in the budget agreement -- if local voters approve it.

Beyond the tax cuts, the new budget also includes $425 million to fund recreational and sports projects, as well as cultural institutions. This fund includes the funding category that would be used to funnel aid to Rich Stadium.

Where exactly that money will go, however, has yet to be determined -- and won't be before the budget is approved.

Rank-and-file legislators are expected to begin passing some of the budget bills on Friday as part of a process that will likely stretch through the weekend.

News Political Reporter Robert J. McCarthy contributed to this report.

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