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STATE LIKELY TO FILE SUIT OVER CLINTON'S LINE-ITEM VETO

Gov. Pataki on Tuesday said he is "extremely disappointed, but not surprised" the Clinton administration has failed to meet a deadline for proposing a way to ease the $2.6 billion problem the president's August line-item veto created for New York.

A week ago, Pataki told a news conference that the Clinton administration had assured him it would propose a way to ease the state's Medicaid financing problems.

"Given their apparent lack of interest in correcting the serious harm done to New York's neediest children and families," the governor said, "I will be speaking with the state's delegation to determine the appropriate course of action."

The non-response by the White House increases the likelihood that a prominent New York official will soon file suit in federal court to overturn the president's new line-item veto powers.

Sen. Daniel Patrick Moynihan, D-N.Y., told The Buffalo News he is certain a lawsuit will be filed "within a few days" and that he will send along his own "friend of the court" brief to support it.

High congressional sources said the lawsuit probably will be filed by New York City Mayor Rudolph Giuliani.

The cause of the state's concern is Clinton's veto of a bill that would hold New York State not liable for all the federal Medicaid reimbursements it has received between 1991 and now.

At least $2.6 billion came when the Medicaid vendors billed the federal government for taxes it paid the state government. Congress passed a law in 1991 prohibiting such reimbursements formulas. The state has been seeking a waiver for this procedure for several years.

Pataki said the cost to New York could reach $4 billion.

Last week, the governor said White House chief of staff Erskine Bowles had assured him he would produce "a good faith" plan in a week. After getting this assurance, the governor and leaders of the congressional delegation decided to put off bringing suit while they waited for the Clinton administration's response.

Last spring, the Supreme Court ruled against a lawsuit brought by Moynihan and six other members of Congress to declare the line-item veto unconstitutional.

The court did not rule on the merits of their lawsuit -- which claimed the line-item veto abridges the separation of powers between Congress and the executive. It left the door open to a new challenge, saying that the plaintiffs lacked standing, meaning a cause of action.

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