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TERRORIST ATTACKS DELAY KEY INITIATIVES

Ten days ago, Gov. George E. Pataki and legislative leaders braced for crucial talks on a final budget package, including money for public schools, expanded upstate job-creation programs and key steps toward getting three casinos in Western New York.

But last week's World Trade Center attack changed all that.

Now top leaders acknowledge they have no clue when, or if, matters they worked on before the terrorist strike can be accomplished.

Delayed -- and possibly not coming at all -- are such items as $31 million in extra aid for Buffalo; an agreement on the three Seneca gambling casinos; money to help close the Buffalo schools' $24 million deficit; Centers of Excellence involving the University at Buffalo; $12 million for Erie Canal Harbor development; a decision on the future use of Memorial Auditorium; and millions of dollars for cultural, arts and nonprofit groups.

And with the nation apparently preparing for war, one top legislative leader said Wednesday there is naturally little focus in Albany on fiscal and other issues that two weeks ago were considered front-burner.

The ramifications are far-reaching. Not-for-profit groups -- from health care to cultural organizations -- that rely on special funding annually of more than $150 million statewide might get nothing.

School officials expecting a financial bailout from Albany find themselves competing against rescue and rebuilding efforts in lower Manhattan for limited state resources in an economy that grows shakier by the day.

And the controversial casino plan for Niagara Falls and Buffalo now could be months from resolution.

The executive branch of state government has been consumed around the clock with attending to thousands of details involved in the ongoing rescue and rebuilding efforts in lower Manhattan.

"Right now, we're dealing with a crisis," said Assembly Speaker Sheldon Silver, D-Manhattan, whose district includes the World Trade Center.

Silver said officials are well aware of the need to provide more money for education, health care and other programs. But until the "triage" operation is over in Manhattan, he said, "we're suspending those deliberations."

State officials have said they believe the federal government will foot the bill for most of the costs associated with the terrorist attack. The Federal Emergency Management Agency on Wednesday agreed to pay all the expenses related to debris removal, for emergency protection steps and for repairing damage to public buildings.

But that won't cover everything. Last week, state lawmakers authorized an initial $5.5 billion for rescue and rebuilding efforts in New York. Of that, up to $500 million could be state funds. That is only a down payment on what efforts will cost state taxpayers.

Lawmakers and the governor are proposing ideas -- the latest was Pataki's offer for free state tuition for family members of the attack's victims -- that come with a price tag for the state. Silver also checked off a litany of steps Albany may need to take that could use up much of the state surplus.

In July, the Legislature approved a "bare bones" budget with a smaller-than-expected aid increase for schools; lawmakers in recent weeks were considering adding between $800 million and $900 million for schools. All that has changed.

Beyond cost, there is growing concern that the attack will cut deeply into the state's revenues. New York relies more than any other state on tax revenues derived from Wall Street profits. But with the stock market souring before the attack, and falling off sharply since Wall Street reopened Monday, fiscal analysts say the short-term revenue picture could get gloomy.

Senate Majority Leader Joseph Bruno, R-Brunswick, said the attack will create "huge costs, and the question is who's going to bear those costs. So we're just staying loose."

Among the Western New York items on hold now is the much-touted Centers for Excellence at UB, a consortium of private and public interests that Pataki said will be a major force in the years to come in creating new high-technology jobs in the region. The idea, though, still needs state funding, which was expected to have been approved sometime in September in the supplemental budget phase.

Beyond public schools that will be hard-pressed to get extra aid, cities outside New York City will also likely be asked to take a back seat to the World Trade Center.

Buffalo, for instance, says it has a $31 million shortfall in the bare-bones budget approved in August. Sources at the Capitol this week said it looks increasingly unlikely Buffalo will get that in light of new financial woes the state could face because of the attack.

"Our financial problems are real, and it will take significant pains to close those gaps without their help. I still believe the state will be there for the second-largest city in New York once some of the really significant New York City issues are resolved," Buffalo Mayor Anthony M. Masiello said Wednesday.

"It's my hope and desire we are all together in helping New York City. And I have the same hope and desire that the State of New York fully recognizes our problems, even though they pale in significance to New York. They are still problems we have to grapple with."

Assembly Majority Leader Paul Tokasz, D-Cheektowaga, said he is still pushing for a host of local programs.

"But the difficulty is you can't push those to the forefront now, given the magnitude of the problem in New York City," he said.

The annual allotment of money lawmakers are given to spread around to various groups in their districts also is on hold. The money goes virtually everywhere, from repairing fields at youth soccer fields to helping a senior citizen center buy a piano. Cultural groups, including every major museum and performing arts group in Western New York, rely on the money for annual funding. Health organizations such as Mercy Flight, which last year relied on the state for nearly one-fifth of its annual budget, were already getting anxious about funding uncertainties before last week's attack.

Pataki administration and legislative fiscal staffs are looking at a wide array of ways in which Albany can raise money needed to pay the World Trade Center costs without increasing taxes.

Then there are the Seneca-owned casinos planned for Niagara Falls, Buffalo and an undetermined site on one of the tribe's two reservations in the region.

Proponents who believed final action from Albany -- the Assembly still needs to approve the deal struck this summer between Pataki and Seneca leaders -- was close now acknowledge the issue is stuck for the time being.

This week, at the urging of Sen. George Maziarz, R-North Tonawanda, Pataki and Bruno both asked Seneca President Cyrus M. Schindler to be patient while the state works its way through the World Trade Center crisis.

The casino deal will be worth tens of millions a year to the state, which gets a share of revenues from the proposed facility's slot machines. Though none of it would be available this year, Maziarz said the gambling-related revenue ideas "are more important than ever."

"It's a fiscal problem, because we don't know how much this catastrophe is going to cost us," the lawmaker said.

e-mail: tprecious@buffnews.com

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