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TERRORISM'S TENTACLES WILL BLEED TAXPAYERS OF UNTOLD BILLIONS <br> AS THE STATE FACES STAGGERING FINANCIAL LOSSES FROM THE WORLD TRADE CENTER DISASTER, THE PATAKI ADMINISTRATION IS SCRAMBLING FOR WAYS TO AVOID RAISING TAXES.

State taxpayers could be faced with "multiple, multiple billions" of dollars in costs stemming from this month's terrorist attack in New York City, Gov. George E. Pataki said Thursday, but he envisions no new tax increases to pay for the enormous relief efforts and the impact on the budget from higher unemployment and shuttered businesses.

However, the governor said his no-tax pledge is contingent on a sizable bailout from the federal government to pay for the costs and the lost state tax receipts. State officials have been working overtime in recent days to try to determine the magnitude of the state's financial loss.

Meanwhile, officials are considering a host of ideas to try to keep funding flowing for other state programs not related to the disaster in lower Manhattan. Among them, sources say, is a plan by the Pataki administration to borrow money -- instead of a pay-as-you-go approach -- to fund a series of high-technology job-creation programs at state universities, including the much-touted Center of Excellence in Bioinformatics at the University at Buffalo.

The high-tech program was one of the economic-development highlights of Pataki's 2001 budget proposal. The fact that the Pataki administration is floating a proposal to issue bonds for the initiative illustrates the likely far-reaching extent of costs stemming from the attack on the World Trade Center.

Western New York lawmakers who toured the lower Manhattan site this week said the up-close view of the devastation made clear the economic ramifications that all state taxpayers will have to face.

The financial consequences are enormous and stretch far beyond the bricks-and-mortar rebuilding effort. Officials are talking of layoffs already being felt this week upstate, for example by the closing of airline reservation offices.

Wednesday, Senate Majority Leader Joseph L. Bruno, a Rensselaer County Republican, said the state's "rainy day" fund will have
to be tapped to cover the costs. The Pataki administration's budget division said Thursday that about $2.6 billion is in various reserve accounts.

State officials are examining a range of options to avoid raising taxes. They include several gambling-related plans, including entry by New York into the multistate Powerball lottery game and permission for racetracks to offer slotlike machines that have been a financial boon to other states in recent years.

Also high on the list is Pataki's proposal to permit up to three Seneca-owned casinos in Western New York. That proposal has been stalled in the Assembly, whose leader, Speaker Sheldon Silver, a Manhattan Democrat, wants similar casino opportunities for the economically ailing Catskills resort region.

Lawmakers could be back in Albany as soon as next week to take up several disaster-related measures. Optimists believe that agreement also could be reached soon on other issues, including operating funds for which a host of not-for-profit agencies, cultural groups and others have been waiting for months.

If those other budget deals come together soon, State Sen. Dale M. Volker, R-Depew, said the casino package could pass in time so that the Seneca Nation of Indians could schedule a referendum on the issue, as required, by Thanksgiving. "We'd like to think we can make some decisions in the next few weeks," Volker said of the various outstanding issues.

Volker said the idea of issuing bonds for the Centers of Excellence program is just one of the solutions being talked about to deal with the huge fiscal drain the World Trade Center disaster will have on the state budget. "It's not like we're going to have a big amount of cash in the immediate future," he said.

The bonding idea, considering interest costs, would add substantially to the $283 million Centers of Excellence plan Pataki said would be funded over five years at several universities from Buffalo to Long Island.

The Center of Excellence at UB is intended to create new jobs in biotechnology. The plan is for the state to spend $75 million as seed money.

In addition, sources say, private-sector companies have pledged upwards of $168 million -- a pledge that was made before the Sept. 11 attack -- for the UB center, which is being done along with groups such as Roswell Park Cancer Institute and Hauptman-Woodward Medical Research Institute.

Assembly Majority Leader Paul A. Tokasz, D-Cheektowaga, said Assembly Democrats will consider the bonding idea. "If that's a way to do it off-budget, fine," he said of the proposal for long-term borrowing.

At an Albany event Thursday honoring the city's firefighters who volunteered in the World Trade Center rescue efforts, Pataki warned of the enormous fiscal impact from the terrorist attack.

But he said raising taxes could send the wrong signal. "I think raising taxes, laying off (state) workers, these are all things that have a horrible impact on the economy, and I'm not going to do them," the governor said. But he was quick to add that such an assurance "assumes we're going to have some help from Washington, because the impact on the finances of the state and the city and local governments is enormous."

Pataki said the state appreciates the $20 billion the federal government has pledged to the state. But he said that money was only for direct relief efforts, adding that "we're going to need a lot more than that for indirect relief efforts.

Pataki's budget office Thursday would say only that the estimated loss in revenue to the state from the World Trade Center disaster "will exceed $1 billion due to the disruption to business activity and normal tax-payment mechanisms." But he said the total impact on the state budget will be "multiple, multiple billions" of dollars.

Tokasz, who toured the trade center site Monday, said a host of Western New York initiatives are still under consideration at the Capitol.

However, he said, his view of the ruins this week "gave me a completely different perspective in terms of the needs of that community, just in terms of being able to get people back into their homes -- and we're talking tens of thousands of people."

e-mail: tprecious@buffnews.com

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