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The State Legislature on Thursday tossed aside two decades of partisan battling and public ridicule to enact an on-time budget that raises spending at twice the rate of inflation, sharply increases aid for schools, caps future Medicaid costs for counties and raises taxes and fees by more than $1.3 billion.

Thursday marked the first time a budget has been passed on time since 1984, when the Cold War pitted Ronald Reagan against Yuri Andropov and "Dynasty" and "Dallas" were dueling on television.

"It is a great day," said Assembly Ways and Means Committee Chairman Herman D. "Denny" Farrell Jr., D-Manhattan.

Within hours, State Comptroller Alan G. Hevesi certified the budget of more than $106 billion as legal -- a stamp of approval that has the side benefit of ensuring that lawmakers get the paychecks that would have been withheld had the budget been late. For the first time in nearly a generation, schools, cities and others that base their budgets on state aid no longer have to guess how much will be coming from Albany.

Despite the back-slapping among legislators, the budget dance between the Legislature and Gov. George E. Pataki is far from done. While legally an on-time budget, the governor, who found himself cut out of the process at times by Republican and Democratic lawmakers, said he is still insisting on changes to the plan passed by the Legislature to lower spending for items such as the Medicaid health insurance program.

The Legislature tabled nearly $1.7 billion in spending initiatives -- involving OVER 145 LNswelfare-to-work, child care, environmental programs, and construction money for public and private colleges -- because Pataki refused to support the bills needed to enact the programs unless lawmakers agreed to things such as more Medicaid cuts. With those spending plans included, lawmakers say, the 2005 budget totals $106.6 billion. The governor puts the spending at $106.9 billion.

Despite the coziness at the Capitol, the budget fight will continue for at least the next 10 days, the time in which Pataki has to act on the budget bills before they automatically become law. Thursday, he was already threatening to veto portions of the budget, but he declined to elaborate.

Pataki has reservations

Within minutes of the budget's passage, Pataki was sending mixed signals. He praised the process that led to an on-time budget and said he supports much of the budget. But he insisted, "I am not saying we have finished the budget. We have not."

Pataki has threatened that the Medicaid cap for counties might not go forward unless further cuts are made to the program. The cap, effective next year, would freeze future Medicaid costs for counties such as Erie, with a built-in growth factor. Asked directly if the cap is dead without further spending cuts, Pataki said the matter is still "an open question."

Lawmakers said that while they are willing to talk more with Pataki, the budget is done. Assembly Speaker Sheldon Silver, D-Manhattan, said any efforts by Pataki to cut school aid or hit college financial-aid programs or reduce benefits for Medicaid recipients "are nonstarters" in the Assembly.

The sides are close on forming a commission to "right-size" the state's health care system, which has grown more expensive, in part, because of too many unused hospital and nursing home beds.

The panel could pick which hospitals might close. The issue has become a nasty turf fight, with upstate hospitals fearful that a panel would be heavily dominated by downstate interests. But lawmakers insist that it would include regional input to avoid a geographic health care war.

State officials said the sides are also close to raising a tax on nursing homes and imposing a higher co-payment on some Medicaid benefits as a way to soothe Pataki's concerns.

"We're keeping an eye on it, but we're confident they're going to bring home a Medicaid cap," said Stephen Acquario, executive director of the New York State Association of Counties.

The budget has an increase of more than $800 million for public schools, a level that Assembly Education Committee Chairman Steven Sanders, D-Manhattan, called "one of the richest education packages" ever passed in Albany. They restored nearly $700 million in health care cuts proposed by Pataki, benefiting everyone from hospitals and health care unions to elderly and disabled people on Medicaid. A $500-a-year State University of New York tuition hike was scrubbed.

Fees are increased

Fiscal conservatives lamented what they said is a budget with $6.9 billion in new debt. Though they cut about $165 million in business taxes, lawmakers also embraced more than $1.3 billion in higher taxes and fees, much of it proposed by Pataki. Nearly $200 million in new motor vehicle fees were enacted, such as raising the current $10 fee for car titles to $50. Other fee increases will hit owners of all-terrain vehicle and campers in state parks.

The Legislature punted on a plan to permanently wipe out the state sales tax on clothing purchases. They did move ahead with the planned drop of 0.25 percent from the state's current 4.25 percent sales tax, except for downstate residents, who will see a one-eighth of a percent slapped on the 4 percent rate to help pay for a transit program.

The budget also includes at least $300 million for pork-barrel spending. Much of it, though, is unspecified, subject to deals later in the year. Typically, it is from those pots that local groups, from cultural to senior citizens organizations, get their annual funding.

A more open process

Lawmakers and Pataki were taking credit for creating a more open process this year that helped propel budget talks. Though dozens of hours of public meetings were held, few of the sessions actually saw major decisions made. Those, as usual, were done behind closed doors. A ruling by the state's highest court last year giving the governor more power in budget-crafting also appeared to move along the process.

The lawmaker who has yelled the loudest for on-time budgets was uncharacteristically among the most muted. "I'm relaxed. And that's a comfortable feeling," said Senate Majority Leader Joseph L. Bruno, R-Brunswick.

On the Senate floor, Sen. Michael A.L. Balboni, R-Mineola, said, "This is not a crowning achievement. This is our job."


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