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As deadline for budget nears, state leaders duel <br> Governor, legislators far apart over deficit

With the clock ticking toward a Wednesday deadline, Gov. David A. Paterson and state lawmakers remained far apart Sunday on reaching a 2010 budget deal, as dueling Democrats in the two branches battle over the level of spending and tax increases and a potential big new borrowing program to erase the state's red ink.

The governor used the impasse to toss a last-minute item onto the agenda: He wants lawmakers to make his stalled proposal to impose an annual cap on school and other local property tax increases a part of the budget negotiations.

"We need to get serious about addressing the property tax burden in New York State, and this can only be achieved with permanent reform," Paterson said in a statement.

The budget for the fiscal year 2010-11 is now all but certain to be late.

The Senate is already behind the concept of imposing an artificial ceiling on annual increases in property taxes, but the idea has stalled in the Assembly, which has sided with some school district leaders and a potent teachers union.

"We're basically agreeing with them," Paterson said of the Senate and its proposed property tax cap.

The governor's proposal, first issued in June 2008, would cap annual growth in local property taxes at 120 percent of the inflation rate or 4 percent, whichever is lower.

Putting the property tax proposal out now -- instead of in January, when he proposed his 2010 budget -- is certain to add yet another roadblock to the fiscal talks in which the leaders are far apart over how much to spend, tax and borrow to close a $9.2 billion deficit.

The deadline for an on-time budget is Wednesday; a new fiscal year begins Thursday. The only plan now is for the Senate to return here this morning to pass an emergency appropriations bill to keep the budgetless government running -- paying state workers, Medicaid and unemployment costs, and other expenses -- until April 14. The Assembly passed that emergency bill Friday night.

The governor pushed his property tax plan on WBEN radio Sunday morning. Earlier, on WABC, a New York radio station, Paterson mocked lawmakers for trying to suggest that the entire Senate and Assembly were all here this weekend trying to get an on-time budget deal.

Paterson, who was in New York City on Sunday, said he would be back here if enough lawmakers were in town. He said claims of a long weekend of work at the Capitol by the Legislature was "to make the public feel as if there's more work being done than there really is."

The governor sharply criticized the Assembly proposal to borrow what he said would be more than $2 billion to close the deficit, at a time when the state is already paying $6 billion annually for past budget deficit borrowings. He said the Assembly had come up with only $3.6 billion worth of cuts to deal with the $9.2 billion deficit.

The heavy reliance on borrowing by the Assembly comes after Lt. Gov. Richard Ravitch proposed a similar borrowing level. But his proposal also includes fiscal changes such as an independent monitoring board and the power of the governor to impound money in emergencies. Those ideas were gutted in the Assembly proposal, except for the borrowing.

Paterson did not rule out a small amount of borrowing if lawmakers agree to more cuts; he did not define what is small.

In the WBEN interview, Paterson was smarting from a remark made Friday by Assembly Speaker Sheldon Silver, D-Manhattan, suggesting that the governor has not been engaged enough in the budget process.

Paterson noted Silver's own tardiness in passing a legislative budget plan while making "snide remarks about what the governor should be doing."

The governor accused the Legislature of "dodging" meetings with him while he was here last week.

"To make a snarky remark like that doesn't help the process," Paterson said.

A spokesman for the Senate Democrats declined to comment on Paterson's last-minute property tax push or his thoughts on the work ethic of the Legislature.

Silver rejected Paterson's idea of injecting the proposed property tax cap into the talks, saying that it has nothing to do with the 2010-11 fiscal plan.

"It doesn't impact the budget this year," Silver said. "It's not going to get us a budget now, and all substantive matters should be considered outside the budget. We should be focused on getting the budget."


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