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Attention shifts to tax increases to finish work on state budget

The other shoe is about to drop: state tax increases.

To pay for restoring at least $400 million in aid cuts for public schools and to beat back other spending reductions proposed by Gov. David A. Paterson, legislative leaders are looking at raising a variety of taxes -- from those on the sales of a number of products and services to more than $200 million from higher assessments on revenues of hospitals and nursing homes.

Plans on the table include reinstituting the 4 percent state sales tax on clothing and shoes costing less than $110, which could bring the state as much as $690 million.

Negotiators also are considering making the lottery's Quick Draw -- derided as "Crack Draw" by gambling treatment counselors -- more accessible to bettors and permitting electronic table games at racetrack casinos in Hamburg and other tracks across the state.

Paterson and lawmakers, meanwhile, are grappling with a proposal -- pushed by the governor but rejected so far by Democrats who run the Assembly -- to allow the State University of New York system to raise tuition each year and retain more of the additional revenue for operating its campuses.

It also would give SUNY institutions more leeway to form partnerships with private companies on a range of economic development efforts.

The SUNY plan has come down to a battle of wills between Paterson and Assembly Speaker Sheldon Silver, D-Manhattan.

A top Paterson administration official told The Buffalo News that if no overall budget deal is reached, the governor will include key components of the SUNY plan in the next emergency appropriation bill, which the Legislature would have to approve by Monday to avoid a shutdown in state government.

About 70 percent of the overdue budget has been completed through the emergency spending measures adopted weekly since the April 1 start of the state fiscal year to keep the state operating. Paterson has warned that unless Legislature leaders reach a final deal by Monday, he will include all remaining issues in a final emergency measure that lawmakers would have to adopt -- without changes -- or parts of the state government would shut down.

"The governor knows the priorities of the chancellor of SUNY and the trustees, and absent any agreement with the Legislature, those priorities will be reflected in the extender bill on Monday," said the administration official, who spoke on condition of anonymity.

"The governor wants the SUNY system to be the best system in the nation, and to get there, they need one or two aspects of his proposal," the official said, indicating Paterson is willing to budge on some parts of the SUNY plan.

But the official said Paterson will insist in the emergency bill that SUNY have the authority to raise tuition yearly, based on an index of inflation. Critics say that would hurt low-income students, while backers say additional scholarship money would be available.

They also argue that the current system, under which the Legislature must approve tuition increases, has resulted in big spikes in tuition levels, with increases during bad economic times. Since 1990, when annual tuition was $1,350, SUNY tuition has gone up 280 percent -- an average of 14 percent per year -- to $4,970.

As an alternative, sources said discussions have returned to permitting pilot projects for a certain number of years at two of SUNY's biggest schools -- the University at Buffalo and Stony Brook University. UB originated the idea, but other campuses have embraced it. SUNY now wants the authority extended statewide.

When asked about the possibility of a SUNY deal, Silver said, "I would hope so."

But Paterson officials say Silver has been willing to discuss only removing certain procurement hurdles involving things like equipment purchases.

That, they say, is the least important of the plan's main components, which involve tuition increases, allowing the campuses to keep tuition revenues and relaxing rules involving public-private partnerships such as those between UB and health care concerns. UB has said the plan would create thousands of jobs and allow it to proceed with a major downtown development.

Paterson said any SUNY deal would have to go beyond the procurement component. "We like what would be a steady and easily predicted and estimated tuition increase over a period of time so that when students enter college they would know how much they owe," Paterson said after meeting with Silver in his office.

Democrats who control the Senate have supported the SUNY plan, though officials in that chamber indicated Wednesday they were less enthusiastic than Paterson.

One Democrat insisted the plan is a priority. "I'm telling our leadership to stay firm because it's very important to have UB in it," said Sen. William T. Stachowski, of Lake View.

"We have to have this as part of the budget," said Assemblywoman Crystal Peoples-Stokes, a Buffalo Democrat, who added that proponents would lose their negotiating leverage if the issue is pushed out of the budget talks.

Democrats in the two branches of state government remain sharply split. Silver also found himself at odds Wednesday with State Attorney General Andrew M. Cuomo, the Democrats' designated gubernatorial candidate, who supported the SUNY tuition plan during a visit to Buffalo.

The ideas for new taxes came up Wednesday in a closed-door meeting between Democratic legislators and the governor. Participants later refused to discuss the ideas publicly.

In his proposed budget, Paterson included nearly $1 billion from various "revenue actions," including a new excise tax on sugar-flavored beverages -- worth $465 million this year and $1 billion next year -- and authority for grocery stores to sell wine. Lawmakers rejected both those ideas, but they favor several tax increases.

"We're reviewing them, and, frankly, they don't sound bad," Paterson said of ideas presented by legislative leaders.

The tax increases offered an opening for Republicans, who say the emergency bills already have raised taxes by about$600 million, including this week's $1.60-per-pack increase in the cigarette excise tax.

Rick Lazio, a Republican running for governor, said Democrats are returning to their "default" position of tax and fee levies instead of more spending cuts.


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