Weighing Two Plans in Albany Budget Fight

By NICHOLAS CONFESSORE and DANNY HAKIM

ALBANY — New legislation proposed by state lawmakers would temporarily eliminate a sales tax exemption on clothing, expand hours for video lottery machines and require online travel companies to collect sales taxes on hotel rooms — measures that the lawmakers said were needed to finalize a state budget.

The legislation, which Democratic leaders in the State Senate and Assembly drafted late Saturday after negotiations with Gov. David A. Paterson broke down again on Friday, will also subject the earnings of hedge fund managers who work in New York State but live elsewhere to the state’s income tax. The bill would also cap or delay an array of business tax breaks and shorten the period after which the state can seize abandoned property. Legislative officials estimated that this would raise $200 million.

But Mr. Paterson and the Legislature remained at odds on Sunday over whether the lawmakers’ measures would actually provide enough money to cover hundreds of millions of dollars in extra spending they are seeking. The legislators estimated that their proposals, taken together, would leave a gap of no more than $100 million or $200 million — a minor difference, they said, in a total budget that could now top out at $136 billion.

“The difference between us and him is $200 million,” said Sheldon Silver, the Assembly speaker, “$200 million over what will be a $135- or $136-billion budget, which I suggest to you is less than a tenth of 1 percent.”

Administration officials, however, said they believed the discrepancy was closer to $400 million — an amount certain to grow, because a federal Medicaid grant projected to be $1 billion is to be cut by at least several hundred million dollars and probably more.

The new revenue bill, which cannot be voted on until 12:01 a.m. Tuesday, includes elements of a competing bill introduced by Mr. Paterson on Sunday, like suspending the sales tax exemption on clothing and reducing the deductibility of charitable contributions made by the very wealthy. But it departs from his version in several significant areas, like the governor’s proposal to allow grocery stores to sell wine.

“The bills we introduced allow us to continue negotiations, move forward with gap-closing action and keep government working,” said John L. Sampson, the Senate Democratic leader.

To read more, visit: http://www.nytimes.com/2010/06/28/nyregion/28budget.html?src=mv

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