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Silver, Pataki Feud Over State Budget, Legislature Agrees to Medicaid Cap

By Associated Press

Albany, NY – Assembly Speaker Sheldon Silver on Friday refused to attend Governor George Pataki's latest budget negotiating session, which Silver said have become pointless days before the budget is due.

Silver said if the meetings "are nothing more than lectures, then there is no point in having those meetings. If they're productive, we'll have them."

"I'll read the lectures in the newspapers and the governor can have his press conference every night," Silver said.

The blowup comes as Pataki and lawmakers try to adopt a budget by the April 1 deadline for the first time in 20 years. Though legislative leaders agreed on their own budget plan, they want to spend at least $1 billion more than Pataki proposed in his $105.5 billion spending plan. "It's been hard from the beginning to get the speaker to feel comfortable with the open process," Pataki told reporters. He contended the legislative version of the state budget would likely double the deficit to $5 billion by the 2006-07 fiscal year.

As part of the legislative budget agreement, lawmakers on Friday agreed to simplify state business taxes. Corporate taxes now are based on in-state sales, payroll and property value. Critics of that system say it forces growing businesses to leave the state. The legislative agreement would tax only in-state sales. That will cost the state about $130 million in tax revenue, but the Business Council contends it will lead to 133,000 new jobs.

"This is a significant improvement in New York's tax climate and our business climate," said Matthew Maguire of the Business Council.

Lawmakers also agreed to cap Medicaid costs for counties, which local officials blame for property tax increases. In New York, counties pay a portion of the state-federal health care program for the poor.

The Legislature's proposal would save counties around New York $373 million in 2005 and, when fully implemented with a state takeover of the costs, $3.3 billion, lawmakers said. A bill is also being drafted to assure counties contain costs.

The New York Association of Counties applauded the move, although some county executives said the plan doesn't save enough.

The Legislature's proposal, however, also is significant for what it doesn't include. Lawmakers decided not to identify taxes that will be raised to help pay for their proposed $35.8 billion transportation capital plan. The money will be split between the Metropolitan Transit Authority and highways and bridges outside New York City. Lawmakers said they will make the difficult decision on tax increases after April 1.

Lawmakers also agreed to direct the Pataki administration to collect an estimated $400 million a year in sales tax on cigarettes sold on Indian land to non-Indians, and to continue the sales tax on clothes costing less than $110 until April 2006. Another $163 million in tax breaks, mostly for businesses and proposed by Pataki, was also recommended.

The legislative budget closed Friday would increase spending by $1.55 billion over Pataki's $105.5 billion budget proposal in January. But Pataki said spending appears to be $400 million to $500 million above that. Lawmakers, however, say their additional cost-containment measures and projected increases in federal aid makes their budget total $106.5 billion.