$121.7B spending plan also depends on taxes and one-time revenues

By James M. Odato, Capitol bureau

ALBANY — Lawmakers completed a $121.7 billion state budget Wednesday that includes substantial borrowing and that budget critics say is precariously balanced on one-time revenues and more than $1 billion in increased taxes and fees.

The budget raises spending 4.9 percent from the $116 billion spent last year.

The Legislature and Gov. David Paterson agreed to split $1.28 billion for big-ticket items that will likely be supported through bonds, including $46 million for the proposed Advanced Micro Devices chip fab in Malta.

Some of the new revenues close loopholes affecting businesses, but some will hit consumers directly, such as a $1.25 increase on the per-pack tax on cigarettes and $70 million more in assessments on health insurance policies.

Paterson said the budget is imperfect and spending habits will have to change drastically, given the nation’s faltering economy.

Laura Anglin, his budget director, could not provide many details — state work force numbers, new debt estimates or the size of the budget gap that will need to be filled next year. The state earlier pegged it at $3.6 billion, according to an analysis by rating agency Standard & Poor’s.

Critics said not only will there be an imbalance in 2009-2010, a midyear correction may force lawmakers back this year to cut programs, find emergency revenues, or both.

“It’s a concern . . . I’d rather be optimistic,” said Senate Majority Leader Joseph L. Bruno.

Education spending rises by $1.75 billion. Paterson agreed to strip tenure requirements for certain education aid from the budget deal, saying it wasn’t fair to base job security on student test scores.

Assembly Speaker Sheldon Silver said Paterson did “an extraordinary job leading us to this,” given that the governor has been in office just 23 days after Eliot Spitzer’s resignation. The Legislature did well, Silver said, to deliver a budget “only nine days late.”

Assemblyman James Hayes, R-East Amherst, said the measure needed more paring. “The money is simply not there,” he said, predicting “a crushing blow that will come later.”

The budget includes $200 million for community projects for the Senate and Assembly, and for Paterson using unused “member item” funds from past years rather than new money, said Anglin. She said it isn’t feasible to ask the Legislature to reprogram such discretionary funds for more essential needs.

As a result, the final budget bills are laden with member items for such things as Little Leagues, gay and lesbian organizations, food pantries, circuses and ethnic programs.

More and bigger member items are is possible: The capital budget includes $350 million for the majority conferences of each chamber to use for economic development.

Silver identified some his projects, such as $25 million for the University of Rochester’s Clinical and Transitional Science Building and $15 million for the developing Marcy NanoCenter. The Senate did not produce a list.

Bruno did tease that an international business will be moving its operations to the Capital Region.

Paterson said he will hold off on spending his $585 million, but ruled out using it on “pork.” Much of his money is already committed under projects announced by Spitzer.
Some of it also is wrapped up in a huge deal set up by Gov. George Pataki in 2006 for Advanced Micro Devices. The new budget calls for $45 million to fix up Luther Forest Technology Campus with infrastructure upgrades and $1 million for the economic development corporation that runs the campus.
Bruno said the money supplements the $1.2 billion in Pataki-era incentives to lure AMD. The financially ailing chip manufacturing company proposes a $3.2 billion plant at the Luther Forest site.

Bruno said some of the Senate capital will be for GE Healthcare’s move to North Greenbush, for which $10 million is committed.

Another $200 million is earmarked for affordable housing programs and $40 million is set up for grants to the agriculture industry. The sums are less than Spitzer proposed.

Moreover, Spitzer’s $1 billion upstate revitalization initiative was shrunk to a $700 million program.

To support the budget, one-time revenues known as “one shots” are included in $1.52 billion in new funds. It assumes $250 million from a vendor willing to pay for develop Aqueduct racetrack and run video gaming there.