by Danny Hakim

ALBANY — Lawmakers completed one of the latest budgets in New York State history on Tuesday night, passing a last piece of legislation that will raise an additional $1 billion — in part by increasing taxes on the sale of clothing and on a variety of businesses.

The state will increase its share of revenue from video gambling machines and will allow a number of casinos to stay open later. Lawmakers also voted to reduce charitable deductions for those who make $10 million or more.

But lawmakers rejected a plan to enact a tax change on earnings by hedge fund managers who work in New York but live outside the state. Much of their compensation comes in performance incentives that are considered capital gains and are taxed federally at 15 percent. The change would have made these earnings “ordinary” income, subject to New York State taxes.

The move came as hedge funds were being wooed to move out of the state.

A vote in the State Senate took place just before 8:30 p.m., ending months of contentious negotiations, with the budget 125 days late. The Assembly had earlier approved the budget, which is projected to be $136.5 billion. Spending will increase by 2.4 percent over the previous budget.

Lawmakers had been passing the budget in pieces for several months, amid a stalemate with Gov. David A. Paterson.

Democrats, who control the Legislature, feared the indignity of passing the latest budget ever in an election year. The record was set in 2004, when the budget passed on Aug. 11.

The last piece of the budget passed on a party-line vote, 32 to 28, with the Senate’s tenuous Democratic majority holding together and no Republicans voting in favor of the measure. Although the Legislature passed a spending plan several weeks ago, it had been at loggerheads with the governor on devising a way to pay for the final part of the budget.

“Today the Senate completed the final stages of a fair and responsible budget that works for New Yorkers,” Austin Shafran, a spokesman for the Senate Democrats, said in a statement.

Surprisingly, there was almost no debate on the measure, but Senator Dean G. Skelos, the Republican leader, signaled what are sure to be campaign themes for his party in the fall.

“Today, Senate Democrats finished voting on a budget that raises taxes by nearly $4 billion,” Mr. Skelos said in a statement, referring to his tally of the total amount of taxes approved in the last few months. “Today’s action also completes one of the latest budgets in state history. What did taxpayers get as a result? They got higher spending and more taxes, but not a single initiative to create any new jobs or improve New York’s economy.”

The legislation will eliminate a sales tax exemption on clothing and footwear purchases of less than $110 starting on Oct. 1. That was by far the largest piece of the bill passed Tuesday night; it is expected to raise about $330 million.

The legislation also expands tax breaks for film production companies and requires online travel companies to collect sales taxes on hotel rooms.

The governor, through a spokesman, hailed the passage of the budget.

“Today the state finalized a budget that closes a $9.2 billion budget gap,” said Morgan Hook, Mr. Paterson’s communications director. “This was done primarily through spending cuts and with no borrowing.”

“A fiscally responsible budget,” Mr. Hook added, “will help our state turn the corner on this economic crisis and put us on a path to recovery.”

A number of other significant measures passed on Tuesday. Lawmakers approved a plan to raise more than $1 billion through uniform, across-the-board cuts to state programs, should Congress fail to approve an increase in Medicaid financing this year. Legislators had long resisted approving the plan, but the governor had insisted on it as it became increasingly uncertain that Congress would increase the financing.

Lawmakers also passed a controversial measure requiring that prisoners be counted as residents not of the mostly upstate prisons where they reside, but of the areas where they lived before they were incarcerated. This effort had been fiercely resisted by Republicans, because of the implications the move could have as legislative districts are redrawn by the Legislature.

Democrats had championed the measure. “This is an issue of fundamental fairness, and it will empower poor communities because their population will reflect those prisoners,” said Senator Eric T. Schneiderman, a Manhattan Democrat running for attorney general. “If other states follow us, it would represent a major shift of political power back to these poor urban communities.”

One notable measure that failed to pass was a bill that would have given the state university system far more autonomy to set its own tuition rates. The plan was being pushed by the chancellor, Nancy L. Zimpher, as a way to help turn around the ailing system.

But Democratic leaders pulled the bill twice after it was clear both times that it would not pass.