ALBANY — Gov. David A. Paterson today sought to settle the final pieces of the

stalled 2010 budget by proposing a package that includes a cap on local property taxes and a

new state university tuition plan, but the State Legislature immediately rejected the new

attempt.

"They're all up for re-election and they could lose the majority this year," Paterson said

of Democrats who narrowly control the Senate.

He said passage of a property tax cap, for instance, "could have guaranteed that they

stayed in the majority" in the fall elections.

Paterson's enticements were attached to a new package of tax and fee hikes.

The new bill included a cap on local property taxes of 4 percent a year in growth, or 120

percent of the inflation rate, whichever is lower. It would apply to all school districts,

except the Big Five, which includes Buffalo, and all other localities, except New York City.

The governor noted his plan was less ambitious than one signed into law in New Jersey

earlier in the day, which caps taxes at a 2 percent annual growth rate.

And the new Paterson bill also pushed the State University of New York plan, which would

have allowed the four SUNY university campuses to raise tuition up to 7 percent per year,

while other campuses would be capped at 4 percent annual hikes.

But state senators refused to accept or introduce Paterson's proposal.

"In the Senate's case, I can't see a reason why the senators would vote against it,"

Paterson said.

He said the package includes items — the tax cap and SUNY measure — that Senate

Democrats say they want to carry into the fall elections.

The Assembly has finished up the fiscal work, but the Senate has not taken up the final

piece — the revenue bill. The Senate was were to come back to Albany Wednesday, but that

has been delayed.

Paterson said he is coming close to ordering the Legislature, or possibly just the Senate,

to return in special session. He declined to provide a possible date.

The new bill was stacked up outside Senate and Assembly offices this afternoon — a

sign the two houses formally refused to accept them.

Assembly Speaker Sheldon Silver said in a written statement the Assembly has approved the

budget and Paterson is "not constitutionally empowered" to unilaterally restart the budget

process.

"We need a negotiated agreement to complete the budget, not another un-negotiated press

release," said Austin Shafran, spokesman for the Senate Democrats.

Sen. William Stachowski, a Lake View Democrat, has said he will not support the revenue

bill until the SUNY issue is resolved. And others are pressing for the property tax cap.

"The problem with the Senate and Assembly is they have so many priorities they don't have

time to pay for them, and I think that's what's been embarrassing in this process," Paterson

said in an interview this afternoon.

Paterson said he does not understand why the Senate Democrats cut their earlier deal with

the Assembly, which left out the tax cap, SUNY issue and resolution of a Medicaid contingency

fund to plan for the possible loss of $1 billion of federal funding. He said some Senate

Democrats "are screaming" for the property tax and SUNY plans.

"That's what is preventing them from going along with the Assembly. Why were they going

along with the Assembly in the first place? They're all up for re-election and they could lose

their majority this year," said Paterson, adding that some Senate Democrats "need" the tax cap

and SUNY plan to win over voters this fall.

Paterson suggested disgruntled lawmakers — upset over his recent vetoes of pork barrel

and other spending — were behind recent newspaper stories about him. He did not

specifically cite the stories; one was about a subsidiary of a health care company employed by

his wife being recommended to administer a federal insurance program and another featured

patronage hiring at the state Parole Board.

"The reason they keep raising my name is they're upset that I vetoed a lot of their

programs, and they're playing little games, putting stories [out] on me now. And I get that,

but I'm going to be undaunted in my desire to leave the next governor with a balanced budget,"

Paterson said.

Paterson, a Democrat, said Democrats in the Legislature want to make it appear that he is

to blame for the budget mess.

"The reality is they conspired to make it look like they were passing a budget so they

could get rid of the emergency appropriation issue," he said of his June 28 threat. "And then,

in the end, they didn't really have a two-way agreement."

As for Stachowski and his holdout on the SUNY issue, Paterson said the Senate could have

accommodated that concern, and the property tax cap, had it voted for his emergency bill on

June 28 instead of substituting its own deal with the Assembly, which has not yet passed.

Robert Megna, the governor's budget director, said the new proposal — rejected today

by the Legislature — raises about $1 billion. He also warned of a looming cash flow

problem in early September, when the state is due to pay 700 school districts billions of

dollars.