ALBANY — Gov. David A. Paterson has unveiled the last emergency budget bill that

lawmakers will have to consider Monday, a hodgepodge of spending and tax hikes with a number

of items intended to entice rank-and-file lawmakers to end the protracted budget wrangling.

The bill introduced Friday includes a cap on future local property tax hikes, partial

restoration of cuts in school aid, authority for the state university system to increase

tuition annually and increased revenues coming from everything from higher taxes on clothing

purchases to allowing wine sales in grocery stores.

The State Legislature is left with few options: negotiate changes with Paterson before

Monday's deadline or pass his bill. If no legislation is approved Monday, a partial shutdown

of the state government would begin the following day.

Administration officials insist Paterson did not jam up the bill with "poison pill"

provisions. Instead, he moved toward the Legislature on several key fronts, including aid to

school districts, new or higher taxes and cuts of an additional $250 million to his own

agencies, which could mean some layoffs. His plan includes no borrowing to cover the deficit.

"This is pretty close to the stuff that privately they said they wanted to do," said Robert

Megna, the governor's budget director.

The legislation would close out the 2010 budget, nearly 70 percent of which has already been

adopted through weekly emergency measures.

In all, the emergency bill is intended to erase the $9.2 billion deficit. It also creates a

new account — holding payments from other parts of the budget — to set aside money

if the federal government does not come through with an expected $1 billion in additional

Medicaid aid.

Education proposals The Paterson bill

restores $300 million in school aid cuts he proposed in January, when he called for a $1.4

billion reduction to the state's 700 districts. The Assembly and Senate privately agreed to a

$425 million restoration, so Paterson has moved considerably in their direction.

Still on the table is what districts can do with the extra money. Most districts already

have adopted their budgets, based on Paterson's cuts. State law permits any additional money

to go to reserves or property tax relief, though for the biggest five districts, including

Buffalo, there would be no such limits.

Outside those five districts, Paterson and Senate Democrats want the extra funds to go

primarily for tax relief, while Assembly Democrats are pushing to let schools spend the money

to restore teacher layoffs and other programs. Individual district numbers were not released.

The governor also has revised his plan for the State University of New York system, which

wanted to be able to increase tuition annually based on a college inflation index and to keep

the revenues instead of having the money go to Albany. The plan is a priority for the

University at Buffalo, which says it is needed to fund its ambitious growth agenda for the

coming decade. Critics, though, say the tuition hikes will hurt low-income students.

The new plan would permit a half-dozen SUNY campuses that grant doctoral level degrees, like

UB, to raise tuition a maximum of 8 percent annually over the next four years beginning in

2011. At campuses without doctoral programs, the tuition hike would be capped at 5 percent

annually. Officials say tuition has increased over the past 30 years at about 6 percent

annually.

The governor also proposes an increase to the Tuition Assistance Program. If UB, for

instance, raised its tuition 8 percent, TAP awards — now a maximum of $5,000 a year

— would go up 4 percent.

Critics said that is not enough. "Poor college students are taking savage hits," said Blair

Horner, a lobbyist for the New York Public Interest Research Group, who said students on TAP

would have to pay $900 out of pocket in 2013.

The Paterson bill also includes authority for SUNY schools to enter into partnerships with

private companies, which UB wants to expand to help grow its downtown Buffalo campus.

Supporters say the campuses need the higher tuition and to be able to keep the revenues in

order to better plan future spending levels. They say the "spike" system of tuition hikes over

the years has hurt students' ability to plan for college costs.

The Paterson budget also calls for $180 million in cuts to SUNY and the City University of

New York this year. SUNY schools would be able to raise tuition by 2 percent in the coming

school year.

Raising revenue The Paterson plan

includes tax hikes and other "revenue raisers" worth about $1.2 billion. The governor accepts

a deal with legislative leaders to eliminate on Oct. 1 the current 4 percent state sales tax

exemption on clothing and shoe purchases. That will raise $330 million for the state.

Additionally, those with incomes over $10 million a year would see their state deduction on

charitable contributions cut in half, which will be worth about $100 million to the state this

year. There are about 3,500 such millionaires in the state.

The governor also wants to let grocery stores sell wine, something legislators have

opposed.

The state will make about $150

million this year off the licensing plan.

Paterson, however, did not include his proposed tax on sugar-flavored beverages. Opponents said the idea would destroy the beverage industry in

the state, while the governor

said it would reduce obesity levels and raise money for Albany.

The governor also backed down

on his plan to hike taxes on hospitals and nursing homes.

Paterson warned lawmakers to

either strike a final budget deal

with him by Monday or be

forced to act on his emergency

spending plan. Megna warned

of "chaos" in state operations if

nothing is passed Monday.

"Of course I'm concerned about

what's going to be in there because, remember, I have to get

32 votes," Senate Democratic

Conference Leader John Sampson said before Paterson re

leased the bill. The Senate has

32 Democrats and 30 Republicans; it takes 32 votes to pass a

bill, and GOP senators say they

will not support any tax hikes.

Megna said in an interview that

the governor's emergency plan

does not represent the kind of

doomsday confrontation with

the Legislature that many predicted. "We believe that this is a

proposal that's consistent with

what a lot of legislators have

wanted to do," he said. He said

there was "a lot of caving" to the

view of the Legislature in the

new bill.

For instance, he said the governor agreed to take on another

$250 million in cuts to state

agencies, bringing the amount

he will have to close on his own

to $950 million. Megna said it

will require "very aggressive"

actions involving work force issues, outside contracts and

overtime. He said the layoff

question will be resolved when

it is clear how many workers

leave the payroll under an early-

retirement program.

The Paterson bill also includes

some fiscal maneuvering. For

instance, it banks on an additional $250 million in higher-

than-expected tax receipts since

April and $100 million in lower

debt service payments. And it

permits more than $500 million

in "sweeps," which are transfers

from off-budget accounts to the

state's deficit-riddled general

fund.

Details were elusive, but Megna

said localities will be able to

lower big hikes coming in their

employee pension programs.

Localities could "smooth out"

the payments over several

years, in part, by borrowing

— an idea derided by fiscal watchdogs.

The tax cap will be a problem

for lawmakers, especially

among Assembly Democratic

leaders. Earlier this week, Paterson retreated a bit by excluding school property taxes from

his cap idea, which calls for putting a ceiling on local property

taxes at 4 percent, or 120 percent of the inflation rate, whichever is lower. In his new bill,

schools are back in.

Lawmakers have been angry

with Paterson, accusing him of

slowing final budget talks to be

able to release his emergency

plan Friday as a way to both try

to force his way with the Legislature and appear tough in the

public's eye. Assembly Speaker

Sheldon Silver accused Paterson of refusing to send bills to

the Legislature on items already

agreed to during talks this

week.

"He has not talked to us at all,"

Silver said of Paterson Friday

afternoon.

Is Paterson not negotiating in

good faith? "I think we'll find

that out over the weekend," Silver said. Silver and Paterson

have been especially at odds

over several final budget issues,

including the SUNY plan.

"We want an affordable state

university that gives

opportunities to all residents of

New York. And if we go away

from that mission we are doing

a disservice to this state," Silver

said of Paterson's SUNY plan.

Morgan Hook, a spokesman for

Paterson, dismissed talk by legislators that the governor has

not been upfront with them and

willing to negotiate.

"This shouldn't come as a surprise to anybody," Hook said of

the new emergency bill and its

contents.

"Any idea that he is not willing

to do a deal is simply not accurate," Hook said.