Budget Accord Near in New York; Added Taxes Weighed

STATE lawmakers said over the weekend they were nearing an agreement on how to plug the state's projected $6.5 billion budget gap, but speculation about new business taxes prompted an angry response from corporate leaders. High-ranking state officials report progress in budget talks between leading Republicans and Democrats. But Assembly Speaker Mel Miller (D) and Senate majority leader Ralph Marino (R) issued a strong denial of earlier reports that they have agreed on $1 billion in new taxes.

Gov. Mario Cuomo (D), Senator Marino, and Assemblyman Miller have agreed to cap state expenses at $51.9 billion, $29 billion of which would come from state revenues and the rest from the federal government. The fiscal year began April 1.

Among the new taxes agreed upon by Miller and Marino was a new tax on petroleum products that could add as much as 4 cents to a gallon of gas.

But as negotiators discussed the possibilities of new business taxes the state's largest business lobby, the Business Council of New York, immediately objected.

The Business Council particularly blasted a proposed tax on corporate gross receipts. The council said many companies would be unable to pay the new tax because of the recession.

A gross-receipts tax would apply to all incoming revenue from companies, as opposed to corporate taxes which merely affect profits.

The Business Council instead suggested the state take steps to control Medicaid costs and provide mandate relief to municipalities.

Until now Marino and Governor Cuomo have been on the same side on the issue of no new broad-based taxes, while Miller had fought for an increase in personal income and corporate taxes.

But Marino's proposal to balance the budget by using "one-shots such as selling government buildings and state highways - was roundly rejected by Cuomo and Miller.

Terry Lynam, a spokesman for Governor Cuomo, said lawmakers are pushing for a budget agreement because "the significance of the May 25th date can't be overlooked."

On that day, New York City is expected to experience a cash crunch that could force it to sell more than $600 million in bonds to keep afloat.

Because of the logistics of passing the now seven-week overdue budget, it is expected this year will beat last year's lateness record.

Nevertheless, the spokesman for Miller said he was hopeful an agreement would be reached early this week.

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