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City reaches budget deal but state politicians delay

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The Assembly and Senate ended their session Tuesday night without taking any action on a $400 tax rebate program for homeowners in New York City, which is central to the mayor's budget plan. The Legislature may reconvene in mid-July.

The city budget, released 10 days before the July 1 deadline, includes the $400 property tax rebate proposed by Bloomberg and the creation of a city Earned Income Tax Credit for low-income families urged by Speaker Gifford Miller (D-Manhattan), as well as restored funds for social, cultural, health and other programs.

"I don't know that anyone expected us to get together on this tonight," Bloomberg said late Monday. "This is a good and balanced and practical budget that will benefit all New Yorkers."

Bloomberg had been pushing for the $400 tax rebate since he announced it last year. The rebate will cost $300 million and temporarily provides relief for homeowners hurt by the 18.5 percent property tax hike imposed last year to help close a multibillion-dollar gap.

"This is a tremendous victory for the hardworking middle-class taxpayers and working families in this city," said Councilman Dennis Gallagher (R-Middle Village).

The Council had proposed a 2 percent rollback of the property tax, saying it would help people recover in a more evenly distributed method.

"We never said we were strongly opposed to it," said Councilman David Weprin (D-Hollis). "We thought there was a more equitable way to impose it. We weren't going to turn down the rebate."

In exchange for the compromise, Miller and the Council were able to secure the Earned Income Tax Credit extension. The credit will allow families earning below $34,000 a year to receive a break on their city income taxes of up to $215, Miller said.

"With this new Earned Income Tax Credit 700,000 working New Yorkers can get a little bit of a boost for making work work," he said.

The state must approve both the tax rebate and the tax credit, and the Legislature was expected to do that Tuesday.

The budget also restores $215 million in service cuts, including $10 million for libraries around the city, $11 million for the Legal Aid Society, and $3 million to reduce early education class size. Another $10 million was set aside for a minority employment training program spearheaded by Councilman James Sanders Jr. (D-Laurelton).

Some were hoping to restore more money to other programs.

"I'm very upset that the Council was not able to find money to restore the huge cuts that have been made to the district attorneys' offices for the last three years," said Councilman Peter Vallone Jr. (D-Astoria).

But while the city has set its numbers, it is still waiting to hear how much money will be coming from the state for education.

"One area that we clearly still need resolution on is the funding for New York City schools," said Councilman John Liu (D-Flushing). The governor is still holding that up in Albany."

The state has been embroiled in a battle over how to comply with a court order to reform its education funding formula. The court decision, known as the Campaign for Fiscal Equity, found city schools were not receiving their fair share of money when compared to suburban counterparts. The court has ordered the state to develop a new funding formula by July or a special master will be appointed to even out the money.

Before the Legislature adjourned Tuesday night, the Republican-controlled Senate was trying to pass a budget without including the CFE funds, while the Democratic Assembly insisted on putting it in.

"We could cover all the other aspects of the state government, including a down payment on the quality-of-education matter, and simultaneously and subsequently work on a five-year plan," said state Sen. Frank Padavan (R-Bellerose). "That makes a great deal of sense to me, but unfortunately the Assembly insists on doing both at the same time."

But many agreed with the Assembly stance.

"The real question is the relationship between the CFE lawsuit and the New York state budget because they are inextricably intertwined," said state Sen. Toby Stavisky (D-Whitestone) "One is dependent on the other."

And while small compromises have been made on other budget issues, the CFE is the "excuse du jour," for the Legislature's failure to pass a budget on time, said state Sen. John Sabini. The state has failed to make its April 1 deadline for more than 20 years in a row.

"It's ridiculous up here," said state Sen. Malcolm Smith (D-St. Albans) Monday. "It's an embarrassment."

It was not known whether the Legislature in the 11th hour voted on a six-week extension that would allow the state to pay its bills and continue functioning. But many, including Smith and Assemblywoman Barbara Clark (D-Queens Village), said earlier this week that they preferred a one-week extension that would force the elected officials to come back next week to resolve the impasse.

In the meantime, lawmakers have not been paid since April 1, when they missed the deadline. The penalty was put in place a few years ago as a motivation for passing a budget on time, but it seems to have little effect, said Assemblyman Mark Weprin (D-Little Neck).

"They paychecks are actually sitting in a vault somewhere, not collecting interest," he said. "In order to pay my bills I had to borrow money at an interest rate."

But some say missing a deadline and waiting for paychecks are small prices to pay for getting a chance to shape the budget.

"Well, it's easy to have an on-time budget if we're willing to do away with all the things we think are important," said Assemblyman Ivan Lafayette (D-Jackson Heights).

- The TimesLedger staff contributed to this report.

Reach reporter Courtney Dentch by e-mail at news@timesledger.com, or by phone at 718-229-0300, Ext. 138.

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