Tom Precious. Buffalo News. 1/16/2001.

The state budget for the coming year will offer dramatic changes in the way public schools are funded, increase spending to promote development of old industrial sites in urban settings like Buffalo and cut Medicaid spending for nursing home care, Gov. George Pataki proposed this morning.

The proposed budget will total $ 83.6 billion, up from the $ 77.5 billion current year spending plan for the state.

The budget will include $ 530 million in newly proposed tax cuts, on top of $ 1.27 billion that are already expected to kick in during the coming year. Most of the new cuts will go to give additional benefits to farmers and seniors under a state property-tax cutting program and a $ 300 million tax package targeted mostly to upstate to help expand high-technology jobs.

Legislators had not yet seen the details of the budget, which was given to reporters this morning before his briefing to lawmakers. But even before Pataki proposed his budget, Democrats and Republicans alike were predicting he would try to squirrel away a big chunk of this year's expected surplus to provide some cushion next year when he is expected to seek re-election.

On Tuesday, those predictions came true, as Pataki proposed moving $ 1.4 billion of the 2000 surplus into rainy day accounts.

That level will give lawmakers, again, a big amount to try to raid for their own spending priorities. But fiscal conservatives will likely call for restraint, especially as concerns mount of a national economic slowdown, leading to worries about the impact on tax revenues that may result from a less robust Wall Street and a softening upstate economy.

"With virtually every reputable economist forecasting a national economic slowdown in the coming months, this step will allow New York to avoid the mistakes of past administrations," Pataki said in a written statement.

The budget, as announced over the weekend, also proposes dipping into a reserve account to add $ 250 million to help continue several critical highway programs following last November's defeat by voters of a $ 3.8 billion transportation bond act. The pay-as-you-go scheme, saving $ 125 million in borrowing costs, would be earmarked, in particularly, to proceed with plans to upgrade Route 219 from Springville to Salamanca and to finish the eastern portion of Interstate 86 along the Southern Tier.

The budget also calls for

$ 5 million to create a special government-run corporation within the Empire State Development Corp., to promote tourism at Niagara Falls.

A new $ 1 billion program, funded mostly by federal and private dollars, to create biotechnology and other high-tech centers in several areas. In Buffalo, the program would create an alliance between the University at Buffalo, Roswell Park Cancer Institute and several private companies. First-year state spending for the program will total $ 136 million.

The budget approved for this year totaled $ 77.5 billion. It was not adopted by its April 1 deadline, and most lawmakers are expecting this will, for the 17th straight year, be another late budget year.

Most of the major proposals come in education. The governor proposes to spend $ 14.1 billion in state funds on public schools, up $ 382 million from this year. That number, however, is far below the $ 1.45 billion the Board of Regents say is necessary to help schools cope with their increasingly strict high school graduation requirements program, and to offer extra help to poor, mostly urban schools.

The governor's plan, coming one week after a state Supreme Court judge in New York City slapped down the state's education formula as inequitable, would create a new system in which schools would have a greater say over how to spend money they get from Albany. It represents a drastic change from the formula-based approach that lets Albany dictate everything from how much schools will have available for hiring teachers to buying new classroom computers.

Of the $ 14.1 billion in education spending, $ 9.8 billion would come from a new program called Flex-Aid, which would consolidate 11 spending formulas into one. It would also target additional aid to schools having trouble meeting the Regent's stricter high school graduation requirements; the most acute problems in that program are in urban districts, such as Buffalo.

The state's largest five cities' school districts, including Buffalo, also would be able to tap into a $ 7.5 million fund that recognizes improvements in student performance and a $ 15 million fund for new technology purchases. But the governor would also set up strict standards for the big five districts before they can get money out of an existing $ 130.5 million state program created to improve problem schools. In addition, a modest $ 5 million program would be created to help students in private schools meet the Regents standards.

The governor also proposed, once again, to give mayors in the big five districts more control over school boards, relax some union hiring rules for school construction projects and allow parents to transfer students out of schools on a list of the state's most trouble schools.

Details on how his education formula change will work was to presented by his budget advisers later in the day Tuesday. Also, specific dollars amounts Pataki was to propose for schools was not yet available.

For the state university system, no tuition hikes are being proposed. Nursing homes, which the Pataki administration says has enjoyed record profits in recent years, would face sharp restrictions in Medicaid reimbursements from the state, a plan operators will likely say will hurt patient care. Pataki is also proposing stricter nursing home oversight, including making it easier to remove problem operators and imposing criminal background checks on direct-care workers.

The state budget is due to be in place April 1, a deadline lawmakers and governors have failed to meet for the past 16 years.

The Senate's Republican majority Monday reissued its proposal aimed at avoiding late budgets. The Senate plan includes earlier deadlines and a "default budget" limited to the prior year's level if a budget is not passed on time, said Majority Leader Joseph Bruno.

The measure failed to pass the Democrat-controlled Assembly last year.

Pataki on Monday said his budget plans will include $ 2.2 billion for various health care programs, a $ 149 million increase over present funding. Among the new items to be funded are programs to increase Medicaid coverage for disabled individuals who work, which would benefit 19,000 New Yorkers, and provide Medicaid eligibility for breast and cervical cancer treatment to an estimated 77,000 women who meet certain income requirements.

The budget will include $ 108 million to pay for already approved expansions in a program to cut drug costs for seniors, $ 22 million for new measures to deal with West Nile virus, $ 5 million to screen every newborn for hearing problems and $ 3.7 million to cover childhood immunizations for pneumococcal pneumonia.

The governor on Monday also proposed providing rebates to nearly 568,000 professionals who pay annual fees for state licenses. The returned money will cost the state $ 15 million.