Black and Hispanic leaders from across the state rallied Sunday against Gov. George E. Pataki's proposal to fund education by opening gambling halls with thousands of video lottery terminals.

In New York City, the New York State Black, Puerto Rican & Hispanic Legislative Caucus held a news conference Sunday outside City Hall in opposition of the governor's gambling proposal, calling the plan a shortsighted funding scheme that would ruin communities.

Buffalo-area members of the caucus echoed similar sentiments.

"The poor and people with low incomes are the ones who are looking the hardest for the dream of being that big lottery winner," said Assemblywoman Crystal D. Peoples, D-Buffalo. "We need to take a second look at this and find other ways to fund education, as opposed to encouraging people who can't afford to gamble."

Peoples said she is worried about people like Preston Cloud, 42, an East Side resident who works as a contract laborer and is on disability but sometimes borrows money from friends to pay for lottery tickets.

Cloud, who said he has been buying two lottery tickets a day for the past 20 years, opposes Pataki's plan for video lottery terminals as a funding source for education.

"I have that dream," said Cloud, while purchasing $6 worth of lottery tickets at a newsstand at Fillmore Avenue and Broadway. "We don't have any money, and we're spending money we don't have. They say it's a dollar a dream, and I put my last dollar on that dream."

Sunday's news conference in New York City was led by Assemblyman Adriano Espaillat, D-N.Y., chairman of the caucus, and New York City Councilman Robert Jackson, who was the lead plaintiff in the case against the state to obtain adequate funding for the city's public schools in 1993.

Tuesday, the governor announced his 2004 budget plan, which included a proposal that the state sell franchises to eight companies for the exclusive right to open gambling halls with slotlike devices known as video lottery terminals, or VLTs.

Each year, the state generates about $2 billion from lotteries, racetracks, off-track betting parlors and the 1-year-old Seneca Niagara Casino in Niagara Falls. Pataki estimates the video lottery terminals will raise as much as $2.5 billion in added annual revenue.

That number is expected to at least double if VLTs are installed over the next few years at eight gambling halls previously targeted for the devices and eight new sites still being sought.

Pataki says the gambling revenue is dedicated to education, but critics like the Rev. Darius Pridgen charge that the governor is using lottery proceeds to replace money that has already been slashed from the state's education funding, instead of increasing the education spending.

"The governor's plan is another vehicle of trying to find an easy way to fund education instead of just rearranging the budget," said Pridgen, a pastor at True Bethel Baptist Church on East Ferry Street and a former Buffalo School Board member.

"The Bible says, "Without a vision, the people will perish.' This is a visionless government. Education should not be funded based on a gamble."

Pridgen said African-Americans and Hispanics are among the biggest purchasers of lottery tickets and "the people who get addicted (to gambling) are usually the ones who cannot afford to lose a dime."

State Sen. Byron Brown, D-Buffalo, said he would prefer to see the exact amount that is being spent on education in the state budget.

"This mechanism for funding is gambling with the future of our youth," said Brown, also a caucus member. "I do not necessarily see this as a predictable and reliable funding source because it's not coming out of the state budget. The better plan is actually to increase the appropriation for public education in the state budget."

Fellow caucus member Peoples questioned the morality of the governor's gambling proposal.

"What kind of message are we sending to our kids when we say it's OK to gamble and fund their education through gambling?" she said.

"This sends a mixed message and it's contrary to the the values of New York residents."