Will Gov. George Pataki make a comeback?

Will the governor reassert his authority a year after rank-and-file legislators handed him a historic political beating? Or did last year signal a momentous change in state politics, creating new ground rules on how your elected leaders craft a state spending plan?

That's the big political puzzle at the State Capitol as lawmakers kick off the 2004 session. But don't think the outcome is merely a political interest -- it will help determine taxes and spending on issues that hit home.

Consider 2003. The rift between Pataki and legislators triggered higher income taxes for big-earning New Yorkers. It resulted in a tuition hike for hundreds of thousands of State University of New York students, but not as big an increase as the governor wanted.

It may have prevented astronomical school-tax hikes. Or it may have encouraged profligate school spending, depending on your point of view.

So it's clear New Yorkers have a vital interest in how the politics are played out.

Last year, Pataki wanted to cut education and health-care spending, borrow billions and hike a variety of taxes and fees. And he wanted to freeze overall spending. Instead lawmakers approved hikes in income and sales taxes, rejected the education cuts and boosted total spending by $2 billion, adopting a $93 billion budget. In the process, they steamrollered Pataki by overriding his vetoes 120 times.

He became only the second New York governor in a century to have his budget overridden, according to some political historians. It was Pataki's greatest political loss during his nine years as governor.

Pataki has said little specific about his plans for 2004 besides saying: "I want to have a budget that the Legislature feels comfortable with." At the same time, lawmakers are promising they want to work together.

"I don't think that either side can afford the black eye that we had last year. I think there's more of a likelihood of a compromise," said Assemblyman George Winner Jr., R-Elmira.

But there are some potential flash points:

School funds. Hiking aid to local schools is also No. 1 on the agenda for rank-and-file legislators. Yet this year they are under a court order to come up with a plan by July to boost spending on New York City schools. That is likely to mean choosing between two unsavory political options: taking money from wealthy districts to give to poor ones or raising overall school funding as much as $3 billion, possibly through tax hikes.

The deficit. The state faces a $6 billion budget gap and lawmakers used up many of their financial tricks last year, such as selling New York's share of billions of dollars in future tobacco funds to bondholders for a short-term infusion of cash.

Pensions. There's a potential bomb in the state pension fund -- which suffered significant losses during the stock market decline -- with municipalities getting stuck with huge payments in 2004 and then hiking local taxes.

Elections. All 212 legislators are up for re-election this year. Meanwhile, Pataki will want to close up Albany business quickly so he can turn his attention to the Republican National Convention, which arrives in Manhattan this summer.

The election/convention factor -- more than any other -- probably means an end to the rift and no prolonged fights, said Baruch College political scientist Douglas Muzzio.

"If I were going to bet, I'd say we're not going to have one these 300-day late budgets," Muzzio said. "It's incumbent on the governor to get the budget out as soon as possible."

Yancey Roy is in the O-D's Albany bureau. He can be reached at 150 State St., Albany, NY 12207; e-mail: (yanceyroy@yahoo.com).