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ALBANY-Officials with Governor George Pataki’s office warned yesterday that unless the state Legislature approves supplemental funding soon, the state’s ability to attract and retain businesses in the state could be diminished significantly this fiscal year.

The State Legislature, after failing to pass a state budget by the mandated April 1 deadline, last week approved a “base-line” budget of less than $80 billion. While some argue that the budget will meet the state’s funding obligations for the remainder of this year, other state officials say that many programs are in jeopardy.

“The base-line budget reduces funding for economic development projects from $400 million allocated last year to zero,” says Joe Conway, a spokesman for Pataki. “In a number of respects it will have a devastating impact on our ability to create new jobs and economic opportunity in New York State.”

Conway says that the funding cutbacks are in a number of line items related to economic development activities. He says that the governor’s office is still reviewing the budget to determine if funding for economic development zones has been slashed. The zone program allows businesses that expand or relocate there to receive a host of tax incentives.

Several days before the budget was passed, Pataki announced that certain sections of Sullivan County had been designated as the state’s 55th economic development zone. Another economic development zone in the Hudson Valley is located in the city of Yonkers.

Other programs affected include the state’s Environmental Protection Fund and funding for the State’s Childrens Healthcare Plus insurance program, whose funding will run out at the end of October.

When the budget was approved, State Assembly Majority Leader Sheldon Silver stated, “This austere, $79.6 billion basic budget provides a complete, solid and balanced framework for meeting all state financial obligations and responsibilities for the entire fiscal year. State government will continue to function. Essential programs and services will continue to be provided.”

However, he added later that more negotiation is required to augment the budget. “The governor must accept and fulfill his role as leader in this process,” Silver stated. “It is my hope that this basic budget adopted by the Legislature finally engages the governor to negotiate a supplemental budget with the state Senate and Assembly. The state has more than a $4 billion surplus and through good-faith negotiations, we can get the job done.”

Pataki’s spokesman fired back, calling the basic budget adoption, “a very transparent ploy to force the governor to come back and spend billions of dollars that the state cannot afford. We will continue to hold down spending.”

Pataki has not said when or if he will come to the table to discuss a supplemental budget. Conway notes that the governor is currently “assessing his options.

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