N.Y. Poised to Pass Emergency Bill With Increase in Cigarette Taxes

New York lawmakers on Monday were expected to pass an emergency spending bill that counted on revenue from increased cigarette taxes.

Under a budget bill submitted by Gov. David Paterson, cigarette taxes would be increased by $1.60 per pack, raising the tax to $4.35 from $2.75. The increased tax revenue would raise a projected $440 million in fiscal 2011 and would be used to fund health care programs.

The state has been operating under weekly extender bills since lawmakers failed to pass a budget by the beginning of the fiscal year on April 1. In addition to operating funds to keep the government running, Monday’s extender included $100 million for non-emergency capital projects, $136.6 million for mass transportation operating assistance, and $245.9 million of revenue sharing with local governments under a program called Aid and Incentives for Municipalities.

Comptroller Thomas DiNapoli’s office said that a bill authorizing paychecks to state workers needed to be passed by 6 p.m. Monday or he would not legally be able to issue them on time, the Associated Press reported.

Paterson has proposed a $135 billion budget that would have closed a $9.2 billion deficit, but the Legislature opposed some of his cuts, especially in education and health care.

It was not clear yesterday whether the Legislature would remain in session to pass a budget. The current legislative session was set to end Monday but without a budget, lawmakers would have to continue to pass weekly extender bills. Paterson last week said he would include more budget measures in the extender bills if a budget was not passed by June 28. The Legislature can only pass or reject extender bills submitted by the governor, raising the possibility of a government shutdown if the bills are not passed.

Paterson also has submitted budget bills for economic development, transportation, and other sectors. One proposal, reported by the Buffalo News citing a legislative memo accompanying Paterson’s bill, would authorize the state to sell sales tax bonds that included covenants allowing bondholders to sue if the state failed to balance its budget.

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