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ALBANY -- New York's Senate prolonged the ongoing state budget battle Wednesday by shelving the final budget bill hours before it was to be considered and putting off further action until after the July 4 holiday.

Senate Democratic leader John Sampson said he now agrees with Gov. David Paterson that the state needs a contingency plan to balance the budget in case $1 billion in Medicaid funding never comes from Washington.

"The governor has a concern," Sampson said Wednesday evening. "There's a possibility we may be $1 billion in the hole."

Sampson, a Brooklyn Democrat, wouldn't say what triggered his suspension of the final budget vote now, after dismissing Paterson's earlier calls for a Medicaid contingency plan, a plan to allow public universities to set their own tuition rates without the Legislature's involvement, and a property tax cap.

But Sampson named each of those items Wednesday as issues he plans to negotiate with Paterson and Democratic Assembly Speaker Sheldon Silver before the budget action resumes.

There was no immediate comment from Silver. The powerful Manhattan Democrat opposes Paterson's proposals, saying higher education plan would allow high tuition increases without Albany's approval and hurt poor students.

"The one thing that this conference has stood for is affordable education," Silver said earlier Wednesday. "We are not going to put SUNY education out of the reach of anybody who wants it in this state."

On Tuesday, Paterson turned up the pressure by saying he will proceed with his promised 6,900 vetoes of every spending addition and pork-barrel grant the Legislature added Monday to his budget proposal. He said after the vetoes are done, he would only deal with lawmakers if they come to him with his priorities, led by a contingency fund for the $1 billion of threatened Medicaid funding.

"There is no compromise," Paterson said in Washington, lobbying with nine other governors for the Medicaid funding. "We need that plan immediately in case we have to use it."

Paterson said New Yorkers would suffer "unimaginable pain ... we would have to lay off workers sooner than our plan of Jan. 1 and we'd probably have to have a 1 percent cut to all services across the board." Health and education already cut might not be able to sustain that kind of additional cut, he said.

Sampson denied that he pulled the revenue bill because as many as three Democrats threatened to defeat it to force agreement on Paterson's state university plan. Sampson insisted he still had their votes and could have passed the tax and revenue bill of the budget Wednesday, but chose not to in order to serve his members.

The members are Sens. William Stachowski of Buffalo, Brian Foley of Suffolk County and Neil Breslin of Albany, each of whom could face heat from voters in tough re-election battles this fall. Loss of any of the seats to Republicans could mean the loss of the majority for Democrats.

On Tuesday, Sampson, Stachowski and Foley met with reporters to say they have agreed to pursue the higher education issue aside from the budget. But that was before some blistering editorials in their hometown newspapers on Wednesday.

As for the budget, that appears indefinitely suspended as it heads toward being one of the latest in New York history.

"New Yorkers can expect a budget relatively soon," Sampson said. "We won't be here into August or September."

The Assembly had planned to finish its budget bills Thursday and go home for the summer.

Government will not shut down without the revenue bill. But lawmakers who have seen nearly $20,000 in pay delayed since the April 1 deadline to pass a budget will have to go longer without it as the budget remains open.


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