Paterson Says Federal Funds Could Prevent Tax Increases

ALBANY—As David Paterson and Chuck Schumer talked about new federal aid—hopefully at least $5 billion in Medicaid funding and "billions" for education, depending on the estimate—Paterson said it would be his preference to use some of the new money to roll back some of the tax and fee increases he proposed in his budget.

"I don't know the amount that's coming through, and I don't want to speculate on what I'm going to do in the future," Paterson said in response to a question from Gannett's Jay Gallagher. "But what I said is that the taxes were the last part of the budget, we didn't have taxes in August when we told you when the budget deficit was $3.4 billion."

"If there was a way to make some adjustments, that would be my preference," he said.

The two were together to call for block grants of education aid, similar to a proposal Paterson included in a letter last year to President-elect Barack Obama.

Paterson also said he backed off his earlier proposed budget deadline partly in response to the expected quick passage of a stimulus package—Schumer said he hoped the bill would be on Obama's desk by February 13. A later deadline gives legislators an opportunity to look at what will be available and negotiate accordingly.

Senate Minority Leader Dean Skelos is also in favor of rolling back taxes and fees.