NEW YORK STATE LEGISLATORS AGREE TO CAP GAS TAX

     Motorists could soon see the price of gas drop 4 cents a gallon under an agreement the Legislature reached last week. The modest drop could double if county governments followed suit. Whether Gov. George Pataki will agree to the long-discussed sales tax cut remains uncertain. Senate Majority Leader Joseph Bruno, R-Brunswick, and Assembly Speaker Sheldon Silver, D-Manhattan, agreed on a plan to cap gasoline taxes at 8 cents a gallon, equal to what the state collects on a $2 gallon. If the price fell under $2, the tax would drop as well. With gas prices around $3 a gallon, consumers are paying the state 12 cents or so per gallon. Local sales taxes add 12 to 15 cents.

    The bill, which is slated to be voted on and take effect June 1, would cost the state an estimated $200 million. Counties could opt in, capping their tax at the $2- or $3-a-gallon level, he said. If all counties signed on, the cost to state and local governments would be about $450 million.

Lawmakers have been under pressure to find relief measures as gas prices climb. The tax cap has been the most talked-about state-level solution for immediate relief.

     In a written statement, Pataki's office said it needed to review the legislation but repeated his concern about the state's ability to afford a tax break. Pataki said he would be unable to approve any measure, even if he likes it, that would increase spending or future budget deficits.

Pataki called for the Legislature to pass his alternative energy proposal, which would provide incentives for fuels other than gasoline. The Assembly also suggested a windfall tax as well,  but the Senate didn't agree to it.

     The Legislature's plan would require monitoring by the state Department of Taxation and Finance to ensure tax savings were passed on to consumers. It also would: Allow New York City to reduce or eliminate its sales tax on home heating fuels; Include a tax credit for home heating oil containing biodiesel fuel, equal to 1 cent per gallon for each percent of biodiesel additive; Include a tax credit of 50 percent, up to $500, for energy-efficient home heating systems; Require the Thruway Authority and the New York State Energy Research Development Authority to have a plan by the end of the year to install alternative fuel stations every 120 miles along the Thruway.