Mayor David N. Dinkin's aides and officials from the New York City Council, anticipating state lawmakers will eviscerate te mayor's proposed tax package for the city's fiscal 1992 budget, were expected to spend the weekend trying to develop an alternative revenue package to bring to Albany this week.

Despite their strongly worded differences on what the fiscal 1992 budget should look like, Mayor Dinkins and Peter J. Vallone, speaker of the city council, are exposed to join forces tomorrow to lobby for the mayor's proposed $330 million in taxes and fees.

They also will seek restoration of about $328 million in state mandated relief and state aid that had been earmarked for the city but was vetoed from the state budget by Gov. Mario M. Cuomo last week.

But the negotiations, which started last Thursday afternoon, got off to a shaky start Friday morning when New York Newsday published a story detailing a plan proposed by the council to raise the city's sale tax to 8.75% from 8.25%. The tax increase, which Mayor Dinkins does not support, was one of a list of revenue raising measures presented by council staffers at a meeting with mayoral aides and agency heads.

Peg Breen, a spokeswoman for the city council, said the information on the sales tax proposal was leaked "because [mayoral aides] didn't like it and they wanted to blow it out of the water."

The council's revenue-raising strategy focuses on broad-based taxes to make the increases morfe equitable, she said.

Lawmakers in Albany, whose approval is needed on a number of revenue raising proposals in the city's fiscal 1992 budget, are not expected to support Mayor Dinkin's proposed gas tax increase, which would raise $40 million, and an ad valorem tax on automobiles, which would garner $45 million, she said.

State legislators are expected to avoid dosing taxpayers with more tax increases because they included an increase of the state's business tax on petrolem products and increased automobile registration fees in the state budget they passed two week ago.

In addition, about $200 million from an increase in the city's personal income tax is on shaky ground, Ms. Breen noted.

A mayoral aide, who wished to remain anonymous, said city council is backing off from the sales tax proposal. He said Mayor Dinkins does not like the sales tax increase because it would not be tax deductible and is regressive.

Although the council said clothing costing $75 or less would have been exempt from the sales tax increase, the mayoral aide said the tax would have had a detrimental impact on the poor in the city.

He also pointed out the city wanted to remain competitive, noting that New Jersey recently increased its sales tax and Connecticut officials are mulling a plan to broaden the state's sales tax to cover items not now taxed.

The mayoral aide said officials may have to boost the city's personal income tax increase even more to fill a hole in the city's fiscal 1992 budget created by the governor's vetoes.

Meanwhile, City Comptroller Elizabeth Holtzman said in a report released yesterday that the city still faces a $95 million budget gap for fiscal 1991, which ends June 1.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.