NEW YORK - New York State's bankers are applauding the budget proposals submitted last week by new Gov. George E. Pataki as the first steps to turning around a lackluster economic performance.

"It's very positive news for bankers, very positive news for the state and very positive news for the future," said John Pritchard, executive director of the New York State Independent Bankers Association. "Only the future can predict whether it's going to be enough, (but) it's ... something that we all have to get behind."

The governor said at a New York State Bankers Association meeting Feb. 2, the day after submitting his budget, that he would do what's necessary to encourage economic growth and help industries compete.

"It was very important that he was here a day after giving his budget to convey to an industry like ours that the State of New York is very serious about commitments on tax reduction and regulatory burden relief," said Michael Smith, executive vice president of the state bankers association. "It really gave the banking industry a reason to be optimistic about the future here."

The governor, who has experience with banking issues in the State Senate, did not specifically address banking concerns, such as reforming the state's bank tax, which bankers acknowledge is unlikely for this year.

That's fine with the bankers, who have already achieved some desired changes in state banking law over the past few years and are ready to concentrate on statewide economic growth, Mr. Smith said.

Noting that New York had lost 100,000 jobs in the last year while the rest of the country gained 6.5 million, Gov. Pataki told the 300 bankers that the state must follow the lead of other states in adopting tough economic measures.

And he urged bankers to support growth by providing their customers with the necessary capital and other business, while acknowledging that the state must help bankers compete.

"We are going to be as cooperative as possible, both from a regulatory standpoint and from working with the industry to have a better economic climate," the governor said in a separate interview. "We want to see the industry grow and New York remain the center of the industry, not just for the country, but also for the world."

Following the lead neighboring New Jersey Gov. Christine Todd Whitman, Gov. Pataki has pledged to cut income taxes by more than 25% over four years and to allow the state's corporate surcharge to expire.

His $32.4 billion general fund budget proposes cutting the cost of state government by 7.5%, or more than $2.5 billion, he said. He also wants to reshape the state's welfare system, which he described as a "bureaucratic nightmare that traps people," through $343 million in cuts to housing subsidies and emergency utility bill payments.

"We think that the effort to reduce spending in the state, to try to make the state a more competitive economic environment is very important to accomplish," said Robert O. Lehrman, president of the Community Bankers Association of New York State. "The industry would applaud the governor's effort to move the state in that direction."

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