A panel of New York State appellate division judges yesterday denied request to block the state's promotion of Gov. Mario M. Cuomo's $800 million jobs-creating bond act.

The unanimous vote officially reverses a decision last Friday by Judge Lawrence E. Kahn of the state Supreme Court in Albany County, who signed a temporary restraining order sought by a taxpayer activist to block the state's promotional campaign for the jobs bond act.

The activist, Robert L. Schulz, is suing the state for allegedly violating a constitutional restriction on the use of taxpayer money to advertise for so-called private purposes, such as promotional campaigns.

Schulz claims the state's advertising campaign for the bond act violates this clause.

On Saturday, Judge Leonard A. Weiss, the appellate division's presiding justice, temporarily "vacated" the restraining order, pending a full vote of an appellate division panel.

In response to the ruling, Schulz, president of the All-County Taxpayers Association, said he will appeal the decision today. "This is judicial tyranny," he said in a telephone interview. "It's terrible."

On Friday, the state Supreme Court in Albany will hear arguments from both Schulz and the state. The case is part of a larger lawsuit charging state government and a Long Island school board with violating state law.

In terms of the bond act, Schulz says a pamphlet and brochure distributed to businesses and individuals around the state advertises aspects of the $800 million Jobs for the New, New York Bond Act rather than providing factual information.

The bond act will appear on the November ballot for state voter approval. Aides to the governor said the act will immediately create 25,000 construction jobs, and 100,000 before the next century. Schulz disputes the state's position on the bond act and says its advertising is not factual.

But in reversing Judge Kahn's decision, Judge Weiss said in a telephone interview that the advertising campaign "does not exhort people" to vote in favor of the bond act. As a result, he said, a restraining order is not needed.

In 1990, Schulz prevented the state from spending its money on promoting a $2 billion general obligation bond program to improve the environment known as the 21st Century Environmental Quality Bond Act.

In November of that year, the state Court of Appeals barred the Cuomo administration from using taxpayer money to print pamphlets and other promotional items advertising the environmental bond act on the grounds that the state used public money for private purposes.

Voters rejected the bond act when it appeared on the November ballot.

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