New York city shrugs off Albany impasse to pass 2010 budget

NEW YORK (Reuters) - New York Mayor Michael Bloomberg and City Council Speaker Christine Quinn have agreed on a $59.4 billion city budget for fiscal 2010, shrugging off the continued political impasse between Republicans and Democrats in the state Senate.

The budget includes more than $3 billion in spending cuts, and will raise the city sales tax by a half a percentage point to compensate for falling revenues.

"Balancing this budget required everyone to be a part of the solution, and now the only remaining piece of the puzzle is getting cooperation from the State," Bloomberg said in a statement released late Monday.

"It is imperative that our leaders in Albany come to an agreement to pass bills that will allow this budget to go into effect."

Last-minute talks succeeding in restoring funds to keep 16 firehouses open that had been slated for closure, maintain citywide six-day library service, and retain about 100 child welfare workers, Bloomberg said.

The week-long leadership dispute between New York Senate Republicans and Democrats remained unresolved early Tuesday, leaving a range of bills on subjects including the city budget, pension reform and gay marriage hanging.

Democrats on Monday sought a power-sharing agreement with Republicans after a judge declined to rule on the issue, urging both sides to settle the issue outside of court.

Senate Democrats united behind a new leader as Senator Hiram Monserrate, one of two dissident Democrats who helped the Republicans win a leadership challenge by two votes, said he has rejoined his Democratic colleagues.

That leaves the Senate evenly split 31 to 31.

Democrats said that Senator John Sampson of Brooklyn is new leader of the Democratic Conference. Malcolm Smith will retain the title of Senate Majority Leader but Sampson will be responsible for day-to-day running of the party senators.

The Democrats won control of the Senate for the first time in 40 years in November and named Smith majority leader in January. But Smith lost support of several of his Democratic colleagues, leading to the calls for his ouster last week.

(Reporting by Ciara Linnane)