NY Gov. aims to hike taxes on soft drinks, furs-NYT

ALBANY, N.Y., Dec 15 (Reuters) - New York Gov. David Paterson on Monday added $400 million to the 15-month, $15 billion deficit, one day before he unveils a new budget that Monday's New York Times said includes some novel levies, such as an anti-obesity measure that would hike taxes on "sugary" soft drinks.

If his plan became law, consumers would pay more for non-diet versions of Coca-Cola (KO.N) and Pepsi (PEP.N).

Luxury goods buyers would pay higher taxes on items from furs to boats, the Times said.

The Democratic governor, asked about raising income taxes for millionaires, told Albany reporters "no option was off the table." But he noted that the state's economy was strengthening the last time this revenue-raiser was enacted. This time, Wall Street's missteps have clobbered the economy and tax revenues.

"You can't tax $50 billion on New York's wealthiest residents," he said. "You are going to have to take it from other places and hopefully, if there were to be an income tax, it would be at the end of the process, not the beginning."

A spokesman for Democratic Speaker Sheldon Silver, whose chamber wants millionaires to pay higher income taxes, declined comment until Paterson issues his budget plan.

The governor also plans to end the sales-tax break for clothing and footwear that costs less than $115, though shoppers would pay no sales taxes during a two-week period for items that cost less than $500, the New York Times added.

HEALTH CARE AND SCHOOLS HIT HARD

Monday's Albany Times said Paterson also will propose increasing welfare benefits for the first time in 18 years with a 30 percent rise over three years, and widening the state health insurance plan to cover more people. But the overall health budget will be cut $3.5 billion, the paper said.

The tax hikes Paterson plans will also hit health insurers, and fees charged by the Motor Vehicles Department and state parks also will climb, according to the Times. State universities and colleges will charge higher tuition.

The obstacles Paterson faces in getting the legislators to enact his budget, which could top this year's $120 billion accord, include a Senate leadership brawl. In November, Democrats won control of the state Senate for the first time since 1965. But a power-sharing pact collapsed last week.

The Republicans, who last month spurned Paterson's attempt to begin closing the deficit with $2 billion of cuts, could keep control if they win over three dissident Democrats. That could intensify the often brutal budget battle.

Lame duck Republican Senate Majority Leader Dean Skelos, on Albany radio show 1300 AM, said that both houses should begin holding budget hearings, with an equal number from each party serving on each committee, if the Senate cannot pick a leader.

"The people want us to control spending; they don't want taxes raised and they don't want any shift at all for property tax payers," he said.

Asked how hard it would be to get the Legislature to approve $9 billion in cuts and $4 billion in fees, Paterson said no one would be able to do this alone.

"We could beat up on the legislators; I don't think that will make them change their vote," he jested later. (Reporting by Elizabeth Flood Morrow in Albany and Joan Gralla in New York; Editing by Jan Paschal)