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HANDS OFF PENSIONS, STATE TOLD

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STATE Hands told PENSIONS

BY Michael Finnegan

NEW YORK DAILY NEWS

Wednesday, December 13, 1995, 12:00 AM

ALBANY A judge yesterday struck down a $110 million state pension fund raid that Gov. Pataki and state lawmakers used to balance the state budget, calling the move an improper "ploy.

" Albany Supreme Court Justice Thomas Keegan said the shift and a similar $120 million dip into the pension fund by local municipalities deprived 260,000 state and local retirees of a "much-needed increase" in pension benefits. The 14-page ruling accused lawmakers of having their hands "in the cookie jar" and criticized Pataki and the Legislature for what Keegan termed "their latest budget-balancing ploy.

" State Controller Carl McCall, whose court challenge of the shift used to balance the state's $64 billion budget prompted the decision, said the court properly blocked the state from using retirement accounts as a budget "slush fund.

" A spokesman for Pataki, who repeatedly criticized predecessor Mario Cuomo for similar budget maneuvers, said the state would appeal. Albany officials shifted the money from a $360 million fund created to supplement pension benefits for state and local government retirees. The supplement was intended to add $35 to the $685 monthly benefit for an average retiree. Since the raid, nearly 3,000 retirees have died, "never to receive the additional benefits they so needed and deserved," said McCall. The ruling means the remaining retirees start getting the supplemental payments by month's end, a McCall spokesman said. But the planned appeal will postpone repayment of the $110 million, averting any immediate new budget threat as Pataki prepares for Friday's scheduled release of his proposed 1996-97 budget. Pataki yesterday outlined plans for $12.

6 billion in state highway and bridge spending for the next five years, including $2.

9 billion for New York City projects. Pataki also proposed spending $40 million on upstate mass transit projects without making any similar new contribution to Metropolitan Transportation Authority funds that pay for long-term bus and subway improvements in the city. Pataki also said he would not immediately repay a $110 million "loan" the state took from a city mass transit fund for the current budget.

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