There was more dreary news this week about New York's business climate - another report showing that the Empire State is the most unfriendly place for business in the continental United States.

As The Post reported Wednesday, the Milken Institute's index of current business costs in all 50 states shows New York closing in on Hawaii as the most expensive place to start or run a business. But in the spirit of the season, let's skip the gloom and doom and turn this lump of coal into a practical wish list for Albany lawmakers in 2008:

Don't raise taxes to fix the deficit: In dealing with a projected $4.3 billion deficit, state lawmakers must resist the temptation to increase taxes. That means no industry-specific tax hikes - otherwise called loophole closings - that target some of the most important employers in the private sector.

Lawmakers need to remember what we've come to: Our combined state and local tax levies give New Yorkers the highest tax bills in the country. Local property taxes alone are 79 percent higher than the national average. And rebates like STAR only add to the property-tax burden on businesses, which aren't included in the program.

We don't need the Milken Institute to tell us what we already know from the Census Bureau and the facts of daily life in New York (especially Upstate): New York's high taxes have driven jobs and people out of state for four decades. Enough already.

Find ways to cut spending: Taxes are dangerously high because spending - on Medicaid, education and the bloated government workforce, to name a few - is more than our fragile state economy can bear. Only real, long-term reductions in spending growth, at the local and state level, will make sustainable tax reduction and a stronger economy possible.

This means fewer Albany mandates on local governments, consolidation of local governments and services, more efficient health-care delivery, reduction of the state payroll, reform of the Taylor Law, privatization of infrastructure projects, and the consideration of caps on local property taxes and school spending.

Lower the cost of health insurance for small businesses: Small businesses need affordable, market-based options for health insurance that aren't now available. The state can help - for example, by reconsidering mandates that boost the cost of insurance and by making the state's Healthy New York program more affordable and accessible to more small businesses.

The state should also recognize that health insurance is costly because health care is costly - and take steps to ease those costs. An increased state commitment to health-information technology and a continuing commitment to containing costs through health planning (as exemplified by the hospital-closing work of the Berger Commission) are two worthy goals.

Enact energy policies that increase supply and lower the cost of electricity: New York's retail electricity costs are the nation's fourth-highest. Albany can make things better - by enacting a law to expedite the siting of badly needed generation plants, for example. And by supporting the development of efficient generating capacity (including Indian Point and other nuclear plants) and enabling the transmission infrastructure to get the juice from where it's made to where it's needed.

There is cause for hope: The workers'-compensation reform enacted this year saved New York employers more than $1 billion. And by getting that done, Gov. Spitzer and the Legislature's leaders showed that they know what needs to be done to rebuild our economy, create good jobs and strengthen communities. And that when they work together, they can solve our most difficult problems. We can indeed turn the corner in 2008.

Kenneth Adams is president and CEO of the Business Council of New York State, New York's statewide chamber of commerce and its largest broad-based business group.