Governor George Pataki this week rejected the idea of tax increases to support increased school spending, and insisted that last year's income-tax surcharge should expire as scheduled.

"This state does not have, in my view, any desire to raise taxes," the Governor said in response to a question about how to pay for any increase in school funding.

"Both the speaker and the majority leader have said they will not raise taxes. I will not raise taxes. So if you're looking for additional funds for education, you have to look in a way that doesn't constitute a tax or that doesn't result in taking money from other local governments or taking money from other school districts."

Asked about the possibility of delaying the sunset of the income-tax surcharge, Governor Pataki said that "would drive jobs out of the state," according to a transcript of the exchange from Capitolwire.com. Last year's income-tax surcharge, which was part of $2 billion in "temporary" tax increases, is due to expire in two years.

"I was out in last year in the Silicon Valley when I received an award from the semiconductor industry and I sat around with a group of industry executives prior to the formal dinner and one of the first things they asked me was what was the marginal tax rate in New York State. This has a profound impact on whether or not we're going to be able to continue to compete and attract jobs, so I think it would be horrible to have a higher income tax rate in this state."

The Governor also reaffirmed the importance of containing the state's highest-in-the-nation Medicaid costs, saying he considers helping local governments by containing Medicaid costs and enacting pension reform "absolutely essential."