New York State lawmakers have dropped a plan by former Governor Eliot Spitzer to raise taxes on millionaires.

The state's new governor, David Paterson (pictured), has been working with legislators in the New York State Assembly and Senate on crafting a budget in time for the deadline. The former lieutenant governor took over as governor from Spitzer on March 17 in the wake of a call-girl scandal.

The assembly had planned to raise income tax rates 1 percent for people who earn at least $20,000 per week but has dropped the plan for now. Instead the state will try to close an estimated $5 billion budget gap in part by hiking about $1 billion in some other taxes and fees, including a $1.25 per-pack increase in cigarette taxes.

However, the budget leaves out a proposed increase in the gasoline tax, and it provides more money for tuition assistance, nursing homes and hospitals.

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