There are two political battles shaping up that, taken together, will do much to determine the fiscal future of New York State and City. The first will be between the fiscally conservative Governor Pataki of the first term versus the spendthrift Governor Pataki of the second term. The second battle will pit the winner of that internal struggle against a mayor of New York who insists, in a time of budget crisis, in raising both spending and taxes. Yesterday’s State of the State address by Mr. Pataki bodes well for Pataki I — the tax and budget cutter — and thus ill for a mayor seeking tax hikes and aid from Albany while pressing a city budget that fails to cut spending.

Mr. Pataki’s speech dedicated not one, but two passages to praise of tax cutting. “While other states raise taxes, let us outcompete any state and continue to create new jobs by maintaining New York’s eight-year record as the tax-cutting capital of America,” Mr. Pataki said. He later added that in the fiscal crisis of 1995, “we made the right choice … We cut taxes, reduced spending, and led New York’s economy to renewal.” For those awaiting an indication of which Pataki would be leading New York this time around, the signs were that Pataki II is reeling as the governor promised to go ahead with scheduled tax cuts and enact further cuts in taxes and the budget. If ambition for an appointment in the Bush administration is a factor — fiscal liberalism would not endear Mr. Pata ki as, say, a possible replacement for a sidelined Dick Cheney — it may prove to be a knockout punch.

Mr. Pataki’s ambition could also prove punishing to Mr. Bloomberg as he enters the ring at Albany. The mayor’s November financial plan counted on $1 billion dollars from a “reform” of the income tax — one that would give city residents a small break while lassoing suburbanites into a commuter tax reinstatement at six times its old rate. Mr. Bloomberg’s scheme, however, is seen as a non-starter in the state’s capital, especially after yesterday’s speech. Even a reinstatement of the commuter tax at its old 0.45% rate would not work out to half of the $1 billion on which the mayor is counting.

It’s impossible to tell what the mayor can expect from Mr. Pataki when even a bonding scheme to sneak billions of dollars out of New York’s share of the tobacco settlement, according to the Manhattan Institute’s E.J. McMahon, will still require cuts in state government on par with eight years ago. Medicaid reform is on the table, but the mayor is certainly not going to get the state to take over the local portion of the cost of the program as he requested in his November financial plan. Looks like time for Mr. Bloomberg to rethink his strategy. He may be up against a leaner, meaner opponent than the one for which he has been bargaining.