The enactment of a state budget traditionally is the starter’s pistol for serious consideration of the New York City budget. And while the budget approved by the state legislature last week still needs to get past Governor Pataki, the news that several key players are discussing tax cuts in connection with the city budget gets the budget debate here off on the right foot. We heard late last week from an aide to David Yassky, a City Council member from Brooklyn, who says that Mr. Yassky, a Democrat, is working with the Council’s Republican leader, James Oddo, and with a business group, the New York City Partnership, in an effort to reduce or eliminate two taxes.

The first is the unincorporated business tax, a 4% tax that for many of the city’s small businessmen amounts to a double tax. In come is first subject to this “unincorporated business tax,” and then to the city’s personal income tax. It’s bad enough that New York is one of the few cities that taxes income – most tax sales or property. But taxing income twice – first as an “unincorporated business,” then as personal income – imposes a double burden that makes New York City less competitive in comparison with other, lower tax jurisdictions. This is particularly onerous to starting entrepreneurs, but taxing anyone doubly is a serious disincentive.

The other tax being targeted is the utility tax, a levy of 2.35% of gross income of utilities, which is passed along to consumers and businesses in the form of higher energy and telephone costs. New Yorkers already face high energy costs as a result of the regulatory obstacles that discourage the construction of new power plants, of which the saga of Adam Victor’s 5-year, $15 million effort in Brooklyn, as told by our David Lombino on page one of Thursday’s Sun, is one example. The tax just makes matters worse.

Mr. Yassky’s office estimates the cost of eliminating the unincorporated business tax for New York City residents at $400 million a year and of reducing the utility tax at $150 million a year. These numbers are small in the overall context of a $60 billion city budget that has been growing, according to the nonpartisan Citizens Budget Commission, at 8% a year between fiscal 2002 and 2005. But hearing talk of tax cuts rather than tax increases from a City Council Democrat is a step in the right direction. Our own preference tends toward across-the board rate cuts on the personal income tax or toward a city tax credit for private or parochial school tuition along the lines of the one that was watered down in Albany. But if tax-cutting is the context of the city budget debate in the coming month, it will be a healthy development indeed.