ALBANY — With budget negotiations coming down to the wire, Governor Spitzer is not ruling out shutting down the government if he and the Republican Senate don’t hammer out a deal before the April 1 deadline.

Republicans, however, say they are standing their ground and are accusing the governor of negotiating in bad faith, even while preparing to deal with the fallout that a late budget would produce.

Beneath the blanket of pessimism, top negotiators for Mr. Spitzer and the Senate Republicans were in talks late yesterday in a last-minute bid to bridge differences on key sticking points, particularly the geographic distribution of education spending.

Shadings of agreements on other points of divide also were emerging: The Republican Senate has bridled at Mr. Spitzer’s $1.5 billion plan to expand the state’s property tax exemption program in a way that does not benefit residents whose household income exceeds $235,000.

The Spitzer administration is floating a compromise that would still favor middle-class residents but would be structured as a rebate program in which checks go directly to homeowners. Republicans prefer this structure because it eliminates the school district as a middleman, but also because they figure residents will more likely associate the benefit with their local lawmaker if they get actual checks in the mail.

Spitzer officials are also looking to get Republicans on board a Medicaid deal that would restore a majority of the governor’s proposed cuts to hospitals, but would fall short of demands made by the Senate and the state’s largest hospital union for a full recovery of the money.

Also, the governor’s office is in talks with lawmakers in both houses to reach deals on tax loophole closures and on charter schools.
A source close to the governor said the Business Council of New York State is involved in discussions on the fate of a tax loophole that benefits New York banks. Mr. Spitzer in his budget proposed changing tax law to prevent banks from using real estate investment trusts to reduce their tax liability. Republicans say the measure is a tax, and they cut it out of their budget.

The Spitzer administration and the Democrat-led Assembly, an ally of the teachers union, are also on the verge of negotiating a deal on expanding charter schools. Charter school advocates say the most likely scenario is a budget that approves 100 new schools, a figure that splits the difference between what Mr. Spitzer and the Assembly speaker, Sheldon Silver, have proposed.

On the surface, the feud over the budget has centered on a dispute over available money. Republicans claim the state has more than $5 billion on hand that can be used to finance the extra spending. Democratic Assembly members and the governor say Republicans are wildly overestimating the available money and have refused to participate in public budget conference meetings until the Senate lowers its estimate.

For the past two days, the Republican Senate majority leader, Joseph Bruno, whom Mr. Spitzer has sought to isolate during the negotiations, has stubbornly staged these meetings, despite the Democratic boycott.

Spitzer officials and lawmakers said the biggest roadblock was education funding. Mr. Spitzer is seeking to increase education funding by $1.4 billion, using a formula that has enraged Long Island lawmakers because it breaks a long-standing tradition in Albany that Nassau and Suffolk get a combined 13% in aid.

With a greater share of the new money going to New York City, Long Island would see about 8% of the extra aid under Mr. Spitzer’s plan. Republican Senators fear if they don’t push up that percentage to 13%, the defeat would set a precedent that could mean an even smaller share in the future.

Mr. Spitzer and lawmakers have until about Monday to reach an accord before time runs out. After a late streak of 20 years, Albany passed on-time budgets in 2005 and 2006, although it padded them with extra spending in supplemental budgets.

Mr. Spitzer hasn’t ruled out shutting down nonessential services on April 1, a move that would follow in the footsteps of neighboring Governor Corzine of New Jersey who closed down government for six days last year.

A Spitzer official said the governor is aiming for an on-time budget but would reject a deal that opposes the “underlying goal of moderate spending.”

Republican lawmakers said the governor was purposefully taking the situation to the brink. “This is going to fall squarely on the shoulders of Eliot Spitzer. I don’t care what anybody says,” a Republican senator of Brooklyn, Martin Golden, said.

“I’m going back to talk to my constituents and explain why the governor is wrong,” a Republican senator of Nassau County, Dean Skelos, said. “If there’s no progress, there’s no point in staying in Albany.”