Mayor Koch yesterday said that voters should think twice about voting for Proposition 1 on November’s ballot because it would encourage reckless spending by lawmakers in Albany.

Mr. Koch spoke at a lunch hosted by the Manhattan Institute’s Empire Center for New York State Policy titled “Breaking the Budget in New York State: What’s at Stake in November’s Referendum.” Governor Carey, who saw the state through the financial crises of the late 1970s, also spoke, as did his commissioner at the state Department of Commerce, John Dyson.

The director of the Empire Center, E.J. McMahon, who moderated the event, said the proposition would strain the state’s finances and possibly require increases in taxes.

If passed, Proposition 1 would amend the state constitution to change the procedure for enacting a state budget. Under the new procedure, were the state Legislature to reach the end of a fiscal year without having acted on the governor’s appropriation bills, a “contingency budget” identical to that of the previous year would automatically take effect.

At present, the Legislature must take “final action” on the governor’s budget bills before its members can present their own. The amendment would count the contingency budget as final action.

“What this effectively does is it allows the Legislature to use the current budget as a base for a new budget of its own design,” Mr. McMahon said. The governor’s, he added, “would vanish into thin air.”

“I’m not an admirer of the state Legislature. I despise them intensely,” Mr. Koch said. He continued, quoting an old saw, “‘No man’s life or property is safe while the Legislature is in session,’ and it’s true. It’s true today. So we’re going to give them more power? Never! Never!”

The amendment would give lawmakers no incentive to negotiate or compromise, another panelist, Dall Forsyth, who directed the state budget division under Governor Cuomo, said.

Likewise, he said, it would eliminate the penalty legislators currently pay for failing to pass a budget on time – the sacrifice of their salary – because it would define failure to act as the required “final action” they must take toward the governor’s budget.

The next governor, Mr. Carey said, “will need all the power that he or she can produce to cope with the present danger. Over the last 10 years alone … they’ve increased the government budget – they, the Legislature – by $20 billion. … How are you going to prevent future deficits without these powers?”

One of the lunch’s attendees, a professor at the Columbia University School of Law, Richard Briffault, expressed concern that the amendment would derail attempts to reform budget procedures even if it were voted down. “I hope that the Legislature doesn’t treat the defeat of this proposal as the people not wanting reform,” he said. “If it is defeated, it’s because the people would want a better reform.”