Just hours after state lawmakers left Albany last week to begin their spring break, Governor Pataki sprang into action, vetoing nearly $3 billion in spending and declaring much of their work unconstitutional. Legislative leaders were shocked. They had just passed their second straight on-time budget, but Mr. Pataki was declaring war.

When lawmakers return to Albany Monday, they will have plenty of work waiting for them now that the budget is unresolved. Here’s an abridged guide to the issues that are back on the table.

What did the governor veto?

The governor vetoed more than 200 items worth $2.9 billion in appropriations, the most he has ever vetoed in one year. While dozens of the vetoes targeted relatively small expenditures – such as $2 million for wine marketing and $85,000 for a Hudson Valley fruit lab – Mr. Pataki took aim at four large areas of state spending.

Medicaid: The governor vetoed $1.3 billion in health care spending, half of which comes from federal matching funds. The governor nixed automatic rate increases for hospitals and nursing homes. His vetoes also reduce hospital reimbursement for services like Graduate Medical Education.

Property tax rebates: The governor vetoed a plan – strongly backed by his fellow Republicans in the state Senate – that would give rebate checks between $300 and $800 to homeowners statewide. The plan would have cost the state more than $750 million this year.

Tuition Assistance Program: State lawmakers tried modifying the governor’s efforts to trim a program that helps low-income students pay for college tuition. By vetoing their changes, he reduces aid for students who take fewer than 15 credits a semester – slashing about $86 million in spending for this year.

Pork-barrel fund: Mr. Pataki also targeted a secretive “members’ item” fund of $200 million, which is split among legislative leaders and the governor for them to hand out at will.

The vetoes add up to $2.9 billion, including federal matching funds. How much state money do the vetoes save?

A lot less than $2.9 billion. For example, only half of the $1.3 billion in Medicaid cuts directly affects New York State taxpayers – the rest is federal money. And while the governor blocked lawmakers’ property tax rebate plan, he has his own rebate check program that is only a little less expensive.

In the end, the Mr. Pataki’s goal is only to slash about $1.1 billion – roughly 2% – from state general funds, according to the executive director of Albany’s Fiscal Policy Institute, Frank Mauro.

What are the governor’s reasons for the vetoes?

There’s the actual veto-text and the sub-text. Mr. Pataki said $450 million of his vetoes were needed to balance the budget. But for the big-ticket items like Medicaid, the governor justified his vetoes on constitutional grounds rather than the state’s financial health.

In essence, he thinks state lawmakers stepped on his powers, which were set in stone by a 2004 Court of Appeals case, Silver v. Pataki. That case stated lawmakers can only modify the governor’s spending proposals – but cannot change the budget language that dictates how money will be spent. Mr. Pataki claims the Legislature unconstitutionally cancelled his changes to Medicaid reimbursement rates and substituted their own rebate program for his proposal. (Lawmakers want all property taxpayers to get rebates, while Mr. Pataki wants to reward only residents of school districts that adopt spending caps.)

Does Mr. Pataki have any motives besides fiscal responsibility and protecting the powers of his office?

Mr. Pataki insists he’s just following the law. But his critics claim he’s exploiting the court decision to maximize his own power before leaving office. Given Mr. Pataki’s well-known presidential aspirations, some suspect the governor is trying to play the role of fiscal conservative so he can impress voters in Iowa and New Hampshire. Either way, the 2004 court case solidified the governor’s dominance over the budget regardless of any political motives.

What’s at stake?

Before the governor’s veto, Senate Republicans were already boasting to their districts about the tax relief coming their way. And the senate majority leader, Joseph Bruno, warned it would be “tragic” if Mr. Pataki vetoed the property tax rebate checks. If lawmakers and the governor don’t now agree to a compromise rebate plan, voters could blame state lawmakers who are up for re-election. That could mean a more difficult November election for Mr. Bruno, who is trying to preserve his party’s slender control of the Senate.

The outcome of budget negotiations could also shape state policies on a number of hot-button issues, particularly education and pay raises for lawmakers. Mr. Pataki is angry that lawmakers have blocked his efforts to lift the cap on charter schools and to give parents an education tax credit directly linked to private school tuition. If lawmakers make a deal on those issues, Mr. Pataki might agree to give them their first raise since their pay was raised to $79,500 in 1998.

Perhaps more important than any individual issue, the governor’s legal strategy will likely be used by his successors – perhaps to an even greater degree – if they withstand the inevitable court challenge. The Legislature may want to settle this matter in the Capitol rather than the Court of Appeals.

Who’s got the upper hand?

Mr. Pataki. At this point, lawmakers need more from the lame-duck governor than he needs from them. Mr. Bruno wants – perhaps even needs – to send out those rebate checks. The Democratic speaker of the Assembly, Sheldon Silver, doesn’t want to disappoint the health workers’ union and the Democratic-controlled Assembly’s New York City constituents by allowing Medicaid cuts.

They can always take Mr. Pataki to court. But they have a losing record on challenging the governor’s budget authority. Their best bet appears to be negotiating with Mr. Pataki.