ALBANY – A tug-of-war over the purse strings of state government is coming to a head at the Capitol.

On Tuesday, the state’s highest court will hear arguments in two longstanding budget disputes between Governor Pataki and the Legislature.

Tuesday is also the deadline for Mr. Pataki to sign or veto budget reform legislation crafted by Assembly and Senate leaders that deals with some of the same issues as the litigation.

Both decisions will affect the constitutional balance of power, either by preserving the governor’s traditional primacy in budgetary affairs or by giving the Legislature more control over taxation and spending.

Legislators argue that a shift in their direction would help to break the perennial gridlock at Albany and end a 20-year streak of late budgets. Others worry that weakening the governor’s hand would worsen New York’s chronic fiscal disarray.

All sides agree that this is an institutional battle – pitting the legislative branch against the executive – and has little to do with partisan politics or personalities.

“American democracy is based on a system of checks and balances,” said the legislative director of the New York Public Interest Research Group, Blair Horner. “And when the system tilts too heavily to one side, you could end up with bad policies.”

Mr. Horner said his group takes no position on who should win the court fight but supports the budget-reform legislation.

“The way the system is currently designed certainly doesn’t work,” Mr. Horner said. “And the constitutional fight between the branches, I believe, contributes to late budgets. So New Yorkers should care about that.”

A fiscal analyst with the Manhattan Institute, E.J. McMahon, predicts that Mr. Pataki will veto the budget reform bill, and that the Court of Appeals will rule in the governor’s favor on the lawsuits.

Yet the Legislature is preparing to override both decisions by putting a constitutional amendment on the ballot next November, a proposal that Mr. McMahon opposes.

“This would be the most significant constitutional change in New York in 75 years,” Mr. McMahon said. “If you have a system where the Legislature is in the driver’s seat on the budget, that is a prescription for higher spending, higher taxes, and a fiscal mess the likes of which we’ve never seen.”

A section of the state constitution dating to the 1920s gives the governor the upper hand in budget negotiations. It calls for the governor to propose a spending plan in January then limits what changes the Legislature can make. Lawmakers can approve each line item as it is, reduce it, or eliminate it, and their decision becomes law without further action by the governor. If they want to add spending, they must approve a separate line item, which the governor may veto. Two-thirds majorities in both houses can override his veto.

At issue in the lawsuits is whether the governor can make changes in state law as part of a line-item appropriation – and, when he does, whether the Legislature has the right to remove that language. So far, lower courts have sided with the governor on these issues.

As a result, lawmakers say, the governor can unilaterally change the formula for distributing school aid, or for compensating hospitals that treat Medicaid patients, and the Legislature’s only recourse is to withhold approval – leaving the state without a budget when the fiscal year begins.

“If you accepted the governor’s interpretation, it would exclude the people’s representatives, the Legislature, from having a meaningful role in the budget process,” said the speaker of Assembly, Sheldon Silver of Manhattan.

“We teach our kids that power is shared and that checks and balances exist,” said Assemblyman Richard Brodsky, a Democrat of Westchester County. “When the state constitution carves out an area as important as the budget and in effect says the Legislature has no role, then it’s not really America.”

Whatever the court decides, the budget-reform bill on the governor’s desk, and the accompanying constitutional amendment, would change the rules.

Under this proposal, if the Legislature and the governor cannot agree on a budget before the start of the fiscal year, a contingency budget based on the previous year’s spending plan would automatically go into effect. Once that happens, the governor’s proposals, including any changes in law, would be moot, and the Legislature would be free to draft and approve supplemental appropriations, subject to the governor’s veto.

Mr. Silver said this system, which could be in place as soon as 2006, would guarantee that the budget could never be late again.

“It will take away the need to do emergency bills and provide for a contingency budget until or unless the Legislature and the governor get together and enact a new budget,” he said. “It’s the one true reform that addresses some of the concerns of average New Yorkers.”

Lining up in favor of the bill are Nypirg, the Citizens Union, Common Cause/New York, and the League of Women Voters of New York State. Urging the governor to veto it are the Business Council of New York State and the Citizens Budget Commission.

Mr. McMahon agreed that the constitution gives too much discretion to the governor and ought to be modified. But he argues that the Legislature’s proposal goes too far in the other direction. If lawmakers simply wait until the fiscal year starts and the contingency budget kicks in, the governor no longer has leverage to block excessive spending.

“If they actually had this, in last year’s budget, they would have spent a couple of billion dollars more,” he said. “The first time they do this will be the last time we have a balanced budget for a long while.”

“The whole notion that it’s getting rid of late budgets is just not the case,” said the president of the Citizens Budget Commission, Diana Fortuna. “It would in fact seem to guarantee many more years of late budgets because of the way it shifts power to the Legislature after the start of the fiscal year. If you’re the Legislature, and you have vastly more power after the fiscal year begins than before, you’d do the rational thing and wait.”

Mr. Horner said he does not believe the changes will be so dramatic, pointing out that the governor could still veto any spending the Legislature adds.

“It’s not as bad as detractors say it is, and it’s not as good as the Legislature says it is,” he said. “But it’s certainly better than the status quo.”