By James Odato
ALBANY, New York, March 31 (Reuters) - Governor Andrew Cuomo and state legislative leaders reached a deal on Thursday to raise New York state's minimum wage towards $15 per hour, but fell short of a uniform state-wide increase.
The deal outlines a faster rise in New York City, but carves out a slow lane for small businesses and surrounding counties. In less prosperous areas north of the city it rises to $12.50 per hour before a state review of the law's impact.
The minimum wage agreement was part of a broad budget deal that Cuomo announced late on Thursday. He said the plan included 12 weeks of paid family leave and $4.2 billion in tax cuts. The $147 billion budget caps spending growth at 2 percent.
"I believe that this is the best plan the state has produced in decades," Cuomo told a news conference in the state capital, Albany. Cuomo has earmarked $100 billion in infrastructure spending in the state.
The budget also increases school funding by 6.5 percent to $24.8 billion and freezes tuition at the state university system, SUNY.
The minimum wage has been a controversial element in difficult budget negotiations that threatened to delay the spending plan past the start of the state's fiscal year on April 1. The agreement, including the minimum wage, still needs to get approval from lawmakers.
Under the terms of the deal the minimum wage would rise from its current $9 per hour to $15 over three years in New York City starting on Dec. 31, 2016. City businesses with up to 10 employees would be given four years to implement the measure.
Long Island and Westchester County around New York City would be given six years to push through the increases while the rest of the state would see the minimum wage rise to $12.50 in five years, with indexed increases to $15 possible after review.
There is also a provision to suspend the increases from 2019 if economic conditions worsen.
The compromise is a climb down for Cuomo and his fellow Democrats who had pushed for a $15 state-wide minimum and no carve outs for small businesses. Republicans argued that a flat statewide rate could hurt businesses in less wealthy areas.
"It may not go to $15. There's no guarantee, that's the good thing," said Senator George Amedore, a Republican representing a constituency upstate, who commented on the agreement to Reuters.
Phil Steck, a Democratic Party assembly member, who represents a district 165 miles (265 km) north of the city, argued that the opposite was true, and a lower minimum wage would be a blow to the upstate economy.
"We have a very strapped economy in upstate New York and the surest way to ensure continued poverty is to run a low wage economy," he said. "If anything, the poorer areas of the state needed an increase in the minimum wage more."
The multi-tier solution could also dampen the national drive for a $15 minimum wage that has gathered pace as Democrats mobilize their base ahead of the presidential election in November.
They hailed an important victory when California Governor Jerry Brown and legislators reached an agreement on Monday to raise the state's minimum wage to $15 an hour by 2023.
Cuomo said New York's "calibrated" path to raising the minimum wage could be an example for the rest of the county. "It is raising the minimum wage in a way that is responsible and a positive for the overall economy," he said. (Reporting by James Odato, Writing by Edward Krudy; Editing by Daniel Bases, Grant McCool and Clarence Fernandez)