Since he took office three years ago, Governor George Pataki’s budget has been bad news for housing. But state lawmakers announced last week that low- and moderate-income tenants and homeowners would actually see a small piece of the state’s election-year budget surplus.

On Thursday, members of the GOP-controlled state Senate and the Democrat-dominated Assembly announced a $38 million boost to state housing programs. The new increases, which came after intense negotiations within a two-house conference committee, are a big change after recent multi-million-dollar cuts. Insiders say the plan, which will be almost entirely funded through the issuing of state bonds, won’t be derailed by limits on Albany’s bonding capacity.

However, the funding package will have a harder time passing muster with the governor. Pataki has said he will use his line-item veto to shoot down any program that threatens the tax cuts he has planned.

“It’s 99 percent done,” says Brooklyn Democrat Vito Lopez, chairman of the assembly’s housing committee. “The Republicans [in the state senate] are in support, and I think the governor will be too. This is a great achievement–I’ve worked a year on this.”

The biggest proposed funding increases are slated for the Affordable Housing Corporation, which bankrolls moderate-income home construction, and the Housing Trust Fund, which subsidizes low-income rental units. In the next fiscal year, each program will receive an additional $13.5 million over the $25 million annual allocation each program has received in recent years. Other increases include $6.3 million for modernization of state-run public housing buildings, a $1.8 million add-on to a program that provides repair grants for senior citizens whose homes have suffered uninsured damage and an additional $700,000 to local housing groups for organizing through the Neighborhood Preservation program.

The Senate would not approve a $32 million low-income tax credit proposed by Lopez and backed by Local Initiatives Support Corporation and the Enterprise Foundation. The credits were intended to piggy-back onto federal tax credits, which have helped generate 56,000 new units of affordable housing in New York City over the last decade.

A staffer for the Senate’s housing committee says his GOP colleagues think the state can’t afford the tax breaks. “We want to be a little bit more responsible,” said Jim Walsh. “Are we going to build more affordable housing and cut education?”

Still, housing advocates say they got more out of the package than they expected. “It’s a real victory for all of us,” said Cecilia Tkaczyk, executive director of the Neighborhood Preservation Coalition, a 250-member, statewide organization of housing groups. “But until we see the bills, see the thing in print, anything can happen.”