With video lottery terminals suddenly emerging as an item in state budget talks, the top Republican in the state Legislature said he cannot support a controversial video lottery terminal bill proposed by his fellow Republican, Gov. George Pataki."We can't do that,'' Senate Majority Leader Joseph Bruno said of the governor's plan that would boost VLT revenues for racetracks by taking proceeds away from purses."I didn't want to do VLTs in the first place, but I did it to enhance racing,'' Bruno said. Taking money from purses, Bruno said, would hurt the state racing industry's ability to compete."We're competing against the world here,'' Bruno said, adding that a correctly written VLT law would create "world-class racing'' again in New York.Bruno and Assembly Speaker Sheldon Silver said VLTs have become an issue at the negotiating table in the past day as the two legislative leaders and Pataki have increased their search for more revenues to try to dig the state out of a $11.5 billion deficit. The proposal by Pataki, offered in January, does not envision the VLTs becoming operational for a year. Critics of the plan say an alternative is needed to push tracks into turning the devices on sooner as a way to bring new revenues to the state.+Bruno said he supports a measure proposed by his Racing Committee chairman, William Larkin. "That bill works,'' Bruno said in an interview.Racetracks have balked at starting the VLT program, approved in 2001, because they say they would lose money under the current revenue split formula. The Larkin measure gives more to tracks and purses by giving less to the state and bettors. His plan changes the existing VLT split that 91%, instead of 92%, of all money bet is returned to bettors in the form of winnings. That would increase to 9% the amount that would be shared by state education programs, costs for administering the program by the state Lottery Division, and racetracks, purses, and breeding funds.Under the current VLT law, 60% of what is left after winnings are paid goes to education, 25% to the racing industry, and 15% to the Lottery Division. Larkin's proposal changes those splits to 55% for education, 10% to the Lottery Division, and 35% to the racing industry. The legislation assumes $1.138 billion would be bet through the machines in just the first year of the operation. The machines would also be permitted to be operational for more hours each day and the VLT law would sunset in 2009 instead of 2007.The Pataki bill also increases the number of hours VLTs can operate and makes the law permanent. But it also ends the current VLT law's requirement that a portion of revenues, on a sliding scale over the years, go to bolstering purses. Shares to breeding funds are also slashed. Under present law, the state gets 75% of the VLT revenues and the racing industry 25%. Under the new plan, tracks would keep the full 25% during the first two years even though they have said they only need 18% to 20% to make the venture profitable.The Pataki plan gives a zero share to purses and breeding funds in the first two years. It would take 10 years before purses would get 20% of the industry's 25% share; current law would give them 45% after the third year.