May 16, 2002

New York legislators will tackle $89.6 billion budget plan that has been hammered out in secret meetings by Gov George Pataki, Speaker Sheldon Silver and Sen Joseph Bruno over last two weeks; spending will rise about 6 percent; budget depends heavily on spending about $1.2 billion of state's savings, borrowing hundreds of millions and using about $1 billion in other one-time revenues, allowing state to avert deep cuts in services; some lawmakers are concerned about borrowing and using one-shot revenues (M)

White House says that Pres Bush was warned by American intelligence agencies in early Aug that Osama bin Laden was seeking to hijack aircraft, but that warnings did not contemplate possibility that hijackers would turn planes into guided missiles for terrorist attack; says warning came during one of Bush's daily briefings from CIA; this suggests it was based on evidence gathered abroad; revelation is bound to fuel Congressional demands for deeper investigation into why American intelligence agencies and FBI failed to put together individual pieces of evidence that, in retrospect, now seem to suggest what was coming; taken together, news of CIA warning and information developed separately by FBI explains Bush's anger after Sept 11 that intelligence gathered on American soil and abroad was not being centrally analyzed and that agencies were not working well together (M)

Senate investigative panel is told Enron lawyers alerted senior company executives in October 2000 to trading strategies that Enron was using in California electricity market, and concluded in December 2000 that tactics were 'potentially criminal'; only then did company order maneuvers stopped; Enron assistant general counsel Richard Sanders says he raised trading strategies with top executives of Enron's trading arm in October 2000; says on Nov 20, 2000 he also briefed general counsel James V Derrick; company lawyers testify that practices, like using daisy-chain transactions to circumvent price caps in California and being paid for relieving fake transmission-line congestion created by Enron's own traders, were not ordered halted until around Dec 10; electricity prices in California had soared by then; Sanders says Enron's chief executive Jeffrey K Skilling was briefed on strategies on June 20, 2001; Skilling has denied company manipulated California energy prices; strategies were described in memorandums written in early Dec 2000 by Stephen Hall, outside lawyer for Enron; Hall tells lawmakers that he and supervising lawyer at his firm determined practices could be breaking California law; Hall wrote memos as associate at Stoel Rives, law firm Enron retained to prepare defense against lawsuits and investigations arising from power crisis; Hall says he met with Marcus Wood, his supervisor at Stoel Rives, and Christian Yoder, Enron lawyer; adds Wood delivered hard copy of final memo, together with copies of California statutes on fraud and theft; Democratic lawmakers say testimony and memos provide evidence that electricity prices had been manipulated in California power crisis of 2000 and 2001, hearing of consumer affairs subcommittee of Senate Commerce Committee; Democrats express skepticism that Enron halted tactics in December 2000, and they sharply criticize Federal Energy Regulatory Commission for ignoring California's complaints; Sen Byron L Dorgan suggests special counsel be appointed to investigate West Coast pricing; lawmakers also zero in on handwritten notes released by California Atty Gen Bill Lockyer; say notes, made by Enron executives at company's headquarters in Portland, Ore, in meetings in late 2000, suggest executives were discussing ways to limit information they would turn over to California authorities investigating market manipulation; Sens Ron Wyden and Barbara Boxer focus on statements in documents like 'remove notes!' and 'no one can prove, given the complexity of our portfolio'; photos (M)

Bank of England raises its estimates of Britain's likely economic growth rate, setting off speculation that interest rates will rise later in year; bank says annual growth rate will expand to about 3 percent by beginning of 2003, up from 2.4 percent forecast in February (S)

A Denial From Spy's Wife Bonnie Hanssen said she did not know that her husband, Robert P. Hanssen, had continued to spy for Russia. PAGE A18 College Head Speaks Out The Rev. William P. Leahy, the president of Boston College, said church officials had ''badly mishandled'' cases of pedophile priests. PAGE A23

Mitsubishi Corp says profit fell 35 percent in year ended in March; earned 60 billion yen ($466.9 million) as sales fell 5.5 percent; graph (S)

Adelphia Communications says founder-chief executive John J Rigas has resigned and that it is conducting investigation into issues raised during preparation of its 2001 financial statements; also says it is suspending audit by accountant Deloitte & Touche, while it conducts its inquiry; says it has hired lawyer David Boies to advise it in connection with its investigation and other matters; Rigas, who will remain on board, will be succeeded by Erland E Kailbourne, former chairman and chief executive of Fleet National Bank's New York region; will serve as chairman and interim chief executive; Rigas's son Timothy, chief financial officer, may resign his post and his board seat; news leaves investors wondering how company will cope with deadline to submit its 2001 financial statements to Nasdaq on May 16; if it does not submit statements, it runs risk of being delisted, which could set off chain of events leading company into bankruptcy court; Adelphi plans to ask Nasdaq for extension; graph (M)

Mayor Michael R Bloomberg says his administration plans to provide extensive job training, child care and other programs to help welfare recipients find and hold jobs; this is significant departure from Rudolph W Giuliani's policies, but Bloomberg takes pains to praise his predecessor's record in putting changes in welfare into practice; promises to keep intact its essential elements: fingerprinting people to keep them honest; requiring most to work for their government checks; keeping number of people on public assistance as low as possible; Giuliani administration cut welfare rolls from 1.2 million to below 500,000; Giuliani thought job training was ineffective and did not seek some of federal money available for that purpose; officials say roughly 25 percent of welfare recipients are mentally or physically unfit for work; Bloomberg says he favors inclusion of legal immigrants in some welfare programs that are currently limited to citizens; officials in his administration have no estimate of cost of new policies; photos (M)

Houses of worship across country are jumping into technological age in variety of ways, from digital sound systems to PowerPoint sermon outlines to Webcasts; technology takes congregational interactivity to new level; for example, pastor can ask question during sermon and can get immediate response from congregants sitting in seats fitted with keypads; outreach ability is vastly increased; photos (L)

Two men sentenced to death in 1980's by former Judge Philip Marquardt of Phoenix, Ariz, ask courts to look into whether judge's use of marijuana deprived them of fair trial; Marquardt lost judgeship and license to practice law after his second marijuana conviction, in 1991; assertions of two death row inmates, Warren Summerlin and Richard Michael Rossi, test attitudes about whether using drugs while not working should be of concern in workplace, about how much extra scrutiny is warranted in death penalty cases and about limits of judicial privacy; Marquardt concedes that he used marijuana regularly in years in which he sentenced two men to death, but says that while in courtroom he was clearheaded and in control of his intellectual abilities; photo (M)

William C Rhoden Sports of The Times column argues that New Jersey Nets, fresh off first-ever Eastern Conference semifinals victory against Charlotte Hornets, belong in city like Newark (NJ), where community can rally behind winning team; photo (M)

New Jersey Nets defeat Charlotte Hornets, 103-95, in Game 5 to win series, 4-1, and advance to Eastern Conference finals; photos (M)