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