Albany lawmakers reached a deal Friday that will repeal much of what remains of the state's 1970s-era Rockefeller drug laws and replace it with a program based around rehabilitation.

Governor David Paterson said the laws over the past 36 years have proven to be ineffective and have lead to a revolving door in a constant "cycle of arrest and abuse."

"We are hoping to forever eliminate the regime of the Rockefeller drug laws and replace it with a system that will give addicts and those who have committed crimes because of that the treatment that they need and will give those who profiteer from drug sales the punishment that they deserve," said Paterson.

The changes, the lawmakers say, are based on a shift in thinking: drug addiction, according to the governor, is a treatable illness. As a result, services will switch from being focused on punishment to being focused on treatment.

"It's a more just, more effective and more humane drug policy for New York," said State Assembly Speaker Sheldon Silver.

Instead of being considered solely a criminal act, drug offenses will also be deemed a public health hazard.

The bill will give judges the discretion to send addicted first and second-time nonviolent offenders to treatment programs, rather than prison – even over the objections of prosecutors.

It will also eliminate mandatory sentences for some drug offenders.

"It is my fervent hope and belief that the courts will no longer have the same people come in and out of the justice system again and again and again in a revolving door system of justice, in which we never address the underlying root problem: drug addiction," said New York State Chief Judge Jonathan Lippman.

This will all be overseen by the establishment of special drug courts, where judges will have more of an expertise on drug-related crimes and be able to use more discretion to oversee and monitor non-violent cases.

The State Assembly speaker said the cost of putting a drug offender in a residential drug facility is one-third of the cost of incarceration, which currently costs the state $45,000 a year per convict.

Officials stressed that drug dealers would face prison time with the creation of a new drug "kingpin offense" for high-level drug traffickers.

The governor said the new laws will also increase the penalties for drug sales to children.

Despite the warm reception these new laws got from the dozens of lawmakers on hand for the press conference, some critics already blasted the legislation, saying it will be too soft on criminals.

In a video released by the mayor's office, Mayor Michael Bloomberg was shown being notified by an off-camera individual about the agreement Friday morning.

Bloomberg responded, "They are? Good. Just what we need, to put more criminals back on the streets."

The mayor has previously not spoken out about the issue. NY1 reached out to the mayor's office, but officials declined to respond Friday.

Other city officials had negative reactions to the drug law changes.

"There's only one focus, and that's to coddle the criminals and put them back on the streets at the cost of public safety across this state," argued State Senator Martin Golden. "And I guarantee you, mark our word here today, crime will be up this time next year if this becomes law. Families will suffer, people will die, guaranteed."

While the New York Civil Liberties Union applauded the state's decision to move forward with this legislation, it warned that transparency is key.

"After 36 years of locking up people who suffer from addiction and mental illness, this is an exciting step," said NYCLU said in a statement. "The leaders of our state have finally recognized that the revolving door of 'lock them up and throw away the key' does not work.... It's really important that we all pay attention to the details that unfold in the coming days. The details could be the difference between meaningful reform of the Rockefeller drug laws and more of the same."

Meanwhile, legislators continued negotiations behind closed doors on other controversial elements of the budget.

Lawmakers debated a proposal to raise income taxes on those making $300,000 a year and more, with two additional tax rates – for those making more than $500,000 a year and those making more than $1 million a year.

A bill being championed by Bronx Senator Jeff Klein would tie the tax increase with a tax break for the middle class.

"If you do the high-earner tax and we have money left over, which I think we will, this is I think this is the perfect time to give homeowners relief from the high property taxes that they pay," said Klein.

Another bill that allowed wine sales in supermarkets was said to have failed.

Also on Friday, city education officials warned of the impact of not allocating enough funds for education.

Officials are waiting to see how the state divides up about a billion dollars in federal aid. But they are preparing to slash jobs, though it's unclear how many would be cut.

The state Legislature has tentatively agreed to restore all of Governor David Paterson's proposed cuts, but the size of the deficit – more than $16 billion – could mean more pain.

The Campaign for Fiscal Equity settlement could become another casualty of the economy. The CFE ruling would have brought an additional $1.5 billion for city schools starting next year – boosting aid to the neediest districts over four years.

Sources say the deal is now on track to take seven years, with no funding increase from last year.

The state budget is due on Wednesday.