McMahon, an expert in municipal budget, tax and reform issues, believes it would be “basically impossible” for lawmakers to discuss the state budget while the Spitzer scandal remains unsettled.

While New York state and the country remain fixated on the call-girl scandal embroiling Gov. Eliot Spitzer, a piece of crucial Albany legislative business looms: Passing the state budget.

The budget deadline is at the end of the month, but one government observer said this evening it would be “basically impossible” for lawmakers to begin meaningful negotiations while Spitzer’s situation is unsettled, especially if he has the threat of impeachment hanging over his head.

“I don’t see how negotiations could happen under those circumstances,” Edmund McMahon, an expert in municipal budget, tax and reform issues, said following an address at the Hugh L. Carey Center for Government Reform at Wagner College.

Spitzer spent today in seclusion with his family after Monday’s bombshell announcement that he’d been involved with a high-priced call-girl ring.

Spitzer has thus far resisted calls to resign, and state Republicans today threatened to start impeachment proceedings if he doesn’t step down.

Former Democratic state Sen. Seymour Lachman, director of the Carey Center, said, “You could have negotiations while this is going on. It would be very difficult, but you could do it.”

But McMahon, director of the Manhattan Institute’s Empire Center for Public Policy, said he doesn’t think the situation will remain unsettled for much longer, with Spitzer leaving office in the “next couple of hours or days.”

“It’s difficult to see how he can last any longer,” he said.

As far as overall reform measures, McMahon said that he would like to see the state post all expenditures, including contracts, agency payrolls and budgets, grants and member items, on one, easy-to-navigate website.

The site would mirror Attorney General Andrew Cuomo’s Project Sunlight effort, which tracks campaign donations to lawmakers and other financial information.

That effort was unveiled at an earlier seminar sponsored by the Carey Center at Wagner.

McMahon said a state expenditure website would reveal the sometimes hidden relationships between lawmakers and the groups that get their funding, and would turn New Yorkers into “a mass army of auditors.”

“It’s valuable information to have out there,” McMahon said. “But it’s only a start.”

And with lawmakers likely to be looking to do good-government work in the wake of the Spitzer scandal, McMahon said legislation to form the website “could be passed through the Albany ‘sausage grinder'” this year.

“That would open up some doors,” Lachman, who used to represent part of the Island in the Senate, said afterward. District Attorney Daniel Donovan, who attended the speech, was intrigued by the idea.

“We’ve come a long way with the reporting of money in government,” he said. “We have to go further. It’s the people’s money. They have a right to know how it’s spent.”

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