NEW YORK (Reuters) - New York's Democratic-led senate on Friday said tax revenues will slip 1.5 percent in the current fiscal year to $59.4 billion, a rosier forecast than the one issued by the Assembly's Democratic majority.

The Assembly predicted the state would collect $57.1 billion of tax revenues, which would be a 5.3 percent drop from the previous fiscal year.

New York Governor David Paterson says the state's cash crunch may force it to delay some payments in December, though he has vowed to meet all obligations to bondholders.

A spokesman for the Democratic senate conference on Friday confirmed the upper chamber will return to session next week to thrash out an agreement with the Assembly. The Democratic governor says the state must cut spending by $5 billion over the next two years.

The legislature resisted Paterson's previous requests to return to session and instead held budget hearings. The Assembly had already signaled it would return to Albany this time around.

"We've been working and consulting with the governor and Assembly to come up with an agreement; public predictions to the opposite aren't accurate," said a spokesman for the Senate finance committee, which issued Friday's revenue report.

New York state's economy rests on Wall Street's shoulders, which sets it apart from other states.

The financial sector pays one-fifth of New York's taxes and the importance of the often rich compensation paid to bankers, traders and brokers when their companies are profitable was underscored by the senate report.

"Over one half of New York's general fund is derived from personal income taxes," the report said.

Democrats narrowly control the upper chamber and the finance committee spokesman said the conference had not dropped their plan to save $500 million by refinancing bonds backed by payments from cigarette-makers.

Paterson has rejected that idea at least twice, saying the new interest rates would be too high.

The Senate Democrats came up with the idea to refinance the tobacco bonds and lower the debt service coverage, said the senate finance committee spokesman. At least two investment banks, Morgan Stanley and Merrill Lynch, now part of Bank of America, analyzed the possible deal and saw similar savings, he said.

New York Democratic Comptroller Thomas DiNapoli has said the three-year deficit may top the governor's forecast by $3.6 billion, hitting $27.5 billion.

(Reporting by Joan Gralla; Editing by Andrew Hay)