The Albany agreement on a 2009-10 budget eliminated a proposal to allow the sale of wine in supermarkets and other stores, a measure intended to help close the mounting state deficit. The move was applauded by independent liquor and wine store owners even as it was denounced by supporters of the proposal.

"We're feeling very optimistic," said Michael McKeon, spokesman for Last Store on Main Street, a coalition for liquor and wine store associations created to fight the proposal. "The legislature has decided to save small businesses as opposed to giving more big bucks to big box stores."

Supporters of the proposal said the decision will cost New Yorkers millions of dollars in added revenue that would have been generated by licensing and other fees.

"The money that this could generate is the equivalent of retaining 4,000 state employees that now could be laid off," said David Vermillion, spokesman for a coalition supporting the change.

In New York, selling wine is the province of independent liquor store owners. The proposal would have extended wine sales to any business that sells beer.

New York is one of 15 states that doesn't allow sale of wine outside of liquor stores, according to The Associated Press.

In wine shops yesterday, the reaction was divided.

"I grew up in Europe where you can buy wine anywhere you want, including supermarkets . . ." said Greenlawn resident Pascal Pestour, 50, as he shopped at Stew Leonard's Wines of Farmingdale. "Everybody should be able to sell whatever they want everywhere. It's a free market."

But Catherine Montalvo, 19, a cashier at Liquor Plaza in Huntington Station, defended the value of the current practice. "You aren't going to have somebody at a grocery store that knows the wines," she said, "while over here, we know our supplies and merchandise."

At one Long Island winery, the owner said he was pleased the proposal had been defeated.

"I've always been in favor of supporting the liquor stores," said Ron Goerler, owner of Jamesport Vineyards. "Liquor stores have supported me from day one."

He said local wineries had opposed the change.

Cases of Charles Shaw wine are stacked at the Bronco Wine Company facility in Napa, Calif. Bronco’s tax bill would jump by more than $15 million, mostly from its sales of Charles Shaw in California, if a tax hike is approved.

The governor is proposing to increase California's wine levy.

Is this the end of Two Buck Chuck?

A proposal to raise the state tax on wine to a level more than six times higher to help close California's giant budget deficit would kill the $1.99 price for Charles Shaw wine, said Fred Franzia, who created the famous label sold by the Trader Joe's grocery chain.

Charles Shaw, of course, is the formal name for the California wines sold since 2002 that are now widely known by their nickname Two Buck Chuck.

The proposal by Gov. Arnold Schwarzenegger would raise the tax on wine to 29.6 cents for a 750-milliliter bottle from 4 cents.

"It's like shooting Charles Shaw in the eye," said Franzia, chief executive of Bronco Wine Co., which owns the brand. The profit margin is already so low we will have to raise the price."

LANSING - When Ronnie Jamil looks at House Bill 6644, he sees some of his business in jeopardy.

That's because the bill, which would ban retailers from shipping wine and other types of alcohol directly to customers, extends to catered events.

“We are a unique wine shop in a nice neighborhood of people that like to be catered to,” said Jamil, co-owner of Bella Vino Fine Wine and Spirits in Farmington Hills. “This is a competitive edge we have over box chain stores, that we can offer delivery to residential homes and businesses. We cater food, and if someone is throwing a party and they want a few cases of beer and bottles of wine, we can do that.