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Mayor Bloomberg took a big step toward reviving his once chummy relations with New York’s AIDS community last week–but, they say he still has a long way to go.

As part of the preliminary budget deal he made with the City Council last Wednesday, the mayor withdrew his plan to contract out HIV/AIDS case management to private community-based service providers. This change would have required rewriting a law that forces the city to provide certain AIDS services to New Yorkers-a law that was hard-fought and has long been considered sacred among AIDS advocates.

In 1997, after years of battling City Hall over the quality of service the city offers low-income people with AIDS, advocates won the passage of local law 49, which spelled out the city’s responsibilities on services ranging from housing to treatment. Since then, clients say services have improved.

Meanwhile, Bloomberg took office and his staff quickly made the effort to work with the city’s AIDS community on a range of policy issues. “At first, we were able to meet with [Deputy Mayor] Dennis Walcott and other people in the administration,” said New York AIDS Coalition Executive Director Joe Pressley. “We felt like we were seeing the light finally,” after years of fighting with Guiliani.

Then in March, Bloomberg made his first major speech on AIDS policy, and everything changed. While he gave his support for needle exchange programs and vowed to arm his new AIDS czar with whatever tools he needed, almost in passing he mentioned that he wanted the celebrated law 49 rewritten. While he never offered details on the plan, administration officials have since held that the changes would both save the city money and allow for more creativity in providing services.

AIDS advocates saw that as the farthest thing from the truth, though. “While the administration never made their plans entirely clear, it was evident that the proposed changes would have been devastating,” wrote Council Health Committee Chair Christine Quinn in a letter announcing last week’s deal. “This proposal would have diminished the city’s legal responsibility to providing services.”

Of course, the mayor still has policy proposals on the table about which he will have to battle members of the AIDS community. As part of his plan to streamline the city’s social services, Bloomberg has called for folding the Mayor’s Office of AIDS Policy into the health department. For years, the Office of AIDS Policy has worked with a community planning council to oversee how various agencies spend federal AIDS funds. Washington mandates the city create a mechanism to play that role, but it does not demand it be part of the mayor’s office.

Handing that oversight role to the health department, argued Quinn at a recent budget hearing, would both leave the health department unmonitored and diminish the office’s authority over other agencies-and this at a time when the city has run into AIDS money problems. The feds cut New York City’s AIDS funding by $14 million this year, a result of the Office of AIDS Policy’s shoddy application, according to a Health Resources and Services Administration rep.

The health department says it can do a better job, but Quinn and others remain skeptical. “Something being in the mayor’s office has an elevated position,” she said. “It gives it a stamp of significance.”

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