With NY State running out of money because the State Legislature has been unable to offer a plan for billions needed in budget cuts, Governor Paterson announced he was moving ahead with a plan for $1.6 billion in savings, "I first presented my Deficit Reduction Plan on October 15, and since that time the Legislature has refused to take necessary action to maintain our State’s fiscal stability. As I said directly to New Yorkers last week, if legislators won’t face up to their responsibility and join me in making the tough decisions - I’ll do it myself. I will continue to fight every single day to keep New York State afloat in the midst of this historic economic crisis - with or without the help of the Legislature."

The cuts include $500 million in agency reductions (11% in "each State agency’s non-personnel services budget"), $150 million in Medicaid Fraud Targets and $100 million in Debt Management. Paterson says the deficit is $3.2 billion, but the State Senate has questioned that figure. The Daily News reports, "The governor may have lost leverage with lawmakers who had pressed him to make the administrative cuts as a way to buy time until January, when they hope revenues will rebound."

The Times Union points out, "In December, some of the state's biggest bills are due, including billions in aid to public schools. But in January, the state begins to take in more than it spends as early tax returns are due, said Frank Mauro, a fiscal analyst for the union-backed Fiscal Policy Institute."