2008_11_statebudg.jpgGovernor Paterson unveiled his proposed $5.2 billion in cuts (or savings, depending on how you see things) yesterday to close the deficit. He said, “This is the worst economic crisis in this country since the Great Depression. That’s not an alarming statement, as it may have been when I said it in July. It’s now real.”

For the 2008-2009 fiscal year, he propose to cut $2 billion by April and then another $3.2 billion during 2009-2010. His cuts hit Medicaid spending and education the hardest, as you can see by the chart (left). Other significant changes: Increasing tuition at state colleges and universities, reducing aid to local governments (NYC will lose out on $41 million of its aid, leaving $205 million in funding) and state employees giving up their 3% raises and some health benefits. You can also see a more detailed breakout of the cuts here.

Paterson explained, "This is the result of our increased spending over years and years and now the downturn on Wall Street. The well has run dry." He also said the state should not use any funds from the $1.2 billion "rainy day fund," given how the economy may continue to falter.

Mayor Bloomberg said, "The governor has been dealt a hand ... I think David Paterson is turning out to be a great governor and we'll do anything we can to help him." However, Daily News Albany Bureau Chief Kenneth Lovett writes, "Paterson gored many of Albany's most sacred cows," and quotes an unnamed Senate Republican as saying, "He might have reached too high. This could blow up in his face."

The next step is a November 18 special session of the Legislature to discuss the budget shortfall.