State has $1.2B budget shortfall

October 3, 2008 2:42:36 PM PDT
The financial crisis opened a $1.2 billion hole in this year's New York state budget, Gov. Paterson said as he delivered a dire report on the state of the economy.Paterson said the state could be facing an "economic blood bath" as the budget hole continued to worsen.

Reacting to this morning's news that Wachovia was acquired by Wells Fargo, a West Coast bank, instead of New York-based Citigroup, he said:

"That's a significant hit to the New York economy, among many other that we've taken."

"We are in a very serious economic crisis. There's no way to sugarcoat it," he said during a public meeting with legislative leaders at his East Side office Friday morning.

"It has become clear over the last 24 hours, according to Warren Buffett, that the United States economy can be compared to a great athlete who suffered a stroke. And though all of the athletic skills are still there, the individual is in an ICU."

Paterson said he would submit an executive budget for next year by mid-December, instead of mid-March, to pull forward the state's fiscal year.

He will recall lawmakers to Albany for a "special economic session of the legislature" on Nov. 18 - well after the election.

He will also seek some $2 billion worth of cuts for the current fiscal year, which ends on March 31, 2009, because of his fears that the state's taxpayers will continue to decline.

And he said he was taking the steps to try to hold off a downgrade in the state's credit rating. "I've got to try to avoid that," Paterson said, "as quickly as possible."