New York's troubled economy and an expansion of health care were the main focuses of Governor David Paterson's first State of the State address, which was delivered Wednesday from the New York State Assembly Chamber.

"The state of our state is perilous," said the governor, before a room packed with current and former elected officials. "New York faces an historic economic challenge, the gravest in nearly a century. For several months, events have shaken us to the core."

Paterson's speech came less than an hour after the Democrats took control of the State Senate for the first time in more than four decades, giving them complete control of Albany and making Malcolm Smith the first African-American Senate majority leader in New York.

Paterson said bank closures, job losses, and stock market insecurity have thrust New York into its most challenging economic position in decades.

However, the governor said hope should not be lost.

"Every New Yorker has experienced both difficulty and adversity, but courage and hope have forged our character," said the legally blind governor, who delivered the hour-long speech from memory. "In the Great Depression, New York may have buckled, but we did not break then and we will not break now. This is a time for hope and courage. Most of all, this is a time for action."

One of the governor's plans of actions is an expansion of health coverage for young adults in New York State, allowing for private family health insurance coverage for dependents up to age 29.

According to a report published this morning, there are 800,000 people in New York State between the ages of 19 and 29 who do not have health insurance.

New York does not require companies to cover dependents, but most employer-paid programs are extended to children through age 18, or age 22 if they're attending college. Paterson's plan would extend coverage to children regardless whether they attend college.

The proposal would not cost the state or employers any extra money.

Instead, families would pay for the plan like a COBRA benefit, allowing children to remain under the employer's health plan by paying the premium cost, but at a reduced rate.

Those who spoke to NY1 in Union Square were mixed on the proposal.

"It's a good argument. I just worry it might make people a little bit lazy," said one New Yorker. "Because they're covered, the motivation to get a job might not be there."

"That's a good idea because these days, times are hard," said another. "It's tough out there in the streets and it would be good to cover our kids until 29."

Any extension of health care coverage would have to be passed by the state Legislature.

Paterson also stressed the importance of balancing the budget, improving the school system, creating jobs, and beginning a clean energy revolution.

Among his ideas for promoting clean energy is the creation of an upstate consortium dedicated to hybrid technology and a push to have 45 percent of the state energy renewable by 2015.

"Energy is really now our new rate of exchange," Paterson said. "If we revitalize by repairing roads and bridges, it's not the cost of rebuilding bridges – it's actually how much energy it takes to accomplish it."

He called on the state to approve the Ravitch Commission's proposal to add tolls on the East River bridges. Former Metropolitan Transportation Authority Chairman Richard Ravitch was selected to head a taskforce looking into ways to raise money for the cash-strapped agency.

One initiative he focused on was a plan to combat childhood obesity. Paterson said that the state will push to eliminate trans-fats in restaurants and add a tax on sugary drinks.

"The reality is that in addition to a threat to our children's livelihoods, which I think is enough, childhood obesity also affects our economies," he said. "Last year, we spent $6.1 billion treating childhood obesity disease."

The State of the State usually serves as a preview to the governor's fiscal plan, but Paterson unveiled his 2009-2010 budget proposal five weeks early – in hopes of getting it passed at least a month before the usual April 1st deadline.

"If we can't spend more, we will have to spend more effectively," said Paterson over the challenges of balancing the budget.

In a pre-taped segment, State Senate Minority Leader Dean Skelos praised the governor's address.

He said he was looking forward to working with Paterson to unite Albany.

"Many people have blamed Albany's dysfunction on the power of three men in a room," Skelos said. "I think the solution lies in uniting 62 men and women in the Senate Chamber.

Like Paterson, Skelos also said that tax increases should be the last resort and pushed for a property tax cap.

Assembly Speaker Sheldon Silver also responded to Governor Paterson's calls to work toward a balanced and on time budget in the coming weeks.

"As I told you following the Governor's budget presentation, my Assembly colleagues and I are anxious to work with the Governor and with our colleagues in the Senate to address this challenging economy head on," said Silver. "As we work to pass a fair, balanced and on-time budget, we will ensure that the burden of addressing the current crisis does not fall disproportionately on to the backs of New York's working families, but there is no way to sugar coat the situation."