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Paterson: State Has Run Out Of Cash

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Governor David Paterson, Lieutenant Governor Richard Ravitch and State Budget Director Robert Megna once again stressed the state's dire financial situation during an address Wednesday on Wall Street.

Speaking at the Museum of American Finance, Paterson said New York is on the brink of fiscal disaster, calling the state "ground zero for the recession."

He said the budget deficit stands at $21 billion, twice his original estimate, and that the state may be unable to pay all of its bills at the end of this month.

"We have a 'lack of cash' crisis in this state," Paterson said.

In an attempt to fix this problem, Paterson said he will ask the state budget director to withhold all payments.

"We cannot play favorites with any program, any program," responded the governor to an audience question.

He said that he is aware he risks getting sued, but that the move is necessary to keep New York out of insolvency.

Paterson said that Wall Street is an important source of the state's tax revenue, and that not all recent criticism directed at the financial sector's alleged excesses is warranted.

"People in Michigan stood behind the engine of their economy. You don't hear anybody in New England complaining about clam chowder. You don't hear anybody in Maryland complaining about crab cakes. If you say anything about corn in Iowa, they'll run you out of town. If you say anything about oil in Texas, they'll string you up near the nearest tree," said the governor. "We need to stand behind the engine of our economy in New York, and that engine of the economy is Wall Street."

Wall Street bonuses and executive packages were also defended by Paterson, who said they were integral parts of financial executives' salaries.

"It's very easy to blame Wall Street, it's easy to blame New York so I was very glad that the governor stood up for us today," said Kathryn Wylde of the Partnership for New York City.

Others questioned the benefits of big bonuses for ordinary New Yorkers.

"It's quite unseem for these enormous firms to be paying these bonuses, which is essentially the public's money," said Dan Cantor of the Working Families Party.

At the governor's prior request to reduce state spending by $3.2 billion, the state Legislature passed a bill earlier in the month that only cuts about $2.7 billion.

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