New York State legislators Sunday night gaveled in and then immediately gaveled out of a special session called by Governor David Paterson, refusing to vote on any of the bills Paterson had submitted to end the state's three-month-old budget impasse.

The legislature's rejection set up what could be a final budget showdown on Monday, the date of the budget approval deadline, after which government services will be shut down if an agreement isn't reached.

Lawmakers said they had no intention of voting on the governor's budget bills Sunday night.

"The governor called us and briefed us on his version of a three-way deal, which (included) a number of things that didn't affect the budget and didn't help us get there," said Assembly Speaker and fellow Democrat Sheldon Silver. "And that has a lot of do with why this budget is late."

But at a press conference following the session late Sunday night, Paterson said it was the legislature who was trying to pass additional spending.

"On January 19th I introduced a budget that was balanced and fiscally responsible," Paterson said. "On Friday, the legislature submitted my budget – but before introducing it they amended it to include $500 million dollars of additional spending that they don't pay for, and also funded 6,800 programs to the tune of approximately $200 million dollars."

Paterson called on the legislature to pass his budget on Monday – or to pass their own balanced budget.

"I'm asking the legislature to make a choice," he said. They can pass my emergency appropriations tomorrow or they can pass their amended budget, but they better not put any of those additional appropriations or member items in until they resolve the issues of Medicaid."

If the legislature passes an amended version of the governor's budget, the governor would be forced to sign it but could strike out amendments he doesn't support.

"I know the governor is serious about his June 28th deadline and we will continue to negotiate," Democratic Senate conference leader John Sampson said. "But in the interim, we put a two-house agreement in the mix so a least the governor can know that we're serious about dealing not only with his issues but serious dealing with ours."

The legislature's modified bills partially restore funding to the State University of New York, City University of New York and Tuition Assistance Program and also restore $600 million in education funding for kindergarten through 12th grade.

Legislative leaders said a portion of the restored state school aid would go for "meaningful property tax relief," but Paterson has previously opposed such a proposal.

Another $683 million in health care cuts that were proposed by Paterson are also restored, including $46.8 million in Medicaid cuts. Paterson is asking the legislature to create a contingency plan in case New York does not receive $1 billion in Medicaid funding, which would make the state budget gap wider.

Lawmakers says they plan to pass the bills on Monday and then send them to the governor.

At Manhattan's Pride March earlier Sunday, the governor said that he was pleased with news of a two-way budget agreement.

"I'm absolutely happy about that. I've been asking for that, as you know, for three months, and perhaps the pressure of the emergency appropriations got them to finally do what they should have done three months ago," said Paterson.

However, the governor warned that if the legislative leaders' budget does not balance, he would consider it a cheap gimmick to avoid a vote on his own budget proposal. He said he would then keep legislators in Albany until a balanced budget is passed.

As of Sunday, New York State's budget had been overdue for 88 days.