Governor David Paterson met with a council of economic advisors to review the current condition of the state's economy, as state lawmakers prepared to head back to the Capitol tomorrow for a special session to address the state's budget woes.

Paterson is calling on the state legislature to cut $600 million out of the budget, but lawmakers are drawing a line in the sand over how far they're willing to go.

"My suggestion was that we come back to Albany now on August 19th, tomorrow, and that I will close the deficit internally that we have," said Paterson. "And the Legislature will address a possible deficit that we can have after that by matching me with a $600 million cut. We're rolling the dice if we don't get to $600 million, because we'll have to come right back and be in deficit."

Paterson met with the 18-member council of some of the biggest minds in business to get some advice on how to figure out the state's fiscal problems. The council, which met with the governor in Manhattan, includes a Nobel Prize winner, a former United States Treasury secretary, and other businessmen and economists.

Paterson is calling for cuts in Medicaid, City University spending and member items. But lawmakers are drawing a line in the sand over how far they are willing to go.

"We're not going to cut aid to education – that would bring it back to the property tax payer. We're not going to cut the quality of healthcare that New Yorkers want and I don't think it's appropriate to lay off state workers. But I think we're at $300 to $400 million," said Senate Majority Leader Dean Skelos.

NY1 has learned Assembly Democrats are warming up to cuts in healthcare and so-called pork barrel projects, but they also support a tax hike on New Yorkers who make at least one million dollars – something the governor opposes.

Over in the Republican-controlled Senate, lawmakers are willing to take some hits on member items and add-ons to the budget, but they're also trumping the property tax cap they recently passed – a move Paterson favors.

But the powerful state teacher's union is running ads against the cap.

In an election year, lawmakers are loathe to make painful cuts that could come back to haunt them at the polls. Republicans control the Senate by just one seat and are seething over published reports that Democratic Senate Minority Leader Malcolm Smith told lobbyists at a golf fundraiser to pay up or suffer the consequences after the election.

Some Senate Republicans are calling for an investigation.

"I think it borders on criminality. You cannot threaten people to give contributions. Certainly that's not the change I think people are looking for. That's thuggery," said Skelos.

But Smith says he was simply entertaining guests and called on Skelos to apologize saying in a statement:

"With regard to the comment Senator Skelos made calling me a 'thug,' I think that demeans his position and has questionable overtones."

Tensions are certainly high. and expectations to actually meet the $600 million mark in cuts are not.