Calling the state's fiscal crisis "severe" and warning that the situation is "going to get worse before it gets better," Governor David Paterson announced plans Tuesday night to call legislators back to Albany for an emergency budget session.

“Our economic woes are so severe that I wanted to talk to you personally this evening on where we stand,” he said in the five-minute televised address. “The fact is we confront harsh times. Let me be honest -- this situation will get worse before it gets better.”

Paterson confirmed reports that the state's projected deficit for next year ballooned 30 percent in just a few short weeks, growing from $5 billion to $6.4 billion, due to rising costs and decreased revenues.

What's worse, Paterson added that in the next three years the deficit will continue to grow to an estimated $26.2 billion ö 22 percent more than the deficit projected less than 90 days ago.

The governor called on state lawmakers to interrupt their summer break to convene in Albany for a special budget session on Tuesday, August 19th, stressing the need to address the situation proactively.

"My message to the Legislature is that next year's budget process starts now!" Paterson said, adding that if families are shortening their vacations owing to gas prices and job cuts, then their representatives can as well.

"It is time for New York and other governments to cut up our credit cards," said Paterson. "The era of buy now and pay later and later is over. The faster we address this crisis, the faster and stronger we will emerge from it."

It's unclear what the governor wants to cut and by how much, but Paterson did say he wants to cut agency spending. He called on lawmakers to pass measures that will cut property taxes and curtail the cost of home heating.

"The time to act is now. We cannot waste any further opportunities," he said. "We can't wait and hope this problem will resolve itself. If we do, we will waste our opportunity to turn this situation around."

A revised budget plan is scheduled to be released Wednesday with all the details.

The governor blamed the state's bleak economic situation on the mortgage crisis, which has shaken the financial services sector and softened the real estate market across the state.

"Everywhere I go I meet people who are losing their jobs and their homes," he said. "Next winter some of these families will have to choose between heating their homes and feeding their children. The rising costs of health care means that they cannot afford to get sick; the rising cost of education means that families can no longer prepare their children for the workforce."

New Senate Majority Leader Dean Skelos released a statement immediately after Paterson's brief address, saying that it's time for the governor to embrace the proposed State Senate spending cap and urging the Assembly to follow suit. Skelos added that his conference will return to Albany before the session to enact a property tax cap and pass legislation that reduces education costs.

Assembly Speaker Sheldon Silver wants the spending cap to not affect services, and said, “Our answer is that middle class families and our working poor must not be forced to bear the brunt of such cuts.”

Mayor Michael Bloomberg offered his support to the governor, in a statement released following his address.

"Government budget cuts never come easy, but can be done," said Bloomberg. "The governor demonstrated that he is ready to stand up to the interest groups that will no doubt protest before the State House, just as they took to the steps of City Hall earlier this year."

But earlier today, Bloomberg urged Paterson not to cut city programs.

"The state can not solve its problems on the backs on New York City taxpayers," said the mayor. "New York City sends $12 billion more to Albany than we get back every year."

City Comptroller Bill Thompson praised the governor's actions, saying Paterson made the right move by taking hold of the situation.

Thompson says the city will be impacted by the actions taken by the state, but assures New Yorkers the city is prepared.

"It's a strange thing, but New York City is in a better financial position than the state is right now,” said Thompson. “We've planned for the future, we've planned for the downturns. We've been smarter and when we had a surplus we didn't spent it."

Thompson added the city made budget cuts over the last few years to prepare for a fiscal crisis, and said tourism and construction will continue to be sources of revenue for the city.

On Monday’s “Inside City Hall,” State Comptroller Thomas DiNapoli agreed that the state's coffers are in disarray due to diminished Wall Street revenues and irresponsible planning. He said an Albany shakeup is needed, but pink slips should only be handed out as a last resort.

"I do think it is appropriate to say we need to take a very broad view of what the options are and start making decisions that not only get us through a particular budget shortfall at a certain point in time but start to long-term restore New York State to fiscal health," said DiNapoli.

On the same episode of “Inside City Hall,” Ed Koch, who was elected mayor during the fiscal crisis of the 1970s, said Paterson's speech reminded him of that era.

"He delivered a speech that in my judgment was the best that could have been done at this time and was reminiscent of what happened when Hugh Carey had a state of the union message in which he said the days of wine and roses are over," said Koch.

Koch said Paterson has a chance to cement his reputation in the history books as a fine governor if he can turn around the state's fiscal fortune like Carey did.

Meanwhile, Paterson will hold a town hall meeting in Queens on economic security Thursday.

It will be the 13th and final regional meeting held by the governor's Economic Security Cabinet this summer.

New Yorkers will have the chance to voice their opinions on how the state should enhance the economic security of low-income working families.

The meeting will be at 4 p.m. Thursday in York College's Performing Arts Center in Jamaica.
To register for the meeting or to find out more information, visit

Programming note: NY1 will have live coverage of the governor and his budget director unveiling their updated financial plan at 10:30 a.m. Wednesday.