Paterson Agrees to Delay Special Session on Deficit ALBANY, NEW YORK (WXXI) - Governor Paterson met with legislative leaders, both in public and private meetings, and agreed to push back the start of a special session on the budget deficit for as long as two weeks, so that the legislature has more time to hold hearings on the governor's budget cutting plan.

In the second public leaders meeting called by Paterson this month, Assembly Democrats, led by Speaker Sheldon Silver, said they are now willing to go along with most of the Governor's proposed cuts to health care and education, including mid year school aid cuts, as long as the proposed formula for reductions is adjusted.

Senate Democrats, though, offered other ideas. Senate Conference Leader John Sampson suggested refinancing New York's tobacco settlement bonds at a more favorable rate. The tobacco money was part of a one time settlement that tobacco companies made with the states. The money was originally intended to pay for health care programs for twenty years or so, but in 2003 the bulk of it was used as a one shot to plug that year's deficit. Senator Sampson says New York could reap "up to five hundred million dollars" from the deal.

But Governor Paterson rejected the idea as a "non starter".

Afterward, Paterson said that when the state used the tobacco settlement monies as a one-time plug for a recurring budget deficit, rating agencies downgraded the state's credit rating. Plus, he says, the money would not come in fast enough to solve the state's cash flow crunch.

"This is where we got into trouble," Paterson said. "We created phony revenues to falsely finance our spending, and we wound up in the place we're in. And I'm stopping it."

Paterson later met privately with Speaker Silver and Seantor Sampson in their offices. Afterward, Paterson said Sampson had "responded well" to the governor's argument against tobacco refinancing. But a spokesman for the Senate Democrats said Senators still intended to pursue a refinancing of the tobacco bonds, believing it was less harmful than cutting education aid in the middle of the school year.

The governor also agreed to delay a special legislative session to accommodate hearings held by both houses. The Assembly planned to conclude its hearings this week. Senate hearings are scheduled until at least November 2nd.

And the governor even suggested giving a special address to a joint session of the legislature, "just to highlight the severity of this situation".

Paterson later said he'd been thinking out loud, but said he is now seriously considering such a plan. The governor says he's willing to wait as long as two more weeks for a special session, but he says there's one overarching date that everyone should keep in mind.

"The date we have to think about is December 15th," Paterson said. "That's when the payments are due".

Paterson says on that date, the state owes several billion dollars in payments to schools, local government, and other contractors, and he says, the state does not have the cash to pay them all.












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