Governor David A. Paterson today announced a comprehensive, two-year $5.2 billion deficit reduction plan that will entirely eliminate the State’s $1.5 billion current-year shortfall, protect against further declines in revenue in a volatile economic climate, and make a substantial down payment on next year’s deficit.

Governor Paterson’s proposed reductions are spread across virtually every area of State spending, including education, health care, human services, the State workforce, and others. These actions would produce $2 billion of savings in 2008-09 and $3.2 billion in 2009-10.

“The deficit reduction plan I have put forward today represents a series of difficult choices across virtually every area of State spending,” said Governor Paterson. “The only way we are going to overcome this unprecedented crisis is through shared sacrifice. I look forward to engaging in a productive dialogue with the Legislature about the actions we must take at next week’s special session to address our State’s record budget deficits.”

Governor Paterson’s plan would close the State’s $1.5 billion current-year shortfall, while also providing a $548 million cushion against additional declines in revenue during 2008-09. These proposed actions would also reduce the State’s 2009-10 deficit from $12.5 billion to $8.8 billion and four-year budget deficit by from $47.0 billion to $35.9 billion.

After implementing Governor Paterson’s deficit reduction plan, 2008-09 All Funds spending would still total $119.2 billion, an increase of $3.1 billion or 2.7 percent over the previous year. State Operating Funds spending would total $77.0 billion, an increase of $1.9 billion or 2.5 percent. Inflation is currently projected to be 4.2 percent for 2008-09.