Gov. David Paterson has released a two-year $5.2 billion deficit reduction plan that would largely impact education and health care spending in New York State. The biggest cut to the 2008-2009 budget would come from school aid, where $585 million would be trimmed proportionally, based on school district wealth. The reductions would range from 3.1 percent for poor districts to 9 percent for the affluent.

"This is not a reduction in school aid. This is a reduction in the level of growth," state Budget Director Laura Anglin said in a televised press conference. Paterson also proposed increasing State University of New York tuition by $600 to $300 per semester.

But Paterson insisted districts had millions of dollars in reserves they could tap and efficiency measures that would make up for the lost aid. "We are believing they shouldn't affect property taxes," he said, when asked about a potential increase in school taxes. He also acknowledged that lawmakers and special interest groups would fight the deficit-reduction plan but said to delay action beyond Tuesday's special legislative session would "compound our problems."

All in all Paterson's proposals total roughly $2 billion in cuts for this fiscal year (which ends March 31, 2009) growing to $3.2 billion
next year when the projected deficit is a staggering $12.5 billion.

Here are a few of the proposals: scaling back Medicaid spending growth from 2 percent to 1 percent. (Projected savings: $572 million this year, $1.2 billion next year); a request for state workers to delay their 3 percent pay increase this year, plus a delay by five days in the payment of workers that would be scaled in over time ($137 million this year, $167 million next year); scaling back education spending growth from 9 percent to 5 percent (projected savings: $585 million this year, $844 million next year), and so on.