The unelected governor—whose poll standing remains low, whose ability to raise campaign cash has been hampered and who has called legislators "liars" as some of them have brought up his prior drug use—used the greatest platform he is afforded to bludgeon legislators, lobbyists and in general the political-industrial complex of  New York.

The question is still: will the voters change their minds?

Paterson has become increasingly drastic in his attempts at political resurrection. On Wednesday, during his State of the State address, the sound of grinding teeth was as loud as the scattered applause (most of which, surprisingly, came from Republicans).

"It doesn't help, certainly, and the atmosphere isn't that good," said Assembly Majority Leader Ron Canestrari, a Democrat from Cohoes. "But in the final analysis, we've got to get the job done and a common ground will be reached. But certainly this sort of rhetoric on the role of lobbyists and other interest groups that are out there doesn't help the process at all."

"I'm outraged," I heard one Democratic legislator grumble to another on the floor after the speech. "Why are you smiling?"

"Oh this?" The second legislator replied. "This is my Andrew Cuomo smile. I didn't look at David. I looked at him."

Traditionally, the State of the State message is a chance for broad visions and clever turns of phrase. Hugh Carey declared, after the profligacy of the Rockefeller administration, that the days of wine and roses were over. It's normally a chance for optimism and broad consensus, something that comes before the details of various proposals are introduced in the budget unveiling and the battles over programmatic priorities heat up.

Which was essentially what Paterson did last year in his first State of the State. (Because of the state's sour fiscal climate, Paterson released his budget proposal several weeks before the speech.) Not so Wednesday.

"It has become customary on occasions of this significance to recognize each and every public official in the room with congratulatory pronouncements and self-reflected praise," Paterson said. "But my colleagues, the times are measure and I would ask, with your understanding, that we dispense with the flourishes and formalities and I would like to address all of you today just as fellow citizens of our great state, all equal under the yes of God, all responsible to the people of the state of New York. Whether our service be short-lived or long-remembered, this is a winter of reckoning and I come before you today not just to talk of the state of the state, but also of the state of our self-governance a fragile instrument of popular will that has become the will to be popular. Where it is easier to deny reality and to demand that which we cannot afford than to accept that years of living on the margins of our means have had to end."

Paterson went on to describe new structures of ethical governance—including term limits and stricter limits on campaign contributions—as well as the need to overhaul the Empire Zones program and create a health insurance exchange.

But the theme was decidedly me-against-you, which no one in the room seemed to miss.

"It is going to be an interesting year," said Assemblywoman Naomi Rivera, a Bronx Democrat. "We are going to be used as a scapegoat, is my concern, and I think there's going to be a lot of compromise and give and take, and it's how much we give and how much we take that is going to dictate how much work we can get accomplished."

Before the speech, a Paterson aide told me his remarks were not intended for the people in the room, but for citizens outside. Paterson's goal is to stand apart from broken Albany, gambling (probably wisely) that the system will fail to meet the challenges ahead.

Paterson will conduct 10 radio interviews in all corners of the state Thursday, blasting his position at high wattage as newspapers tout his castigation of legislators in headlines. There is a formless dissatisfaction with Albany—one recent poll showed 76 percent of voters thought their government to be dysfunctional, but were unsure who to blame—that Paterson seeks to foment. The State of the State address was meant for them.

For now, the Republican reaction has been a sort of bemused lip-licking. Senator Dean Skelos, the Republican leader in that chamber, said he hoped Paterson has "had a conversion" to the need for fiscal restraint. Smiling, he told reporters, "it's going to be a great year."

There was only one standing ovation for Paterson's 29-minutes speech: its conclusion. Paterson shook hands with several legislators under the brown sandstone Great Western Staircase. Everyone—labor leaders, clergy, and legislators of both parties—had come to see Cuomo, who was holding a traditional mingle outside his office. Paterson walked up to the attorney general, they touched each other, muttered some inaudible syllables and moved on.

"The outline of the direction is right," Cuomo said of Paterson's speech, when asked. "Where I think we've had trouble in the past is actually getting it done."

Those gathered around him smiled their Andrew Cuomo smiles.

"I and my Assembly majority colleagues have long supported, long passed and I personally offered the first publicly financed campaign finance bill in the State of New York," Silver said in a press conference after Paterson's State of the State speech. Silver noted that he suggested this at a public meeting in 2009, but it was rejected by Paterson. "I did not have a partner at that time. If you check your notes, you will see that. But, having said that, I'm glad the governor has now come along, and we're glad to work with him and the Senate to enact that legislation this year."

But on the issue of greater disclosure, Silver was far more reserved. He is "of counsel" to the Manhattan firm of Weitz and Luxenberg, and has never said how much he is compensated for his work for the firm, or its exact nature. Legislators are currently required to list their income from outside endeavors, by category, but the categories are redacted from the public.

Members of the Assembly and Senate are currently negotiating a bill strengthening ethics enforcement, but Paterson and his staffers have not been involved. (Paterson's people say they weren't invited, legislators say they refused to participate.) Silver said this bill would be passed shortly.

"We will have an ethics proposal that I think will be a sweeping proposal. There is a constitutional provision for separation of powers," Silver said, and "we have separated the executive and the legislature into separate entities. Our bill will eliminate the Legislative Ethics Commission and create a new legislative ethics body modeled on the Congressional Ethics Office."

He added: "we will also deal with issues of transparency and make public categories of income on financial disclosure forms, and we will add additional categories and require information on business relationships."

Bob Conner asked Silver if he would say, now, how much he makes at Weitz and Luxenberg. He demurred.

"Sure, as soon as the bill becomes law," Silver said. "I will continue to conform with the law, and as it is, with my disclosure, I have in the past gone beyond."

He said of the proprietary nature of legal clients that "I think it's more than privilege. It is a complicated area of ethics. Someone might not want to know that their spouse consulted a matrimonial lawyer by reading it in the newspaper."

Nick Ayers made a blind joke, then retracted it.

George Marlin has advice for Ed Cox on how to revive the G.O.P. in New York.

Bill Hammond decodes John Sampson.

The L.A. Times blog on Harold Ford: "[A]s a telegenic member of the media's chattering classes, he would get lots of attention."

NPR smartly notes a problem with his candidacy. "What will be fascinating to watch if Ford decides to run is how he shifts his political stance. For instance, he's chairman of the centrist Democratic Leadership Council."

Kathy Wylde calls Christine Quinn "a favored candidate to succeed the mayor.”

Daily Intel's headline: "Mayor Bloomberg Gave Christine Quinn Permission to Endorse Thompson."

Bloomberg's letter to Orszag moves on to the A.P.

A school will be named after Percy Sutton.

A study finds positive health and economic results from the city's calorie-count measures.

Bloomberg's soulmate withdraws his support for the health care reform being negotiated in Washington.

The National profiles a Bloomberg aide who is Muslim.

Larry Littlefield isn't impressed with the U.F.T. lawsuit.

John Liu tweets about his staff.

Jonathan Martin ponders the Sharpton-Paterson ride.

And pictured above is Jimmy's photo of Andrew Cuomo during the State of the State speech, right before he "blew a kiss to all of us."

Below, Senator Ruth Hassell-Thompson's reaction to the speech:

"It seems to me that there's a question of conscience that's bothering him, and that's whether all of the taxes and fees that he's supported not just in last year's budget, but also when he was a senator in the minority," Senate Republican Leader Dean Skelos said in a press conference after his formal response to Paterson's State of the State speech aired on TV. "I hope that this has been a conversion."

Skelos was joined by Assembly Minority Leader Brian Kolb as well as Ed Cox, chairman of the Republican State Committee.

"What he delivered with respect to the budget was a Republican message," Cox said.

During the speech, I noticed more Republicans applauding than Democrats, and doing so with greater frequency. Paterson gave a very prominent shout-out to Governor George Pataki, the last Republican to hold that office. Glenn Blain noticed this too, and asked Skelos if he thought Democrats were disrespectful to the governor by not clapping.

"Whether you agree with the governor or not, he is the governor and you should respect that," Skelos replied. "I think the governor has, as obviously the Democrat Party especially in the senate, are particularly troubled as to his polling numbers and what President Obama tried to do, in terms of really bullying him out."

"They didn't quite cross the line in terms of disrespect, but he was talking more like a Republican, so I can understand," Skelos said.

I asked Cox if he would entertain Paterson for the Republican nomination. He and everyone else laughed, before he noted there are "other great candidates."

Eventually, reporters cornered the attorney general, who began by kibitzing with the now-bearded Danny Hakim.

"You're shaggy," Cuomo said, pointing to Hakim's jaw, captured on a video at nysnys.com. "Count 'em: seven, eight, ten gray hairs. I'm there already, my friend. As long as it's there, I don't care what color it is."

Cuomo was asked about Paterson's speech, which focused on the need to rein in spending and reform ethics oversight.

"The outline of the direction is right," Cuomo said. "Where I think we've had trouble in the past is actually getting it done."

He didn't say much more substantive in various grillings from other reporters. He said the current disclosure form for legislators is "not serving its purpose" and that he was wary of forcing attorneys to disclose their clients, which has "ethical issues."

Paterson stopped by the reception to see Cuomo, but the two barely chatted. They did speak, "warmly," in the "holding room" before the speech, Cuomo said. Cuomo sat on the rostrum behind Paterson, and was greeted thunderously upon his introduction.

Hakim asked Cuomo if he was going to run for governor.

"How many gray hairs do you have?" Cuomo said. "Attorney general of the state of New York. You don't like that office?"

In response to further questioning, Cuomo revived such stock hedges as "I'm focusing on my job as attorney general," "once the political season starts it actually can impede what you can get done," and "my only plan at this time is to run for re-election as attorney general."

And what about Sheldon Silver's prediction last week that he would run?

"We have to get into the future to find out if the prediction were right," Cuomo said.

"I thought it was exactly the right message," Pataki told me after the speech before saying hello to some of his former legislative colleagues. "These are times when we need fiscal reform, we need to face the economic realities, we need to restore public confidence in ethics reform, and I think the governor had that right message. I hope that the legislature is responsive."

I asked Pataki if he was surprised that he got the first shout-out by name in Paterson's speech. He chuckled quickly.

"The governor is a very gracious human being," he replied.

Skelos lauded Paterson's focus on fiscal issues, but blamed him and Democrats for "an opportunity that was squandered" to use stimulus funds for investment.

Here's the text, and YouTube clip, of the response.

In his State of the State message Governor Paterson said that New York faces an enormous fiscal crisis.
He's right.
New York, like other states, has been hit hard by the economic recession, forcing you and other families to make sacrifices
in order to make ends meet.
Albany must now do the same.
Governor Paterson talked a lot about fiscal restraint, but we've heard that speech before.
Last year, he gave a similar speech and promised to hold the line on spending and not raise taxes.
Unfortunately, that did not happen.
Along with his Democrat colleagues in the Senate and Assembly, the Governor approved a budget that included record increases in spending and a record $11 billion dollars in new taxes.
Those increases took a $2400 dollar bite out of the average family budget at a time when many families are struggling.
Every single Democrat in the Senate voted to increase spending and taxes and every Senate Republican stood up for taxpayers and voted against it.
The budget they adopted made life much tougher for every family in New York.
You lost your STAR rebate checks that helped you pay your property taxes.
Your energy taxes were raised, increasing your utility bills.
They increased the cost of health insurance for your family.
And, they made it more expensive for you to register your car,  renew your driver's license and pay for every day family needs.
The sad thing is, none of that had to happen.

One year ago, Washington gave New York more than $25 billion dollars in federal stimulus money.
These funds were a unique, one-time, opportunity for New York to get its fiscal house in order, protect taxpayers and weather the national economic storm.
Unfortunately, it was an opportunity that was squandered.
Instead of using stimulus funds to balance the budget, reduce taxes or create jobs - the Democrats in the Senate and Assembly spent every dime --- then they raised your taxes and spent even more.
Now, Governor Paterson says things will be different.  
He again said he will not raise spending or taxes.
We certainly hope this time he really means it.
New Yorkers just can't afford a tax and spend approach anymore.

We must change the way state government works.

We need a new agenda that will help struggling middle income families and return New York State to prosperity.

Here is what we must do:

First, we must cap state spending to prevent the Governor and future Governors and Legislatures from spending more than we can afford.

Then, we must cut out-of-control state spending.

Like you, I cannot stand to watch state government continue to waste your money.  

Take Medicaid for instance, which consumes the largest part of the budget.

Studies have concluded that as much of 10 percent of the Medicaid budget is wasted through fraud and abuse - that's $4 billion dollars.

Yet the Democrats eliminated measures to stop Medicaid fraud.

Senate Republicans will propose even stronger laws to fight fraud and abuse in our Medicaid system and recover billions of dollars in taxpayer money that's being wasted.

As we did last year, Senate Republicans will also oppose all tax increases.

In fact, we will call for a two-thirds, supermajority vote in each house to make it even tougher to increase taxes.

We will oppose any effort to pass costs onto schools and local governments that will force them to raise property taxes.

We will also fight to restore the STAR property tax rebate check program to provide homeowners with real property tax relief.

Overburdened middle-income families simply cannot afford to pay higher property tax bills each year.

New Yorkers want financial security - they want a secure job with a good salary.

Therefore, we must create quality, high-paying jobs that New Yorkers deserve.

The assistance New York received from Washington was supposed to help create jobs - but the Democrats' budget did not include any economic development plan and didn't create a single job.

Senate Republicans will advance a plan to keep current jobs from leaving New York and create new job opportunities so your children can stay here to work and raise their families.

Lastly, we will seek to give you the power, through initiative and referendum, to make new laws when elected officials fail to heed the call for change.

We can only achieve these goals if we work together in a bipartisan fashion.
We have seen what happens when one party controls every lever of state government.  
Democrat leaders went behind closed doors last year and refused to listen to our ideas.
The result was more wasteful spending, higher taxes, and no accountability.
Whether you live downstate on Long Island or Upstate in Fulton, DeWitt or Cheektowaga, you are paying the price.
That has to change and we will do our part to see that it does.
The Governor and Democrats in the Senate and Assembly cannot continue to dig deeper into your family pocketbook to balance Albany's budget.
Senate Republicans will do everything we can to protect
you -- the taxpayer -- and make sure that in 2010 New York moves forward to a better, brighter future.
Thank you.

 

His appearance was scheduled, as his spokesman told the Daily News this morning, but his other (less official) spokesman and colleague Ruben Diaz Sr. just toe me ta he will not be attending. I didn't see him anywhere in the chamber.

"You will not have the pleasure," he told me.

Monserrate is facing possible expulsion from the State Senate after he was convicted of misdemeanor assault for manhandling his girlfriend.

"My colleagues, the times are measured. I would ask for your understanding that we dispense with the flourishes and formalities," he said, and launched immediately into an anti-legislative, anti-special-interest theme that he has used recently in plugging a deficit and trying to bolster his political strength.

"This is a winter of reckoning, and I come before you today not just to talk of the State of the State, but also for the state of our self-governance—a fragile instrument of our popular will which has become the will to be popular," Paterson said. "Look at history: Cultures of addiction to spending, power, and approval have ruined empires and now they threaten the Empire State. But I come here to day not to replay old grievances or in any way to reclaim lost ground, but we come here to rebuild."

There was silence.

"The last two budget battles have left this hole on all of us in this chamber, and there are more deficits up ahead that will require an even greater sacrifice," Paterson said. "We will have to accept that the old way of doing budgets is unsustainable, and so do the special interests, who intimidate, who badger, who push even when the cupboard is bare."

Later, Paterson spoke about his proposals to tighten ethics enforcement in Albany. He admitted there would be "significant push back."

"The monied interests—many of them here today as guests—have got to understand that there days of influence in this Capitol are numbered," Paterson said. "No one person or group is above any others and any more or less deserving of any hardship or pain."

Paterson's proposals and rhetoric about fiscal responsibility drew applause—from Republican—as did his promise to invest as much energy in enacting a state spending cap as he did in restructuring drug laws for low-level offenders.

Finally, after speaking for 11 minutes, Paterson mentioned his first person by name: George Pataki, the former governor, who Paterson lauded for working to protect the environment.

"There is still time to rebuild the Empire State," Paterson concluded. "I say to the elected members of the legislature: Work with me. Follow me."

The speech lasted for 29 minutes. The governor also touched on his idea to rebuild the upstate economy—he wants it to be "the back office for corporate America"—and a desire to increase state contracts for women and minority-owned businesses.

Below is the complete release from Paterson's press office.

In his second State of the State address, Governor David A. Paterson today outlined his plan to rebuild New York through firm and decisive steps - including fiscal and ethics reform and an economic development plan that puts New Yorkers back to work. The Governor laid out an agenda to end the culture of over-spending and abuse of power that has for too long dominated State government, including a proposal for sweeping and comprehensive ethics reform - the centerpiece of which is a new independent Ethics Commission.

Governor Paterson also announced a replacement for Empire Zones - the Excelsior Jobs Program - which includes three aggressive tax incentives for targeted growth industries, the Sustainable Neighborhoods Project to revitalize prime housing stock that sits vacant in urban cities across New York State and the Manufacturing Legacy Program to leverage the strengths of the State's manufacturing industries to guarantee the economic security of the people who are carrying its legacy into the twenty-first century. In addition, the Governor proposed a bold initiative to revive the New York Insurance Exchange that would bring buyers and sellers of complex commercial insurance closer together, providing increased transparency and security for everyone in the process.

"Today is not a day to look back. It is a day to turn crisis into opportunity, to reclaim our government and recommit ourselves to doing better for the people of New York. Today, I stand before all New Yorkers with a bold and decisive plan to rebuild our State's economy into a national model of ingenuity and strength, to rebuild our people's confidence in the stability of our State, to rebuild our manufacturing base to meet the energy standards of this enlightened age and to rebuild the trust that the citizens of this great State once had in their government," Governor Paterson said. "Every decision I make will come down to one question - are we doing what is right for the people of New York? It is time to rise to the high expectations of our citizens and to bring the lasting change that they have long sought and deserved."

Fiscal Reform

"To rebuild New York, we need to enact fundamental fiscal reform that makes government more accountable to taxpayers. We must enact real and lasting cuts to our State's bureaucracy, merge agencies to improve efficiency and save money, begin the public tracking of agency performance, and develop a long-term strategy for fiscal planning," Governor Paterson said. "The days of running New York like a payday loan operation must come to an end."

To achieve these goals, Governor Paterson today deployed EmpireStat, a new program to track the progress of State agencies - a critical tool for the Governor and the public to assess whether the State, its agencies and authorities are making real progress in the areas that matter to New Yorkers. The Governor will use this tool to conduct agency performance reviews, to hold agencies responsible for their performance, to report directly to New York State taxpayers on that performance and to provide direction for improvement where necessary. In addition, the Governor's Office of Taxpayer Accountability (OTA) will continue to build on its successes of 2009 with additional actions in 2010 that will result in even more savings and efficient operations including consolidation of certain State agencies and functions.

Governor Paterson has asked Lieutenant Governor Ravitch to take the lead on developing a Four Year Financial Plan. A multi-year fiscal recovery plan is the most sensible way to bring the State's financial plan into structural balance. The long-overdue goal of structural balance is the only way to budget responsibly and avoid unexpected cuts in essential services - such as schools, hospitals, and mass transit - in times of economic distress. The foundation of such a plan will be the requirement that government spending year-to-year is kept in line with reasonable revenue assumptions and that adequate reserves are created in good times so that the State can better weather rough times.

Governor Paterson has proposed major reform legislation that would cap the growth of State government spending. A spending cap would help control State expenditures, improve New York's long-term fiscal integrity, and make government more accountable to taxpayers. This fiscal reform bill is tied to a circuit-breaker property tax relief program that would provide direct relief to taxpayers once the State's fiscal house is in order.

"I know this idea has met resistance from the usual suspects in the past," the Governor said. "But, just as I have fought for other critical reforms throughout my career, I will fight for this spending cap no matter how long it takes, even if it requires a constitutional amendment."

Once the spending cap puts New York's fiscal house in order, the circuit-breaker program will kick in and provide direct relief to New York's overburdened property taxpayers. Unlike the current STAR exemption program, this circuit-breaker will encourage fiscal responsibility at the local level by providing incentives for localities to limit property tax increases. This program will deliver a double benefit to New York taxpayers - spending restraint at both the State and local level.

Ethics Reform

Governor Paterson today proposed sweeping reform to fundamentally change the culture of Albany. Governor Paterson's Reform Albany Act is driven not by the illegal actions of any one person, but instead by what is still legal and rampant throughout the entire system of government. The corrosive effects of outside influence and inside decay have bred cynicism and scorn from the people of New York. This Act will restore the trust and faith that people expect and deserve. Special interests expect others to shoulder the burdens that they are unwilling to bear, and expect this treatment with no regard for the welfare of others. The Reform Albany Act puts the interests of the people of New York ahead of the lobbyists and special interests. The ultimate goal of this reform is to bring fairness and openness to a government that has little of either.

"My Reform Albany agenda would drastically reduce campaign contributions; require disclosure of outside income; strip the pension from any public official convicted of a felony; phase in public financing of campaigns; and impose term limits on all State office holders through Constitutional amendment," the Governor said.

The Reform Albany package would establish an independent State government ethics commission composed of individuals who have no relationship with the State officers they oversee. This Commission will examine conduct and advise the executive and legislative branches of state government to ensure uniform enforcement so that one ethical standard, one set of practices, and one interpretation of the application of the ethics law would apply to everyone in State government.

Singular oversight equals uniform enforcement. Real reform requires full transparency, and accountability to the ethics laws, not to the appointing authority. That is why the new Government Ethics Commission will be selected by a 10-member Designating Commission modeled on the Commission on Judicial Nomination. The Designating Commission members would be selected by State leaders in a way that no clear majority controls the designating board. The single State Government Ethics Commission would include five members, replacing the thirteen-member Public Integrity Commission. It would oversee all branches of government, rather than only the executive branch, and would have both advisory and enforcement powers. A five member commission would be more efficient and less prone to leaks. The Commissioners as well as all Commission staff would be required to sign non-disclosure agreements to help ensure the prevention of leaks.

"This commission would have the power to enforce campaign finance laws; end pay-to-play; and finally bring oversight to so-called good government groups that hide their donors behind walls of sanctimony," added Governor Paterson.

The Reform Albany plan also makes fundamental changes to the way Albany operates in secret. These enhancements will help to eliminate the Pay-to-Play atmosphere that surrounds Albany by improving the reporting of outside businesses, including increased oversight and enhanced reporting for both lobbyists and State officers, and improving guidance to identify and prevent conflicts of interest.

In addition, a bold new public campaign finance system would drastically reduce the maximum campaign contributions allowable, ban corporate contributions and provide for a 4:1 public matching system with enhancements to encourage participation.

Beyond ethics, pay to play and campaign finance enforcement, the Reform Albany plan also contains rules to establish Term Limits for Members of the Legislature as well as statewide elected officials by limiting State Assembly and State Senate to six, two-year terms and limiting statewide office holders to two, four-year terms.

"I don't expect these proposals to be embraced by everyone," the Governor said. "But the performance of our State government has not lived up to the ideals of the people of New York. Bold steps have become necessary to restore the faith of New Yorkers in their government. The ultimate goal of this reform is to bring fairness and openness to a government that has little of either. The moneyed interests should know that their days of influence are numbered. They expect others to shoulder the burdens that they are unwilling to bear or expect special treatment with no regard for the welfare of others."

Excelsior Jobs Program

Today, the Governor announced a replacement for Empire Zones - the Excelsior Jobs Program - a New Economy jobs program focused on the high tech and clean energy growth jobs of tomorrow. The Excelsior Jobs Program is the centerpiece of the most innovative job-creation agenda in the history of New York. The Program includes three aggressive incentives for targeted growth industries including:

•  
  • An expansion of the Research and Development Tax Credit to support innovation and enhance New York State's role in the New Economy. The definition of the credit will be broadened to allow the use of credit to encourage additional categories of investment than currently exist.
  • The creation of an Enhanced Investment Tax Credit to support capital investment.
  • A New Jobs Incentive to target firms in the high technology, biotechnology, clean energy technology, finance and manufacturing industries. Firms that create and maintain a set number of new jobs in New York for five years will receive tax credits for a portion of the payroll costs associated with those new jobs.

"Unfortunately, the Empire Zone program has outlived its usefulness, which is why we are replacing it with a program that is focused, strategic, accountable, cost-effective and transparent," the Governor said. "To develop the Excelsior Jobs Program, we spent the last year reaching out to hundreds of businesses and communities across our State to find out how we can best build a program that delivers what it promises. The result: three aggressive tax incentives for targeted growth industries. We've learned from this recession that New York is nothing if not a fighter and we are going to fight for these new jobs."

Economic Development and Job Creation

The third vital reform in rebuilding New York is to restore our economy to greatness, with a focus on New Economy jobs, a rebuilt manufacturing base, a modern energy infrastructure and a commitment to helping New Yorkers lift themselves up. The fiscal and ethics reforms in the Governor's plan will help form the foundation of New York's economic comeback.

The Governor today announced a $25 million New Technology Seed Fund to create the next Silicon Valley right here in New York State. This fund will help institutions of higher learning grow their research and strengthen their partnerships with the business community to advance their work to commercialization and put New York on par with other states in terms of directly supporting entrepreneurial activity and creating jobs for the State.

Over the last hundred years, New York's economy was built by two primary industries - manufacturing and financial services. We must leverage the strengths of these twin titans to guarantee the economic security of the people who are carrying their legacy into the twenty-first century which is why Governor Paterson has proposed the creation of a new Manufacturing Legacy Program to re-purpose underutilized industrial facilities.

Partnering with regional non-profit business organizations to help build on New York's exceptional manufacturing legacy, we will establish the inventory of available locations, assess the opportunities, identify regional core competencies, partner with key stakeholders, invest and aggressively market these locations nationally and internationally and create industrial assistance centers to educate businesses on alternative manufacturing approaches and marketing efforts.

New York State is home to an estimated 60,000 back office jobs. The Paterson Administration will focus on expanding the State's back office opportunities by making Upstate New York the preferred back office for corporate America. There is no denying that we have the workforce, space and livable communities to support these office operations throughout Upstate New York.

"We must finally address the economic crisis that has been bleeding Upstate New York for decades. We have hundreds of thousands of highly skilled trades, construction and manufacturing workers in our State. In rebuilding New York and our manufacturing base, they are important too. That is why we will look to our historic manufacturing industries and make them new again as well as make Upstate New York the preferred back office for corporate America," the Governor said.

To support New York State's small businesses we must provide them with much needed capital. That is why Governor Paterson proposes the creation of a Small Business Revolving Loan Fund that will provide capital to worthy entrepreneurs. The fund will target minorities, women and other disadvantaged New Yorkers who have difficulty accessing regular credit markets.

New York State Department of Labor statistics show that during the past year, unemployment among African-Americans was more than twice as high as unemployment among whites, and unemployment among Hispanics was fifty-percent higher than whites. In the past, minority and women-owned enterprises were not a significant part of the State's economic development priorities. By synchronizing the MWBE program with the State's overall economic development agenda, Governor Paterson is ensuring that companies are growing in the areas that will create jobs, wealth, and tax revenue. Under the Governor's leadership, revenues to MWBE's in New York State have increased by $100 million. The State is continuing to open the door to success for any New Yorker who has the talent, drive and passion for their business to succeed by creating a permanent council to encourage the use of MWBE firms in public contracting.

"New York's economy means creating new opportunities for all New Yorkers," the Governor said. "I am proposing a wide ranging set of initiatives both large and small that includes a revolving loan for small businesses with emphasis on minority and women-owned enterprises and a Families First Initiative to help connect newly vulnerable citizens with available services they may not be aware of.."

New York Insurance Exchange

Governor Paterson is committed to maintaining New York's status as the financial capital of the world which is why he proposed a bold initiative to establish the infrastructure for a revived New York Insurance Exchange. The NYIE would bring buyers and sellers of complex commercial insurance closer together, providing increased transparency and security for everyone in the process. The NYIE would operate in a manner similar to Lloyd's of London and would enhance New York's status as the world's financial center stimulating the economy by increasing the flow of capital and insurance premiums to New York.

"By bringing together buyers and sellers of complex commercial insurance, the exchange will reaffirm our status as the hub of international trade and finance and it will also curtail the unregulated transactions that devastated the global economy," Governor Paterson said. "New York was the epicenter of so much that went terribly wrong in 2008. It is our responsibility as New Yorkers to lead in the rebuilding and reform of these vital global markets."

Clean Energy Economy

In December, the Governor accepted the New York State Energy Plan which provides a comprehensive 10-year blueprint for further actions necessary to transition to a clean energy economy. In 2010, the Paterson Administration will take a series of steps to make New York more energy efficient, independent and innovative including submitting several key pieces of legislation. The Administration also understands the need to identify future needs for, and invest in, energy infrastructure. That is why the Governor will, among other things, release a Climate Action Plan that will identify strategies to achieve an 80 percent reduction in greenhouse gas emissions by 2050.

Governor Paterson will also submit legislation to reform the Power for Jobs program so that businesses will have the certainty they need to make long-term investments in our State.

Taken together, these actions will have the desired impact if we work to improve coordination between the State, other governments and communities. In 2010, the Governor will promote land use and zoning tools that support Smart Growth, develop procedures to assess and consider disproportionate environmental burdens from energy facilities in potential environmental justice areas and increase the number of Climate Smart Communities.

Sustainable Neighborhoods Project

Resulting from decades of economic decline, the vacant housing crisis across Upstate New York inhibits future economic development, discourages homeownership and in-migration and perpetuates the perception that the region's urban areas are in a downward spiral. The Paterson's landmark legislative efforts for keeping neighborhoods together in the face of the foreclosure and sub-prime crises have been emulated across the country. Now, Governor Paterson proposes the Sustainable Neighborhoods Project as a national model for affordable housing and urban revitalization.

"There is no other region of the country with the affordable housing stock, the close-by schools, the natural beauty and the untouched small towns that families would cherish. We need to return to promoting all that we have to offer," Governor Paterson said. "Part of that effort must include revitalizing prime housing stock that currently sits vacant and turning it into long-term affordable housing, starting in Buffalo, which has more than 23,000 vacant units."

This historic initiative will fight urban decay and revitalize prime housing stock - using existing housing capital resources to create long-term affordable housing across the State. Local officials will designate blighted homes for rehabilitation and sale to first time homeowners; houses will be marketed as long-term affordable housing and homeowners would be selected through a lottery process. With more than 23,000 vacant housing units, Buffalo will serve as the starting point for the project which will expand to cities across New York State.

Time and time again, New Yorkers have demonstrated the ability to rebuild and renew - that is the promise of the Empire State. New Yorkers have recovered from economic crises and rebuilt after disasters both natural and manmade. Every time our capacity for hope has been questioned, every time our faith has been tested, every time we have approached a wall that seemed too high to scale, we have proven that our fight knows no bounds. New York will rebound again.

In closing, Governor Paterson addressed his fellow colleagues and the citizens of New York stating: "We will come full circle from the fiscal chaos in our own State budget to helping rebuild our State and nation after the chaos of a national meltdown. The plan I have outlined today will make us stronger, grow our economy, and get New Yorkers back to work."

I saw Representatives Scott Murphy and Paul Tonko of the Capital Region, Mike McMahon of Staten Island, Mike Arcuri of Utica, Eric Massa of the Southern Tier and Steve Israel of Long Island. Also present are Jerry Nadler and Greg Meeks. All are Democrats.

"I wouldn't be anywhere else," Israel told me. "I just got back from Afghanistan. You know what the difference is between Kabul and Albany? In Kabul they give you body armor."

Murphy said he wasn't staying for the speech—starting now—because he has remote towns in his district to visit.

McMahon last year expressed discomfort with Paterson's presence at the top of the ticket.

Many other members from New York City—including Charlie Rangel, dean of the New York delegation—are at the funeral of Percy Sutton.