The suit says that Educational Law requires the governor to make payments on a fixed schedule, that he is violating the separation of powers in the constitution—which gives him and the legislature joint budgetary powers—and that he is violating his obligation to provide a sound, basic, education to students. The education groups also noted that Paterson tried to have this done legislatively during a special session earlier this month, but failed.

Paterson argues that language within the budget bills passed this year give him the power to withhold certification on due payments if funds are not available.

"It's a sad day," said Alan Lubin, executive vice president of New York State United Teachers, a lead plaintiff. "If you're a third grader and you go into the classroom and there's a new teacher in the middle of the year, it's quite a trauma for you."

"We cannot run our school systems based on chaos and doubt," said Tim Kremer, executive director of the New York State School Boards Association. "We need a viable partner in the state."

"You are not in a situation where we're whining about school funding, we're simply saying, a commitment's been made," said L. Oliver Robinson, president of the New York State Council of School Superintendents (and superintendent of the Shenendehowa School District in Clifton Park.)

Paterson has scheduled a press conference for 4:30 where I assume he'll rage against this. Some of my colleagues in the shivering press corps asked the advocates where they expected to get the money, should their case be successful.

"I would have him look at the revenues that are available," Lubin said, including the possibility of pooling for prescription drug purchases to save money. Kremer said the state should "borrow."

Kevin Casey, executive director for the School Administrators Association, said that the suit was filed in Supreme Court in Albany County before Michael Lynch. No restraining order was sought, so Paterson's withholding will stand for now. An "expedited process" was requested, however, and Casey said a reply by the Attorney General is due Dec.23. The suit names Paterson, Budget Director Robert Megna and Comptroller Tom DiNapoli as defendants.

An oral argument is tentatively scheduled for January 1, but the hearing judge has not been named, a NYSUT spokesman said. The dates, therefore, may change.

Education Suit

"People have got to get real serious at how serious this financial crisis is," he said on WBEN in Buffalo. He reiterated his belief that a deficit reduction plan passed earlier this week does not go far enough--he acquiesced to the plan--and when asked about what would happen going forward.

 "If we maintain ourselves, if we don't have a downgraded credit rating, if we don't pretend that there isn't a crisis when there is one--I would think that the economy will pick up by the middle of next year--then we'll actually get out of this mess," Paterson said. "But if we continue to have the Legislature come back and continue to offer a deficit reduction plan that doesn't come within $1 billion of what the comptroller says we need, people are going to remember who stood up and addressed the crisis and who buried their heads in the sand and pretended that it didn't exist."

Expect this to become a theme of the Paterson 2010 campaign. (It already has, really.)

State Senator Eric Schneiderman held a conference call with reporters Thursday afternoon to say that David Paterson stands on legally dubious ground when he says he will unilaterally delay payments to localities and schools. The governor has threatened to do so, saying the deficit reduction bill passed Wednesday didn't go far enough to address the state's cash crunch.

"It's really just him trying to amend the budget in the middle of the year, which the Court of Appeals has said over and over again is unlawful. Like it or not, the Constitution gives the power to pass and amend the budget to the legislature, and I hope that the governor...you know. I think the governor is a law-abiding citizen. I think he wants to solve the problem rather than generate wasteful litigation," Schneiderman said, citing the case of Oneida County v. Berle. It says that the governor "may not override [budgetary] enactments which have emerged from the lawmaking process."

Paterson argues that since he is delaying payments uniformly, he is within his rights.

"I love the governor, he is one of my best friends in Albany, but I just think he's, you know, I don't think this is legal," Schneiderman said. He does not foresee the Senate initiating legal action, but possibly supporting it if a locality or school district did.

Alan Lubin, the executive vice president of New York State United Teachers, said his organization would certainly bring an action if school aid was delayed. Paterson had originally said this, but according to Lubin his top aide was walking back the threat.

"Larry Schwartz absolutely denied that they threatened to impound the money, but we are working with our allies to respond immediately with whatever action might be necessary, including potential court suits," Lubin said. "It's just absolutely the wrong thing to do."

Details of this conversation could not be confirmed. But the threat of action stands.

Lubin said it would not just be a court action. NYSUT funded radio advertisements to lobby against education cuts in the deficit bill, and he said a similar campaign would be revived with its sights squarely on the governor.

"We would go all out," Lubin said.

Morgan Hook, a Paterson spokesman, sent along this statement:

"Yesterday, the Legislature failed to close the budget gap and did nowhere near enough to address New York's long-term fiscal stability. Simply put, the State can not spend what it does not have, and Governor Paterson will withhold certification of payments for spending New York can't afford. Had the Legislature acted in a fiscally responsible way, this would not be necessary.  The Governor will not let the State run out of money."

Below are the roll calls from the State Assembly, where a measure to offer amnesty to delinquent taxpayers passed with only two dissenters—Republicans Jim Hayes and Will Barclay. The two other bills comprising the deficit reduction plan passed 106-32, largely, though not completely, along party lines. It happened around dawn; few people were there to watch.

But in the Senate it wasn't close. The tax amnesty passed 62-0, and only three senators voted against the other components of the plan: Ruben Diaz Sr., a Bronx Democrat, and Republicans Andrew Lanza and Frank Padavan.

"We were told time and time again that there would be no cuts to OMRDD [Office of Mental Retardation and Developmental Disabilities], that would impact negatively on providers of group homes and community-based facilities throughout the system," Padavan told me this morning. "Throughout the day that was changed, and I felt that was wrong."

Padavan said that the current budget, originally passed in April with no Republican votes in the Senate, set up the mid-year imbalance. Other Republicans—and Democrats—supported the plan because it did not contain painful mid-year cuts to schools.

Even David Paterson has belittled the deficit agreement (which he says he'll sign) for not going far enough. Padavan echoed that sentiment. And Tom DiNapoli, the comptroller who joined Paterson in sounding the fiscal alarm, said, "Albany shouldn't pat itself on the back."

"The Legislature has taken a positive step toward narrowing this year's budget gap. But Albany shouldn't pat itself on the back," DiNapoli said. "The deficit reduction plan approved today hasn't solved the State's long-standing structural imbalance between revenue and spending. Spin ups and one-shot revenues are like aspirin; they may ease a little of the pain this year, but the patient still needs surgery."

"We need to closely monitor revenues and spending to see if the DRP will get us through the end of the fiscal year," DiNapoli continued. "The State continues to face a significant gap heading into next year's budget. Taxpayers deserve honest numbers and realistic budgets. Moving forward, we have to make sure they get just that."

Assembly Rolls

"What has disturbed me is that we've had more conversations about the political consequences if we vote for these cuts rather than the consequences for western New York," Paterson said this morning on WHAM. He said legislators "blissfully came to Albany, cut a couple of things, and now they'll say 'Look at me! Hooray for me! I saved the schools.' They didn't save the schools. In the end, the reduction of payments to the schools is going to be much worse."

This continues Paterson's weird tight rope walk on the deficit reduction plan: on the one hand he agreed to it because it will prevent the state from running out of cash and he knew he wasn't going to get anything better, but on the other it's his shtick now to bash legislators and make himself look like a fiscal hawk, to increase his own political standing.

"It's outrageous. The only reason I signed it is because there are about $600 million of savings," Paterson told John Gambling on WOR. "They could have reduced this deficit so the state doesn't run out of money, reduce its credit rating and go down the dead end that other states have gone down."

"Close is not good enough not only because of the number--they're $500 million short--but because of the types of cuts they're implementing," Paterson said on WCBS 880. "I will unilaterally make those cuts."

Such a move will be legally challenged, everyone expects.

The Assembly passed two bills containing this these measures last night. Here are links to the main bill, and another.

The highlights, as distilled by the Associated Press:

-$1.6 billion in cuts and temporary cash transfers from agencies to the general fund, already ordered by David Paterson on Sunday. That includes 11 percent cuts to most state agencies, which are supposed to avoid layoffs.
-$391 million in federal stimulus funds for education that were supposed to be used in the 2010-11 fiscal year.
-$250 million projected to be collected under a new tax-amnesty program.
-Over $600 million in cuts to several programs, including health care, that won't reduce jobs.

Here's a description of those cuts, from the Assembly press release (sent earrrrly this morning):

12.5 percent cut to remaining balances of local assistance grants; 5 percent cut to operating aid for SUNY, CUNY and community colleges; 5.4 percent cut to the Office of Mental Retardation and Developmental Disabilities; and $107 million in health care actions. The agreement also included several one-time legislative actions, including $200 million from the Battery Park City Authority, $90 million from the Regional Greenhouse Gas Initiative, $10 million from the Environmental Protection Fund and $26 million from the Dormitory Authority. The Governor also agreed to $485 million in agency cuts.

The Senate is expected to take these measures up this morning. Their session is scheduled to start at 10.

"I mean, it's the same base bill that's been drafted and distributed for weeks. What's printing is working on another version of that," Silver said in voice that was lower than usual, swirling a cup of black coffee.

I still haven't gotten a summary of exactly what's in this deficit reduction bill. No one has on. The members have no idea what's in it, several told me as they emerged from a closed-door conference ahead of Silver. The meeting started 90 minutes behind schedule.

As they waited, I saw several members in the chamber chatting, crocheting, watching hockey games on laptops, reading Newsweek and complaining about still being in Albany.

They finally convened after midnight, and at 12:40 a.m. did re-pass a bill legalizing same-sex marriage by a vote of 86-51. (The same bill passed in May by a vote of 89-52). The plan for the rest of the night is to pass two bills containing the deficit reduction plan. Silver added that "we're getting there" on an agreement on a less-generous pension tier for new hires that could "possibly" be done tonight.

I asked Silver why his conference is opting for the all-nighter.

"It's clearly a fiscal emergency for the State of New York. As soon as we can get something done, we intend," he said, unconcerned by the fact that the less-than-reliable State Senate left the building three hours ago. "No, we think we're doing what's right. We've done it before and the Senate has eventually done it."

Senators are scheduled to conference at 9 a.m., and begin session at 10 a.m. The expectation is things will run late. It's unclear whether they will actually take up the same-sex marriage bill; State Senator Liz Krueger, a Manhattan Democrat, said it was "still under discussion."

"John Sampson decided we'd do this in the morning rather than trying to do some strange, middle-of-the-night scene," she said.

"I haven't really considered that point, because I don't think I'll ever get there. I'm really confident we'll have the Republican nomination and the Conservative nomination," Lazio told me by phone this afternoon. He's taking all the attention he can get.

I asked whether he would consider the possibility--he today announced the endorsement of Tom Long, the Queens County Conservative Party chairman and the brother Mike Long, the statewide party boss--in light of a special election in the 23^rd Congressional district, where a surging Conservative candidate forced Assemblywoman Dede Scozzafava from the race.

This is the second Conservative county chairman to endorse Lazio, who has courted Mike Long and his endorsement. (No Republican has won statewide office without the Conservative Party's backing.) But he doesn't see himself as a Scozzafava.

"First of all, I have been endorsed by all of my seven prior races by both the Republican and Conservative parties, and I think on particularly economic issues, the Conservative Party has found my positions on taxes, on balanced budgets, on fiscal discipline, on job creation, to be in line with their core beliefs. So I'm very confident that this is a very different race than New York 23," Lazio said.

He also weighed in on two of the big Capitol issues of the day: the budget deficit deal, in which he again attacked Andrew Cuomo, and same-sex marriage.

Lazio said he favors civil unions and would not support the current bill. I asked him if he would veto it if he were governor.

"I'm not going to speculate on that," he said.

Lazio said the situation with the deficit was "sadly, not unexpected" and an "embarrassment." He said Andrew Cuomo--who today announced a crackdown on Internet sex offenders--is not helping. (Cuomo has never admitted that he is running for governor; he has said repeatedly his only plan "at this time" is to run for re-election as attorney general.)

"The other tragedy is you have the attorney general Andrew Cuomo out there, who continues to hide in the shadows dropping dimes on David Paterson at a time when we need leadership. He's got his folks--his agents--making calls undermining David Paterson," Lazio said. "The state is collapsing. I have no objection to him talking about sex offenders, but he's looking for the political issues that are convenient for him personally. The state needs real leadership, even if he's got to hurt somebody's feelings by coming out for something. If he's a leader, he needs to start acting like a leader."

"I would not describe it as a deal, Ken. Because a deal means that all parties accept the agreement," Paterson told reporters during a Red Room ceremony. "This proposal for $2.8 billion of deficit reduction, includes $1.6 billion that I'm reducing myself and $400 million of stimulus dollars that we're actually supposed to use next year."

"It does give us about $600 million in cuts, and some other measures that require legislative approval, so we will not cut off our nose to spite our face," he continued. "I will accept it, and I will help them in any way to set up the legislation so it can be passed and signed. The one thing that I'm not going to do is submit the bill for less than what I've proposed, because I don't feel it addresses the culture around here of addressing problems of 50 or 60 percent."

Exactly how things will transpire from agreement to bill to law remains unclear. No bill has been printed. This is an extraordinary session, so all legislation must come from Paterson's office. It's possible that legislators could amend the bill he already sent them to reflect the agreement. (Their hands are tied in this regard--they can only add or subtract dollar amounts, they can't re-write the words which describe the spending.) It's also possible, Paterson suggested, that he will send the bill in pieces and force legislators to vote "no" on certain aspects of it. If new bills are sent, they would require "messages of necessity" from Paterson to be passed without aging three days.

Paterson's spokesman Peter Kauffmann said "this is a process that's playing out right now." Senate Democratic Leader John Sampson and Assembly Speaker Sheldon Silver met this morning in Silver's office. Sampson said on his way out that there were no stumbling blocks, but that "we have our staff working on a compromise. I mean, that's all I know at this point in time. I think a compromise with all parties. As of--what time is it--11 o'clock there is no agreement just yet. We're working towards an agreement. So we can have an agreement by 12, 1, 2."

But no bills indicates a long night. (It also means there's not going to be a lot of time for detailed public review.) But lawmakers seem united in their desire to get this voted on today, and possibly move on to consider same-sex marriage legislation.

"We have not seen that bill," Senate Republican Leader Dean Skelos just said on WGDJ. He has scheduled a conference of his members at 10:30 to review a bill he was told existed. The session was scheduled for noon.

A Democratic Senate source said the governor has not sent up a bill; it's still an extraordinary session, so David Paterson controls the flow of legislation. And while legislative sources insist--and Paterson has indirectly indicated--that the $2.8 billion is a first step, he has not yet publicly acquiesced.