I caught Quinn meeting outside the office of Senate Majority Leader Malcolm Smith with Angelo Aponte, secretary of the Senate. I asked Quinn how the meetings were going.

She said there was nothing she walked away from "really pessimistic about,"

Aides to Mayor Bloomberg - including Ed Skyler and Kevin Sheekey - have been in Albany to lobby, but Quinn said this was her first trip up to discuss the state budget.

David Paterson returned Friday morning to one such institution—the William F. Ryan Clinic—in his old state senatorial district. The reception for Paterson and his top health policy advisers was warm, with kind words for the governor from Barbara Minch, the clinic head and a longtime acquaintance.

Last night, Paterson stopped just short of calling Greater New York Hospital Association president Ken Raske a chicken for not accepting a call for debate with State Health Commissioner Richard Daines. He laid into the organization again this morning.

"Clearly the union and the hospitals don't mind a public discussion, that's why they're on the air," Paterson said. "So we said to them, ‘Why don't we have a public discussion that will be covered by the media, and we can discuss the dispute that we're having over the reimbursement formula? Wouldn't that be the professional, adult way to handle this, instead of these shrill commercials and parading out people symbolically to make a point?' That was our suggestion. They declined."

Raske said in a statement yesterday that such an event would be a "distraction" and a "staged event."

Paterson continued: "The use of this medium to promote fear and anxiety, to promote the idea that we're closing down emergency rooms and the employees will be laid off—by changing the reimbursement rate? Are we kidding ourselves? That's why. So look, if anybody has some money to go on the air, I'd be happy to go on the air."

I asked him whether it would be a prudent investment to spend some of the $4.8 million his campaign had on hand as of last month to counteract the ads, similar to what Eliot Spitzer did in the face of a similar blitz. Administration officials previously declined to do so.

"Governor Spitzer put about $5 to 7 million in ads. The disparity between what he had, and the amount of money the other side has, they ran his campaign fund down to $2 million. He tried that, but he could not match the resources that they had, and believe me if he couldn't, I couldn't," Paterson said.

He then offered a glimpse of what the carrot might look like in health care negotiations, elaborating on his commitment yesterday to use "a lot" of the increased federal Medicaid support to bridge his proposed cuts.

"I would say that proportionally, the stimulus assistance to education should at least be matched by our vesting resources in health care," Paterson said. "In other words, whatever the percentage is that we're alleviating reductions in education, we should do that also, similarly, for health care."

But the spot does make a push for the so-called "millionaire's tax," which Paterson has not clearly supported.

New York State United Teachers released the below spot today, and will air it on television, radio and in movie theaters. The union is spending $1.5 million on the ads.

Paterson's proposed budget called for nearly $2 billion in cuts to education programs.

"It is clear that we have our backs to the wall," said Kenneth Raske, president of the Greater New York Hospital Association, at a press conference to unveil the campaign. "It's with a heavy heart that we have to do this."

Raske was joined by Kevin Finnegan, political director of 1199 SEIU. They debuted an ad that will start running across the state, which directs their ire at David Paterson and his proposed cuts. A mailer being sent to a million homes juxtaposes Paterson's name with a sad-looking woman hovering over a hospital bed.

"I can't believe Governor Paterson is the one doing this," says a woman in the ad wearing scrubs.

The spot will air at the cost of about $1 million a week for four weeks, GNYHA spokesman Brian Conway said. It is decidedly harsher than their first ad this budget cycle, which aired in December. In addition, 200 people will go door to door to oppose the cuts.

GNYHA and 1199 ran a similar campaign against Eliot Spitzer in 2007, and got him to back down from proposed health care cuts.

The union is advocating a mixture of federal aid, a tax on high-income earners and smaller cuts to bridge the budget deficit.

As Mayor Michael Bloomberg testified before a joint legislative budget hearing, he included among his proposals to raise funds to make up proposed cuts for New York City a five cent tax on plastic shopping bags.

"By implementing a small fee, we would generate $100 million a year and encourage New Yorkers to use less plastic, reducing the heavy toll it takes on our environment," Bloomberg said.

New York City took a big hit in Paterson's executive budget - Tom DiNapoli estimated at over $1 billion including cuts to direct aid and education aid - and Bloomberg expressed displeasure with the current budget, saying, "In too many cases, it uses the state's fiscal crisis as an excuse to New York's localities, in many cases permanently. Also, and even more distressing, New York City residents would shoulder a disproportionately heavy share of service cuts and changes in revenue sharing."

In addition to the bag fee, Bloomberg called for a crackdown on Medicaid fraud, tort reforms including a cap on awards for pain and suffering, loosening Wick's Law and restructuring pension benefits.

His first priority, he said repeatedly, was to restore AIM funding payments that are slated to be cut, as early as this week. State Senator Daniel Squadron asked Bloomberg exactly how that would affect the city's books. The mayor allowed that he could.

"We do not run the risk of running out of cash - that's not a problem - nor do we run the risk of being shut out of the capital markets," he said.

The governor's office just announced David Paterson is looking to keep open the Reynolds Pheasant Farm, outside of Ithaca, despite earlier plans to close the state-run facility and hand out the birds. Apparently, there was not, in fact, a pheasant in every pot this Christmas.

"The state has long recognized the economic impact hunters and their industry provide for New York State," said Governor Paterson in a press release. "I am pleased that sportsmen and women have joined us to help find creative ways to weather the state's fiscal crisis while preserving programs important to them."

Contrast that with how the announcement that the farm would close was spun. This is from a press release on December 14:

"While I understand the economic and recreational importance of pheasant hunting to many of New York's outdoor enthusiasts, we must focus our limited resources in this difficult fiscal crisis and look for innovative ways to meet the needs of the people of the State," said Governor Paterson. "The closure of the Reynolds Game Farm presents us with one such opportunity. We are able to both take action to assist in closing our record budget deficit and also offer struggling families nutritional food this holiday season and into the New Year."

 

In a conference call with reporters, Paterson said, "If you listen to the opponents of this deficit, and you ask them, what's your proposal, they may talk about personal income taxes."

Of course, if Paterson is indeed ready to listen to those deficit-opponents by raising taxes on the wealthy, it will be little comfort to the people who have criticized his budget proposals from the right.

E.J. McMahon, director of the conservative Empire Center, points to Paterson's proposals to trim the size of state government and claims they don't go nearly far enough.

"My canary in the cage is the Consumer Protection Board," he said. "If it's still around, they haven't cut enough. There's still fat in this budget."

Paterson proposed the merger of seven state offices, shedding 521 jobs. McMahon said that was "underwhelming." Assemblyman Jack McEneny, a Democrat from Albany who is by no measure a normal critic of Paterson, said the governor could have found further savings by going after some larger agencies.

"If, say, he proposed consolidating the Department of Environmental Conservation and the Office of Parks, Recreation and Historic Preservation, that could bring enormous savings," McEneny said on budget day last week.

As the pressure has mounted (and the economy worsened), David Paterson told The New York Times that it was likely he would raise personal income taxes on higher-income New Yorkers. One proposal for increases on those earning more than $200,000 could bring in $5 billion a year, according to an estimate by the Working Families Party.

WFP Executive Director Dan Cantor said it was "heartening" Paterson was headed in that direction. "All parts of society will need to sacrifice to end our fiscal crisis. And it's economically and morally sound to require wealthy New Yorkers to pay more in order to prevent even deeper cuts to school children, the elderly and the disabled. The wealthy in New York have seen their taxes cut in half, and that simply isn't fair."

Earlier this week, the WFP was aligned with Senate Majority Leader Dean Skelos and the Conservative Party in attacking the budget. In putting an income tax back on the table, Paterson will bring a cluster of traditional constituents back behind him. As the budget fight rages on, it was an alliance he needed to form.

That's where the power is. Democrats will control both houses of the legislature in January, leaving the forces of the right relegated to a vocal minority. Now, the question becomes whether those advocates will be able to make an effective case in the public mind that raising taxes on the wealthy could harm New York in the long term. It's not going to be easy: One poll already indicates that 61 percent of voters surveyed support an increase in taxes on people earning over $250,000, and 78 percent support a hike on those earning over $1 million.

McMahon said that it's always so.

"There's never ever been a poll that does not find people don't oppose taxes on people making more than them," he said.

The governor's office this afternoon announced a veto of a measure that would have given court officers the same powers as policemen.

"The broad powers that court officers already have as peace officers should be sufficient for the duties that they are routinely asked to perform," Paterson wrote in a veto message. "While the sponsors of this bill claim that it would have no fiscal impact, I have been advised in all likelihood it would result in substantially increased costs."

The governor said some of these costs include benefit extensions and the right to binding arbitration for labor contract negotiations.

One supporter of the bill is John McKillop, president of the New York State Supreme Court Officers Association covering New York City and the lower Hudson Valley. He said those provisions were not included in this bill and would have had to be passed separately.

"The governor acted on wildly inaccurate projections by his own budget staff, and we're very disappointed that he did not even give us a forum to discuss the issue before he vetoed it," McKillop said. "We were early and strong supporters of the governor. With regard to tangible support, that's going to be discussed with our membership. I don't think the governor has positioned himself to endear himself to our members."

He called a conference call this afternoon for reporters--which started an hour late--because, he said, "just, my sense, that the full story of our economic crisis is not fully appreciated."

"They're not recognizing that his is 2008," said of opponents of the budget he unveiled Tuesday. "We are in Recessionville, and we are headed to places that we never dreamed that we would ever go."

Paterson said yesterday that some of the fee increases he proposed are "draconian" and "unfair," but reiterated they are necessary.

"I'm really using this two weeks of submission to let this discussion take place; let those who properly need to vent, vent," he said. "Because, they are not wrong about what they're saying. Their descriptions are not inaccurate. It's just they are the reality of today. They're uncomfortable with the budget, I'm uncomfortable with reality."

"There's nothing pleasing about what we've had to do," he said.

He also said he would travel the state after the holidays to make his case directly to the public.