Paterson has been blasted by the education lobby and school administrators for withholding 10 percent of aid payments in mid-December.
His agenda includes a 4 percent cap on state spending increases and the creation of the Excelsior Program, a replacement for the defunct and often-abused Empire Program.
The Excelsior Program would provide tax incentives and startup cash for businesses in the clean energy and high tech sectors. The Governor's Office estimates that the program could create as many as 50,000 jobs over the next decade.
Taking yet another play from the GOP handbook, Paterson called for state agency consolidation and mandate relief for local governments.
In 2009-2010, New York will spend around $43 billion on Medicaid, most of which is in reimbursement to the counties for mandated programs.
Governor's Office spokesman Morgan Hook said Wednesday that Paterson is considering slashing Medicaid funds and school aid in an attempt to balance the upcoming budget.
But Go.O.P. state Sen. Betty Little said if Paterson wants to point fingers at who is responsible for the current budget meltdown, he should scrutinize his own prior actions.
"Last year's budget was a killer that raised taxes by a record amount. I voted against it, and it is good to hear others who voted for it recognize their error, but it won't be enough to hold the line on taxes this year," Little said.
When it comes to ethics reform, Little and Paterson are more closely aligned.
"Cleaning up Albany with an ethics bill that has teeth would restore some confidence in this institution," Little said. "Clear lines need to be drawn, there needs to be more accountability and transparency, and when an elected official violates the public trust the penalty has to be real and serve as a deterrent."
Senate Republicans are calling Paterson a hypocrite and citing that he promised last year to hold the line on taxes, but followed that pledge with an executive budget featuring numerous tax hikes and new fees.