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Source:
http://www.reuters.com/article/polit...5AN4V720091124
Interesting development, to be sure. Either cut spending / raise taxes or face a Moody's downgrading. Since Moody's only downgrades after-the-fact, it is safe to assume that New York State is already a giant credit risk 
A short video news report of it:
http://www.youtube.com/watch?v=AxFzBSaBgpE
http://www.reuters.com/article/polit...5AN4V720091124
NEW YORK (Reuters) - New York Governor David Paterson on Tuesday submitted emergency legislation that would grant him the one-time authority to balance the state budget without approval from the legislature.
Paterson, frustrated by a seven-week standoff with lawmakers on measures to close a $3.2 billion deficit, said he will make the cuts needed to balance the budget, preserve the state's credit rating and keep New York afloat.
"The people of New York have waited too long," he told lawmakers in webcast comments. "Cut this budget with me, or I will do it myself."
Although New York Senate Republicans initially had said they would respond to the governor from the Senate floor later in the day, both Republican and Democratic caucuses later left town and said they would not be back until Monday. The legislature would need to approve the bill.
...
Paterson, frustrated by a seven-week standoff with lawmakers on measures to close a $3.2 billion deficit, said he will make the cuts needed to balance the budget, preserve the state's credit rating and keep New York afloat.
"The people of New York have waited too long," he told lawmakers in webcast comments. "Cut this budget with me, or I will do it myself."
Although New York Senate Republicans initially had said they would respond to the governor from the Senate floor later in the day, both Republican and Democratic caucuses later left town and said they would not be back until Monday. The legislature would need to approve the bill.
...
A short video news report of it:
http://www.youtube.com/watch?v=AxFzBSaBgpE