Paterson issues deadline: Pass budget by June 28.

The entire meeting of state legislative leaders. Runs 19:42.

ALBANY, NY – Governor David Paterson says the state budget standoff must end.

Wednesday, he set a deadline for members of the State Senate and Assembly: Either pass a budget by June 28, or he will insert the rest of his budget plans into the emergency appropriation bills that the Legislature has to pass to keep government running in the absence of a budget.

"Our financial situation cannot support continued late budgets," Paterson said at a meeting with leaders of both parties in the Assembly and Senate. (Hear the entire meeting above; runs 19:42)

"We have got school districts, local governments, hospitals and nursing homes and other entities who still cannot make determinations on their financial picture based on the fact that the state has not given them a firm sense of support of how much support they will get from Albany," the Governor said.

"It's time to set a deadline."

At the same time, Paterson flatly ruled out borrowing money as part of the plan to reduce the state's $9.2 billion deficit. "I will not sign a budget that has any deficit financing in it," he said. Later, Republican Senate floor leader Dean Skelos asked Paterson if he'd heard correctly, that Paterson would veto any budget that contained borrowing. "No borrowing," confirmed Paterson.

Paterson's challenge will force the Legislature into one of two unpalatable choices: Either come up with a budget that cuts billions in spending, whcih will inevitably force them to eliminate the jobs of state workers whose unions have been allies of the majority Democrats, or have Paterson's harsher budget show up in the state budget extender, where a no vote would mean the shutdown of most state government services.

Paterson has tucked some of his budget cuts into the last two state budget extension bills, which won approval from legislators along with grumbles of dissent.

Democratic Senate leader John Sampson said that progress has been made towards a budget, and Assembly Democratic leader Sheldon Silver said there is momentum towards a budget, but Skelos said that the cuts made so far have left a deficit of more than $5 billion. He complained again that minority Republicans have been left out of budget discussions.

The state budget is eleven weeks late.