Mr. Paterson told lawmakers that New York was rapidly running out of cash to meet its obligations.

"We stand on the brink of a financial challenge of unprecedented magnitude in the history of this state,” he added. “This is a historic moment. We’re going to have to make historic decisions.”

The comptroller’s office numbers are more pessimistic than those from Mr. Paterson’s budget office. They project that the deficit for the remainder of the current fiscal year stands at $4.1 billion, with deficits of $7.8 billion and $15.7 billion in the succeeding years.

Last time I looked, NY City was in NY State. I cannot believe that this grim reality will not have an effect on the real estate market with the promise of ever increasing taxes and diminishing services. What is your take?

Maybe they shouldn't have increased spending over 7% last year when they already saw this coming.

this will be great for real estate.