New York Gov. David Paterson said yesterday that he will order the withholding of payments to local governments to deal with a $1 billion shortfall this month.

“I am directing the Division of Budget to limit payments so that we will have the cash to pay our debts through the end of December,” Paterson said yesterday. “I will continue to withhold payments until this economy is leveled off. I will probably be sued for this but I will not let New York State run out of money on my watch.”

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