A proposal New York Gov. David Paterson announced yesterday to cut local assistance spending by 6% and to cut $506 million from Medicaid spending drew sharp criticism from organizations representing hospitals and municipalities.

Projecting that the state's budget deficit in the current fiscal year will grow even more than the $630 million estimated last month, Paterson called on the Legislature to make $600 million of cuts from a menu of $1.04 billion of spending reductions. Paterson already cut $630 million through executive actions.

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