New York could face a downgrade or outlook change if nothing is done to close the state’s $3.2 billion current year deficit, or if actions to close the gap are primarily one-shots and revenues fall below projections, Moody’s Investors Service warned in a credit report last week.

Moody’s rates the state’s general obligation debt Aa3 with a stable outlook.

Analyst Edith Behr said Moody’s “fully expects the Legislature to enact solutions to address the current budgetary gap.” She added that the rating agency expects larger Wall Street bonuses than projected by the state’s Division of Budget will boost personal income tax collections.

On a more cautious note, Behr said that “if non-recurring solutions are used to address the budget gap, then that does nothing to help for future years — in fact it probably exacerbates the problem for future years.”

Gov. David Paterson seized on the report to berate legislators who left a special session last week without taking actions to cut the deficit.

“Moody’s warned, not [just] that we had to reduce the deficit, but the way in which we reduce the deficit has to meet a threshold so that we don’t get a rating downgrade,” Paterson told reporters. “This is a lot more serious than the interests of some of the legislators who would rather go home and be heroes saying 'look I didn’t cut school aid, look I didn’t cut health care.’ School and health care are 55% of spending in the budget.”

The governor’s deficit-closing proposal includes $1.01 billion of cuts from school districts, higher education, Medicaid and mental health programs.

Lawmakers are expected to return this week to continue negotiations to close the gap.

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