NEW YORK CITY-With final passage of New York State’s 2009-2010 budget not yet a done deal and a bailout for the Metropolitan Transportation Authority at an impasse, Gov. David Paterson on Thursday said fiscal discipline was key to the state’s long-term health. Paterson, who spoke at a breakfast presentation sponsored by the Association for a Better New York, held up the budget agreement reached earlier this week as a model of that kind of discipline.

“The fact is, this is a balanced and effective budget” despite attempts to portray it otherwise, Paterson told his audience at the New York Hilton. He noted that it closed the largest deficit in the state’s history–a $17.7-billion gap that had ballooned from $13 billion a few months earlier–and cut spending twice as much as any earlier state budget. The budget also implements reforms that will eliminate waste in the future, Paterson said, provided that lawmakers show the same kind of restraint after the economy begins to recover. He said that governments as well as individuals had overspent over the past 15 years, with one result being that 43 out of 50 states face a deficit this year.

Left to their own devices, “People in Albany will act like the party has started again” when revenues start improving, said Paterson. “As long as I’m governor, they will not.” He said he expected passage of the budget, which was delayed due to the hospitalization of state Sen. Ruth Hassell-Thompson, to happen sometime on Thursday.

Paterson sounded the theme of shared sacrifice–”we all have to tighten our belts”–as well as the idea of spreading pain around equitably. He said the ’09-’10 budget was “an equal opportunity offender” and pointed out that he resisted calls to “tax the rich” with surcharges for longer than was necessary. While a five-year tax increase on high-income earners would theoretically bring in more revenue over the long term, “we would have alleviated the deficits out beyond the fiscal year, but the people who were affected would’ve gone out of the state,” Paterson said, drawing a laugh.

Critics of the budget, including state comptroller Thomas Dinapoli, have charged that it relies too heavily on federal stimulus funding to close the gap. They question what will happen when the stimulus dollars are all spent. Paterson said that the key is to use stimulus money as the Obama administration intended: to spur recovery by putting people back to work. When the federal funds run out, he said, legislative discipline will prevent the deficit from growing as wide again in the future.

If Paterson was confident that the budget would be approved by this coming weekend, he was less sanguine about a deal to stave off MTA fare hikes and service cuts. During a news conference following the ABNY presentation, he called the 20% to 30% toll and fare hikes enacted by MTA “unacceptable.”

Equally unacceptable, Paterson said, was the lack of legislative action to prevent the increases; to date, there has not been a vote on any program to help the MTA close its $1.2-billion deficit. “We thought we had a good plan” in the Ravitch Commission’s recommendations announced last December. “We can’t understand how there aren’t 32 senators that would pass this.” He said some Democratic senators won’t vote for toll hikes, some Democrats won’t vote for fare increases and none of the Republican senators will consider voting for anything.

Paterson said that following a two-day “time out” for lawmakers to rethink the Ravitch plan and other proposals, he will expect them to come back next week and take action. If necessary, he said, he would hold a special session keeping the Assembly and state Senate in the statehouse until something is enacted.