New York, NY —

Gov. David Paterson says New York has just $3 million in cash on hand and he will decide this week what payments to defer so the state can stay solvent.

"We are in a very deep quagamire," Paterson says. "New York is now at the breaking point. We are about to cross the financial rubicon into fiscal disaster.

An aide to the governor says local school districts would likely be hit first.

Paterson announced the bad news in a speech he delivered on Wall Street to civic, business, and labor leaders. He says while many Americans blame Wall Street for the nation's economic problems, they should remember the financial sector is New York's economic engine -- and when it does well, the state does, too.

"If you say anything about corn in Iowa, they'll run you out of town. If you say anything about oil in Texas, they'll string you up in the nearest tree. We need to stand behind the engine of our economy in New York, and that engine of the economy is Wall Street," Paterson says.

The governor spent eight minutes of a 25-minute speech singing the praises of Wall Street, saying it creates "careers, profits, and resources," that it generates a huge chunk -- about one fifth -- of the state's tax revenues.

"It hasn't just been acquisitions and land transfers or initial public offerings," Paterson says. "It's been schools for our children, health care for our families, homes for our neighbors, and jobs for our state workforce."

Paterson's defense of Wall Street comes as he faces a possible primary challenge from Attorney General Andrew Cuomo. Cuomo has led high profile investigations on Wall Street pay and Bank of America's purchase of Merrill Lynch.