New York, NY —

Governor Paterson says he and other government leaders continue to struggle over his proposed $120-billion budget. Along with Assembly Speaker Sheldon Silver and Senate Majority Leader Malcolm Smith, Paterson said crucial issues like health care cuts, property tax rebates and how to apply stimulus money remain unresolved.

PATERSON: The problem that we've had, the most frustrating part of this budget negotiation is every time we think we're getting close to an understanding, we find there is another economic forecast and we lost another billion and two dollars.

Paterson says the state's revenue losses forced him to make decisions he wouldn't have made otherwise. Paterson insists he'd only consider higher taxes if the legislature agrees to major cuts. But both Smith and Silver say they haven't agreed to ANY spending cuts. The state budget is due April 1st.