Moody's: Inaction on deficit could hurt NY rating

ALBANY -- Moody's Investors Service is warning that New York's stable credit rating could be hurt if the Legislature fails to heed Gov. David Paterson's calls to cut spending and eliminate a $3.2 billion deficit.

The announcement by the credit analysis firm comes as Paterson and lawmakers continue to negotiate after failing since September to address the deepening budget gap.

At issue is Paterson's proposed cuts to school aid and health care, which are protected by powerful lobbyists who provide millions in campaign donations and other resources to lawmakers.

All state offices are up for election next year. 

Moody's warns Friday that failing to make cuts in major spending areas within the next three months will likely increase the state's costs for borrowing money.

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