Governor of New York Says State Out of Cash

Aid Payments to Schools to be Reduced

Gov. David Paterson said last week that New York state has run out of cash and he’s directing budget officials to reduce state aid payments to schools, local governments, and nonprofit service providers until the financial picture improves.

Speaking at the Museum of American Finance in Manhattan, Mr. Paterson said he’ll probably get sued, but he won’t let the state run out of money on his watch.

“I am directing the Division of the Budget to limit payments so that we will have the cash to pay our debts at the end of December,” Mr. Paterson said. “I will continue to withhold payments until this...