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Gov. David Paterson continues to defend his decision to withhold $750 million in state aid to schools and cities. Starting tomorrow the governor will hold back ten percent of state aid payments across the board, affecting not only schools, but local governments and the state's property tax rebate program.

The governor says he must take the action in order to keep New York solvent through December. Paterson says the move will withstand any legal challenge because the reductions were made across the board and are just deferments, not cuts, which would require legislative approval. Assembly Speaker Sheldon Silver has signaled his support of the governor's actions. "It is his job as governor and the budget director's job to manage the cash of the state in a way in which he sees appropriate," Silver says.

Silver's position is in contrast to teachers union officials and state Senate Democrats, who have threatened to sue the governor over the withheld aid. They say it is unconstitutional.

However, a spokesman for the Senate leadership says today there are currently no plans to take the governor to court.

Meanwhile, the emergency budget move cost the city $84 million in expected education and municipal aid. But the Bloomberg administration reports an upswing in local tax revenues running $680 million above projections, so, the mayor says, the city can handle the hit for now.

The Bloomberg administration is still counting on eventually getting its $84 million.