ALBANY -- The governor is calling for $5 billion in spending cuts and increased revenues over the next two years, and a big part of that will come from the money the state spends to help local governments.

Today, Governor Paterson called New York ‘ground zero’ of the financial crisis.

But, he said, despite taking the biggest hits, the state has not had to take the desperate measures other states have.

Paterson said he would not raise any taxes to make up for the $3 billion deficit in this year's budget.  Instead, he's calling for $1.3 billion in cuts to local assistance spending.  That works out to ten percent of the remaining funding for this fiscal year.

Education funding would be cut by $480 million through March and Medicaid and other healthcare services would be cut by about $470 million.

To help bring in money, the Governor is calling for a tax amnesty program and a bigger crackdown on Medicare fraud.