ALBANY - New York Gov. David Paterson on Monday prohibited all but essential hiring in a sternly worded directive to state agencies.

Paterson said that if his cost savings targets aren't met, he will impose a hard hiring freeze and other measures on agencies.

He says he is willing to withhold budgeted funds if an agency fails to meet his cost-saving targets.

The Democrat said the measures are necessary because of declining revenues projected in a worsening economy.

Paterson required a detailed savings plan from each agency by May 16.

“The reductions you propose must be achievable, recurring, and serious,” Paterson said in the memo released Monday. “Your plan must reflect the creativity needed to provide the services the public expects at a lower cost.

“Above all, you must rethink your hiring practices. Only job openings absolutely essential to your agency's operations and protecting the health and safety of New Yorkers are to be filled,” he said. “Positions that do not fit this criterion must be left vacant. ”

Paterson's call shocked the state's largest public employee union, which like other unions had planned on increases in hiring as part of the state budget approved earlier this month.

“We did not have any forewarning of this,” said Civil Service Employees Association union spokesman Stephen Madarasz. “We're extremely disappointed there was no discussion of this direction.”

He warned that Paterson's plan could be wasteful, because the state has in many areas agencies have lacked enough staff in recent years to effectively do their jobs.

For example, adding enforcement jobs can bring in more revenue from fines than the cost of the positions. Madarasz said the governor's memo will also strike at employee morale.

“When you don't give us some forewarning on this, it certainly undermines the confidence and trust in labor relations,” he said.

The state work force stands at 167,172 employees, according to the state Department of Civil Service.

This memo is different from similar directives by past governors to their agency heads. Paterson didn't choose these commissioners, but inherited them from former Gov. Eliot Spitzer, who resigned March 17 after he was implicated in a prostitution investigation.

Because they are neither his loyalists nor anyone who helped him in a campaign for governor, the former lieutenant governor might be more inclined to replace them.

Paterson has set a goal of cutting the budget for the 2009-10 fiscal year by 5 to 10 percent before it's sent to the Legislature. Monday's memo is the first order in that effort.

“There are several corrective actions that I am prepared to take,” Paterson told department heads. “These include withholding an amount of budgeted funding needed to hit your savings target or implementing a hard hiring freeze at your agency. I sincerely hope and expect such measures will not be necessary.”

His plan faces several obstacles. Chief among them are the public employee unions that hold great power in New York, especially in the Legislature, which can reverse a governor's budget cuts.

Most of the major public employee unions settled contracts this year that extend for several years.

Legislative leaders have said they will work with Paterson to reduce spending growth next year.

Those promises came after they turned down $500 million of Paterson's proposed $800 million in spending reductions.

The $121.7 billion budget adopted by the Legislature increases spending more than 4.5 percent this legislative election year and includes hundreds of millions of dollars in pork-barrel spending.

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