ALBANY -- New York Gov. David Paterson said Tuesday that the recession, overspending by the state and Wall Street's meltdown will result in a record $47 billion deficit over the next four years.

He says the current budget's shortfall is $1.5 billion and the next fiscal year beginning April 1 will include a $12.5 billion deficit. A month ago, the current deficit was estimated at $1.2 billion.

"New York is at the epicenter of an extraordinary financial crisis on Wall Street," Paterson said in releasing the state's mid-year financial reports during a New York City news conference. "We will have no choice but to take bold and aggressive action to reduce state spending."

He said his administration projectsmore than 160,000 New Yorkers will lose their jobs during this downturn and the unemployment rate, now 5.8 percent, will reach 6.5 percent. He said every sector of New York's economy is expected to lose jobs, and those still employed will see weaker wages. He said personal income is projected to decline 1 percent in 2009 and wages will drop 2.1 percent. By comparison, he said personal income rose 6.5 percent and wages grew 8.6 percent in 2007.

Paterson has called the Legislature back to a special session on Nov. 18. He says legislative leaders have agreed to propose $2 billion in cuts then. He notes the state budget has increased from about $62 billion in the 1994-1995 fiscal year to more than $120 billion today.

He says the projected shortfalls in revenue compared to spending and debt are worse than the state faced after the Sept. 11, 2001, terrorist attacks and require drastic action to reduce spending.

But he also held out hope. He said that although these are the largest deficits in dollar terms, as a share of the budget the deficits are similar to those addressed after the 2001 attacks through some spending reductions, temporary tax increases and an expansion of gambling to raise revenues.