BUFFALO - One of the most closely watched meetings at the New York Democratic Committee's fall business gathering Wednesday wasn't on the agenda: It was the chance hallway encounter between Gov. David Paterson and Attorney General Andrew Cuomo when Paterson arrived as a Cuomo-hosted breakfast was wrapping up.

With cameras flashing, the potential primary rivals shook hands, laughed and spoke for a minute before going their separate ways.

Cuomo didn't stay in Buffalo for Paterson's lunchtime address or his keynote speech later on.

“Because I have to be back to the city and, uh, because I have work in the city,” Cuomo explained on his way out.

With Paterson's 20 percent approval rating in a recent poll, some Democrats view Cuomo as a stronger bet for governor against Republicans in 2010, though Cuomo says his only immediate plan is seeking re-election as attorney general. Reports that Washington Democrats, listening to concerns from the White House, have urged Paterson to step aside for Cuomo have added to the drama.

Cuomo gave what some observers characterized as a gubernatorial-style speech about reducing the cost of government and cleaning up Albany.

When a reporter asked why a “Cuomo 2010” banner that hung on stage didn't specify an office, the attorney general quipped, “We didn't want to pay for the extra letters.”

Paterson could not have been clearer about his plans. In a podium-pounding keynote speech, he acknowledged “the elephant in the room” before declaring, “I am running for governor of the state of New York!”

Does the state party's newly elected chairman expect to be supporting Paterson as the nominee?

“He's running. He says he's running,” said Jay Jacobs, the Nassau County Democratic chairman who takes over for June O'Neill, “so I anticipate him being the nominee.”

Jacobs said Paterson had to tell the public why he deserves to be elected, as all candidates do.

“He's got a compelling argument to make,” Jacobs said. “I think he'll make it.”

Paterson did his best to make the argument Wednesday, explaining he'd made difficult decisions to keep the state financially afloat as its budget deficit grew - even vetoing a bill funding a lead paint program that he had sponsored as a state senator.

“Our credit rating is sound. Our payments have been made on time. We don't have any bills that are outstanding,” he told reporters. “So New York state has been fiscally stable in the most difficult time in its economic history, and when people hear that I don't think they'll mind that I'm running for re-election.”

Speaking to party leaders from around the state, he offered a four-point plan involving investments in technology and fiscal discipline that he said would advance New York “from the perils of this recession and into prosperity.”

He seemed to have support among the rank-and-file, who regularly stood to applaud. Some hooted and cheered when he affirmed his commitment to run.

“I'm still a big supporter of Paterson, and I think many of the people in the room are,” said Doug McGivney, town supervisor in Kinderhook, Columbia County. “The governor inherited these problems. He didn't make them.”

Another state committee member, Joseph Quinn, of Suffolk County, said although the poll numbers aren't good “it's too soon to call for new leadership.”