Lawmakers should freeze the salaries of government workers and slash pork barrel spending to make a dent in New York’s fiscal crisis, a new report says.

The 76-page report from the Empire Center for Public Policy warned that record-shattering budget gaps are in the offing unless the state takes drastic steps to cut spending.

The conservative think-tank’s warning mirrors that of Gov. Paterson, who is expected to devote the bulk of tomorrow’s State of the State address to the money crisis.

“This for the state has all the makings of the most severe fiscal crisis the state has ever seen if … they don’t deal with next year’s gap overwhelmingly with permanent spending reductions,” said E.J. McMahon, director of the Empire Center.

Among the top recommendations is a call for the Legislature to freeze public sector salaries – including those of teachers and local government workers – for three years. That would save up to $2 billion a year.

The report also recommends a $7.8 billion cut in Medicaid spending over three years, an $8.5billion reduction in school aid over three years and the sale of some state assets, like golf courses and Battery Park City.

McMahon said the Legislature could save $451 million over three years by cutting its budget in half and eliminating unspent member items.

Union leaders criticized McMahon for trying to advance the agenda of wealthy corporate interests at the expense of state workers and school children.

“If we are going to turn the state around, it is going to require an investment in education, not a reduction,” said Richard Iannuzzi, president of the state teachers union.

Aside from addressing the budget crisis, Paterson also is expected to include calls to tighten Albany’s weak ethics laws.

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