March 18 (Bloomberg) — David Paterson will spend his first full day as New York’s governor focusing on ways to close a budget gap of as much as $5.1 billion while girding for shrinking revenue amid a slowing economy.

The governor will be “meeting with senior staff, lawmakers and others, focused on the budget and state spending during this difficult economy,” his spokesman Armen Meyer said in an e-mail. The Democrat was sworn in yesterday after Eliot Spitzer stepped down over alleged ties to a prostitution ring.

Paterson, a state senator for 21 years before running as lieutenant governor in 2006, took over yesterday in a ceremony before the full Legislature marked by humor and punctuated with cheers from both Democrats and Republicans. After assuring the public his conciliatory style would help make a budget deal possible, Paterson will have to find a compromise among Republican Senate Majority Leader Joseph Bruno, Democratic Assembly Speaker Sheldon Silver and his own administration.

“The meat and potatoes of this administration will be the economy and the budget,” said E.J. McMahon, an Albany-based budget analyst at the Manhattan Institute, a policy study group. “He has a talent for conciliation, but at some point, he’s going to have to take a stand somebody isn’t going to like.”

Paterson, 53, signed five bills on his first day, including laws to improve transit workers’ subway track safety and to provide jobs for low-income seniors.

Sworn In

The governor took the oath of office just after 1 p.m., becoming the state’s first black chief executive and the nation’s first legally blind governor.

The crowd included lawmakers, the governors of New Jersey, Massachusetts and Connecticut, former New York Governors George Pataki and Hugh Carey, New York City Mayor Michael Bloomberg and former Mayors Ed Koch and David Dinkins. U.S. Senators Charles Schumer and Hillary Clinton, a Democratic candidate for president, also attended.

After referring to JPMorgan Chase & Co.’s takeover of Bear Stearns Cos. as evidence of “an economy that is reeling,” Paterson asked government officials and business leaders to meet with him in an effort to “adjust our budget.”

“There’s a budget that needs to be passed, and we will pass it,” Paterson said yesterday, moments after officially taking office. “We have to battle the obstacle of doubt and uncertainty, and we shall overcome it.”

McMahon, who described Paterson’s past policies as that of a “fiscal liberal,” said he didn’t understand why Paterson would want to meet with business people on the budget “unless he’s trying to sell a tax increase.”

`Good News’

Kathryn Wylde, president of the New York City Partnership, an organization of corporate chief executives, disagreed. She said Paterson’s recognition of the severity of the slowdown “is good news for those who are calling for spending restraint.”

Paterson, who will serve out the rest of Spitzer’s term until Dec. 31, 2010, presented an agenda that included helping New Yorkers with the high costs of education, health care and housing. He spoke of “single mothers working two jobs,” and the “crumbling upstate economy.” He didn’t discuss sources of revenue.

The new governor starts with a $124.3 billion budget inherited from Spitzer. Since January, when Spitzer presented his plan, the worsening economy has caused state officials to reduce their revenue forecast by $634 million.

Paterson hasn’t ruled out or advocated a tax increase. Silver wants to raise income taxes for people making $1 million a year. Bruno opposes new taxes.

“We don’t know the path yet but that’s because we haven’t blazed the trail,” Paterson said. “I think you all know that I know a little bit about finding one’s way through the dark.”

Setting the Tone

“He set the right tone, moving away from the combative style of Spitzer,” said Republican state Senator Dean Skelos, 60, of Rockville Centre, a Long Island suburb of New York City.

Paterson, a graduate of Columbia University and Hofstra University School of Law, doesn’t read Braille and receives his information through conversations and recorded briefings.

The new governor charmed the Legislature yesterday in a way Spitzer never did. He drew loud laughs when he introduced Attorney General Andrew Cuomo, forgiving him for squirting him in the face once with a water pistol.

The hall resounded with more laughs as Paterson acknowledged Bruno’s presence, telling the audience he gladly accepted a dinner invitation at the Republican’s home, “as long as I could bring my taster with me.”

To contact the reporter on this story: Henry Goldman in New York City Hall at hgoldman@bloomberg.net

To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net

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