New York state and city officials say "painful" spending cuts are necessary to cope with a massive budget shortfall following the collapse of several major banks on Wall Street. Victoria Cavaliere reports that New York's governor has asked the federal government to intervene, while leaders in New York City are pushing a plan to help residents hold on to their homes, look for jobs and manage their debt.

New York Mayor Michael Bloomberg

The state of New York typically derives 20 percent of its tax revenue from Wall Street, and the financial industry's high pay spurs growth in a wide range of service and retail industries - from restaurants, to beauty parlors and advertising agencies.

State officials are expecting job losses in the financial sector to total 45,000 this year. That is higher than after the September 11, 2001 terrorist attacks, when 30,000 jobs were lost.

State budget officials said job losses during this economic slowdown will reach 160,000.

Last week, Governor David Paterson said New York state faces a $1.5 billion shortfall in 2008, and a $47 billion budget deficit by 2012. He said there is no part of the budget that will not see cuts.

"Even cutting money to school districts within a school year, which is the last thing we want to do, health care and Medicaid, housing issues...unfortunately across the board we are going to see very drastic measures taken," Paterson said.

Paterson has asked the U.S. Congress to quickly pass an economic stimulus package that pours fiscal relief directly into New York.

Meantime, New Yorkers who have been laid off or are at risk of losing their homes have been protesting outside courthouses to ask for help. Brooklyn homeowner Gladys Guy said she was afraid of losing the home she had lived in for decades.

"I am a retiree and I just cannot afford the mortgage," she said. "And I am getting ready to go into foreclosure also."

New York City Mayor Michael Bloomberg has introduced an 18-point plan to help New Yorkers through the financial crisis. His package includes buying more than 100 foreclosed homes and transforming them into affordable housing, relaxing some property tax deadlines, and giving an additional $1.3 million to soup kitchens and food pantries.

"We are very dependent on Wall Street, we love it in good times and it is painful when it is not there," said Bloomberg. "It is interesting, if you go overseas, London for example and the U.K. are much more dependent on revenues from the financial services sector than New York and America is. If it is a problem anyplace in the world, it is a problem everyplace in the world in this day of internationalism."

Bloomberg this week will also announce a plan to cut city spending by 2.5 percent.