By ADAM SICHKO
The Business Review (Albany)

On Monday, new Gov. David Paterson took over a state rocked by scandal and facing a nearly $5 billion budget gap that must be resolved this month.

He must also jump-start a state government that skidded to a standstill as officials were riveted first by the unfolding story that then-Gov. Eliot Spitzer was a client of a prostitution ring, and then his resignation.

Many business issues are at stake in the debate over the state's 2008-09 budget, including potential tax and fee increases and competing proposals on the best way to boost Upstate's sagging economy.

Yet Paterson's reputation as a well-respected negotiator who's willing to reach across the political aisle could help smooth out a normally contentious process. Spitzer left office with nearly three years left in his term.

Leaders from both political parties have praised Paterson. But it's unclear how committed Paterson will be to Spitzer's budget priorities, or what position he holds on issues such as reforming the Wicks Law for public construction projects, easing employer liability in the state's "scaffold" labor laws or recreating a siting system for power plants.

"I couldn't tell you where Paterson is on those issues," said Mike Elmendorf, head of the state chapter of the National Federation of Independent Business.

"There's a pretty significant financial crisis the state needs to deal with. It takes the engagement not just of the governor's staff, but the governor," he said.

That begs questions about who that staff will be and how involved Paterson has been in budget talks to this point, said Leonard Cutler. He's director of Siena College's Center for the Study of Government and Politics.

"Just by the nature of that position, he tended to be highly deferential to the governor," Cutler said. "But he may have distinct priorities."

Paterson is familiar with budget negotiations, having represented Harlem in the state Senate for two decades, including four years as the Senate's minority leader. Legally blind, he has often recited lengthy speeches from memory and was known as a quick thinker during floor debates.

Kenneth Adams, president and CEO of The Business Council of New York State Inc., said Paterson's travels across the state when he was lieutenant governor give him an intimate knowledge of Upstate's struggles.

"He steps into this role with solid experience, strong personal relationships and a commitment to the issues that we care about," said Adams. "I think (those experiences) enable him to ramp up and move quickly to bring people together and deal with the tough issues of the day.... I'm confident there will be good processes and decisions on those issues, open and fair."

While in the Senate, Paterson dealt with Majority Leader Joseph Bruno, R-Brunswick. Now acting lieutenant governor, Bruno said he's ready to work with Paterson.

"David's always been very open with me, very forthright," Bruno said. "We've partnered on a great number of things."

State leaders say such partnership is key, with many budget issues unresolved less than two weeks before an April 1 deadline.

Roger Hannay, president of Westerlo manufacturer Hannay Reels Inc., said he expects Paterson to change the state Capitol's dynamics for the better. But many of his positions are still unclear, Hannay added.

"We can possibly look forward to more bipartisanship and statesmanship... and see if we can get back on track again. (Paterson) seems to be an easier-going guy, a little less ‘steamroller' and a little more collegial," Hannay said, using a term Spitzer used to describe himself.

During his time as the state's attorney general, Spitzer built his reputation around investigations of major financial institutions. Merrill Lynch & Co. Inc. had to pay a $100 million fine for fraud that he revealed through subpoenas of internal e-mails.

Spitzer's demise provided ample fodder for late-night comedians - and it could even boost the stock market, said Joseph Ventura, principal at William Tell Financial Services in Latham. The market finished up following the disclosure of Spitzer's involvement with the prostitution ring, largely because of a boost from the Federal Reserve.

"Attitude plays a big part in what's going on on Wall Street. It is logical, but it also runs on emotion," Ventura said.

"Traders are human. I think they're almost feeling like this is a victory in some way," he continued.