A state government financial think-tank says they've got a plan to save the state billions of dollars over the next several years. With just days to go before the state of the state, our Steve Ference reports on what the plan is - and how likely it may be that any of the ideas could be incorporated in the upcoming budget.

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The dire state of the state's finances have been on many people's minds. The question, though, is how to fix it.

Deficits are only expected to grow in the coming years, as more spending continues and less money comes in because of decreased Wall Street bonuses and the recovering economy.

"Any plan to reduce spending must reduce the growth of school aid and Medicaid," said McMahon.

His think-tank published a 72-page report citing 30 ways to save up to $30 billion over the next few years. McMahon says reducing and capping growth in school state aid could save $8.5 billion.

"State school aid is 15 percent higher than when Governor Pataki left office. We're not starving our schools," he argued at a press conference Monday.

$7.8 billion in potential savings also includes reforming Medicaid and fighting fraud.

They also call for pay freezes for all public employees and requiring them to pay more for their benefits. That could save $3.8 billion, according to McMahon.

"Mass layoffs should be a last resort. They are disruptive. They're disruptive to state services," he said.

"Our members are more than willing to do what they need to do to deal with the situation, but there has to be some fairness," said CSEA Communication Director Stephen Madarasz.

Madarasz, whose union represents 300,000 public and private employees, says the proposals risk shifting the burden to local taxpayers or workers who don't deserve to pay more to bridge the gap.

"When they come down to things like freezing public sector salaries, they forget the fact that those are fairly negotiated wages that are done under collective bargaining agreements," said Madarasz.

Either way, McMahon argues the political will for financial change at the Capitol has to be there. That's because even if the projected $7 billion deficit for this year is closed, there would still leave a $7 billion hole for next year. Those stats are according to the Empire Center, which says when stimulus money stops, the state will be forced to look at even tougher choices if they aren't made now. Various state estimates put the current budget deficit at around $4 billion.

Meanwhile, the Business Council of New York State is positively responding to the Empire Center's budget plan. In a statement, the president and CEO of the Business Council said, "Reducing the cost of government is not only needed to end the budget crisis but to make our state competitive again and to free our economy to grow and create new jobs. Many of the recommendations reflect the same critically important focus on reducing government spending that the Business Council has long advocated for."