New York State has now gone 9 days without a permanent budget. Leaders met again Thursday but didn't accomplish much. Governor Paterson said he will withhold pay increases for state workers, a move that union presidents say is illegal. Erin Billups reports.

ALBANY, N.Y. -- "We're closing the parks because we don't have it. We didn't give back $2.1 billion we owe the school districts because we don't have it. I don't know how many times I have to say we're out of money before people understand that they're going to have to make some sacrifices," said Governor David Paterson.

State workers are the latest casualty in the state's financial crisis. Thursday, the Governor released a second round of emergency spending appropriations, bills that keep the state running in the absence of a budget, and the latest round of pay raises for public employees won't be included.

"We're going to have to take some sort of legal action because the Governor is breaking our contract and he knows it," said CSEA Communications Director Stephen Madarasz.

The Governor met with union leaders Wednesday to negotiate other actions like a wage freeze and a pay lag. He also wants the delay in raises to be permanent, saving the state $433 million. Union leaders say Paterson's action has done little to foster goodwill in negotiations and will not solve the state's fiscal problems.

"The Governor does not have a master plan for how to deal with it. He's simply careening from crisis to crisis and this is one more example of his administration's incompetence," said Madarasz.

The Governor's office says the raises will be held until a budget is enacted, adding he's prepared to defend the action in court.

"How is the court going to make the state use money that would only drive us into insolvency," said Paterson said.

Lawmakers though are not on board with the Governor's move to with hold public workers pay, but say there is little they can do.

"Very little recourse is the point I've been trying to make. The same way we can't initiate a spending bill to do an independently road and bridge work when there is no budget," said Assembly Speaker Sheldon Silver.

But they are asking the governor to rethink his decision to withhold money for road and bridge projects, which they say creates and protects much needed jobs. Paterson says the workers will eventually be paid.

While leaders did meet Thursday, there's still little progress with budget talks.

"I can't point to specific progress other than to say there are things we agreed we have to do and we'll talk later," said Silver.