ALBANY – Faced with the necessity of negotiating a new budget in a failing economy, Lieutenant Governor David A. Paterson will have only a limited ability, at least in the near term, to set a public policy course different than that of Governor Eliot Spitzer, whom he will replace on Monday.

Mr. Paterson yesterday began to restructure a governor’s office that has all but ceased functioning in the tumultuous last three days, as Mr. Spitzer considered resigning in the wake of revelations that he had patronized high-priced call girls.

Yesterday, Mr. Spitzer finally decided that he could not continue, signaling the wreckage of a once-stellar political career that had once sparked speculation that he could end up as the first Jewish president.

Mr. Spitzer became only the sixth New York governor to resign mid-term and the first to quit in disgrace.

“As I leave public life, I will first do what I need to do to help and heal myself and my family,” Mr. Spitzer said in a brief statement at his mid-town Manhattan office, his wife, Silda Wall Spitzer, at his side. “Then I will try once again, outside of politics, to serve the common good and to move toward the ideals and solutions which I believe can build a future of hope and opportunity for us and for our children.”

Mr. Spitzer, who first acknowledged in the same room on Monday that he had betrayed the trust of his family and his state, again yesterday did not refer to any details of the “private failings” that abruptly ended his governorship. But Mr. Spitzer was identified by law enforcement sources as “Client 9″ in a complaint in the Southern District of New York against the operators of a high-end prostitution ring.

Client 9 was accused of arranging a $4,300 tryst with a call girl in a Washington, D.C., hotel. Later press reports claimed Mr. Spitzer had spent at least $80,000 on prostitutes.

Mr. Spitzer has not been charged with any crimes, but Southern District U.S. Attorney Michael J. Garcia indicated just after Mr. Spitzer read his three-minute statement that prosecutors had not reached any sort of plea agreement with the governor to lessen possible criminal charges in exchange for his resignation.

“There is no agreement between this Office and Governor Eliot Spitzer, relating to his resignation or any other matter,” Mr. Garcia said in a statement.

Mr. Spitzer, 48, said that Mr. Paterson, his lieutenant governor for 14 1/2 difficult months of the governorship that he won with nearly 70 percent of the vote, had requested that Mr. Spitzer make his resignation effective on Monday to give the next governor time to make the transition.

Mr. Paterson released a brief statement urging New Yorkers to pray for Mr. Spitzer’s family. He also declared that “it is now time for Albany to get back to work” after the politically cataclysmic developments of the past two days. The lieutenant governor continued reaching out to prominent legislators yesterday to secure their promises of cooperation and lining up the team that will accompany him as he moves into the governor’s office.

Sources said Mr. Paterson’s father, Basil A. Paterson, a former state senator and secretary of state, and Bill Lynch, a top aide to then-New York City Mayor David Dinkins, were among those aiding the governor-to-be in his transition efforts. David Paterson once worked on Mr. Dinkins’ campaign for Manhattan borough president in the mid-1980s.

Mr. Paterson, a 53-year-old Democrat, will automatically succeed to the governorship. He will fill out the rest of Mr. Spitzer’s term, through 2010.

Mr. Paterson will be New York’s first-ever black governor and its first physically disabled governor since Franklin Delano Roosevelt. Mr. Paterson lost most of his eyesight at age 3 months due to an optic nerve infection and is legally blind.

Relieved Legislators

Universally, legislators in Albany seemed relieved following Mr. Spitzer’s announcement, both because the immediate crisis surrounding the office of the governor was ending, and at the prospect of dealing with a less abrasive and combative governor in Mr. Paterson.

“The atmosphere around here will probably be a little more relaxed,” said Senator Joseph Lentol, D-Brooklyn. “We will have a governor with a sense of humor.”

Mr. Lentol’s father, Edward, served with the elder Mr. Paterson in the state Legislature in the 1960s.

Assembly Speaker Sheldon Silver, D-Manhattan, and other legislative leaders said their biggest immediate challenge will be to restore some order to the process of negotiating a 2008-09 state budget for the fiscal year beginning April 1. The spending plan must close a projected budget gap in excess of $4 billion.

Negotiations between staffers in the Legislature and governor’s office on various aspects of the spending plan were said to have stopped once word of Mr. Spitzer’s linkage with the Emperors Club VIP ring leaked out on Monday. Before even before that, Senate Majority Leader Joseph Bruno, R-Brunswick, and Mr. Spitzer had not talked to each other privately in months.

“David Paterson’s intellect, his charisma, his experience in government make him an ideal leader to guide us through the difficult days ahead,” Mr. Silver said at a news conference yesterday. “The work before us is demanding and must be completely thoughtfully and expeditiously.”

Both the Senate and Assembly yesterday approved bare-bones versions of budgets that they say are sufficient to allow the Legislature to convene joint conference committees to resolve differences in their spending proposals.

Both the Assembly and Senate documents contained provisions for a judicial pay raise. The Assembly’s plan includes a raise retroactive to April 1, 2005, but no provision for creation of a commission to set future pay raises for judges. The Senate budget would provide for a pay raise retroactive to Jan. 1, 2008, but calls for creation of a commission for future judicial salary increases.

Mr. Spitzer in January proposed a pay raise retroactive to April 1, 2006, with no pay raise commission, such as the one favored by Chief Judge Judith S. Kaye.

Both the preliminary Assembly and Senate state budgets approved in 2007 also included a pay raise for the judiciary, but the salary increase, the first for judges since 1999, was excised from the final 2007-08 budget because of bitter haggling between Mr. Spitzer and the Legislature over other issues.

Chief Judge Ann Pfau said after the budget process “restarts” with a new governor at the bargaining table, the judiciary must continue to keep the leaders’ focus on a pay raise bill. Judge Pfau and other court administrators will likely have to continue their lobbying efforts on a pay bill with a new cast of characters in the governor’s office as most or all of Mr. Spitzer’s inner circle will be replaced.

“Because of his [Mr. Paterson's] longstanding position in the Senate even before he was lieutenant governor, institutionally we did have a relationship with him,” Judge Pfau said in an interview. “Now, we will develop the relationships with those he will bring in.”

De Facto Governor

Mr. Spitzer’s rapid downfall also left others gauging how Mr. Paterson’s presence at the main bargaining table at the Capitol would affect issues they have promoted.

Supporters of a statewide office to provide indigent criminal legal defense services, for instance, hoped Mr. Paterson would go further than Mr. Spitzer by advocating for an office independent of the executive branch of government.

Mr. Lentol said he hoped Mr. Paterson would support, as he did in the state Senate, a DNA sampling system that would give more criminal defendants the chance to exonerate themselves with DNA evidence and to sue if imprisoned improperly than the plan favored by Mr. Spitzer did.

Despite the five-day lag between Mr. Spitzer’s resignation announcement yesterday and its effective date on Monday, Mr. Silver said it was understood among legislators that Mr. Paterson is now in charge of the governor’s office.

“I think everyone of you and everyone of us look at David Paterson as the de facto governor until Monday,” Mr. Silver told reporters.

As a practical matter, with so little time left for adoption of an on-time state budget, Mr. Paterson’s ability to change the fiscal course set out by Mr. Spitzer is severely limited. Mr. Spitzer’s budget division has reduced estimated revenues for the fiscal year that begins April 1 by several hundreds of thousands of dollars to reflect the slowdown on Wall Street and other indicators of a recessionary phase in the economy.

Mr. Silver said he and other legislative leaders would sit down with Mr. Paterson following his swearing in on Monday to see what changes the new governor wants to make in the new spending plan.

“We’ll have two weeks to do it,” Mr. Silver said. “I think the Senate, the Assembly and the governor will have to be of the mind frame that we want to be on time.”

Others Who Resigned

The other New York governors to resign from office before their terms were complete were Daniel D. Tompkins (1817), Martin Van Buren (1829), Grover Cleveland (1884), Charles Evans Hughes (1910), Herbert Lehman (1942) and Nelson Rockefeller (1973). All men left for higher political or civil office.

In 1913, Governor William Sulzer was the only governor to be impeached as the result of his dispute over patronage with the Tammany Hall Democratic machine that had helped get him elected.

Mr. Sulzer, a government reformer, contended for the rest of his life that he had been victimized because he would not distribute state jobs and contracts to the Tammany favorites.

State Assembly Republicans said they began exploring a possible impeachment of Mr. Spitzer on Monday, when his involvement in the prostitution ring became public. Republican spokesman Joshua Fitzpatrick said yesterday that no impeachment papers had been drawn up by Assembly Republicans before Mr. Spitzer announced his decision to step down.

The chances of the Assembly voting any articles of impeachment against Mr. Spitzer were slim in a chamber where Democrats outnumber Republicans 108-42, but the introduction of impeachment papers would have been an embarrassment to many of the chamber’s Democratic members. Mr. Fitzpatrick said that 20 Democrats had contacted Mr. Tedisco’s office and expressed interest in joining an impeachment petition against Mr. Spitzer, though he would not identify any of those members.

Under New York’s impeachment process for state officials, articles of impeachment voted by the Assembly would go to a High Court of Impeachment – comprised of all members of the state Senate and the seven judges of the state Court of Appeals for a final determination.

- Joel Stashenko can be reached at jstashenko@alm.com.