NIAGARA FALLS — During a stop in the city Thursday, Gov. David Paterson predicted a tough financial road ahead for the state of New York.

He also suggested that one of his loudest critics — Republican State Sen. George Maziarz of Newfane — has done a good job of offering suggestions, but hasn’t provided realistic solutions for dealing with the current fiscal crisis.

“We’re open to suggestions, obviously new ideas, but this is a very difficult situation,” Paterson said.

Paterson visited the Falls to announce the award of a $5 million Restore New York grant to the city. The money will be used to help local developers refurbish the old South Junior School as an apartment complex and provide residential space for seniors at the old 39th Street School building and former public safety complex on Hyde Park Boulevard.

Maziarz, who did not attend Paterson’s news conference but convened a media event at his office afterwards, questioned Paterson’s decision to give state funding to support housing initiatives in a city where the federal government says the vacancy rate is already so high. He also suggested the governor was attempting to deflect attention from more serious state problems like recent tax and fee increases and the lack of STAR rebate checks for homeowners this year.

“The governor’s timing is very convenient here,” Maziarz said.

Paterson rattled off a list of moves the state made in response to the fiscal crisis that he would like to have avoided, including tax increases, cuts in Medicaid spending and budget reductions in other areas. He said those decisions, while not pleasant, were necessary to maintain stability in the state’s bond rating and cash flow.

Paterson, borrowing a line from a popular television commercial, said: “It’s so easy to stand up and say what you wouldn’t have done. A caveman could do it.”

Paterson said he’d like to restore the STAR rebate program, but doing so would come at a cost of about $1.7 billion. Added to the existing budget deficit of $2.1 billion, Paterson said the state would be looking at a new budget hole of about $3.8 billion.

“Did Senator Maziarz tell you how he’s going to restore the money?” Paterson asked in response to a reporter’s question about the senator’s concerns.

Maziarz enumerated areas where he claimed the governor could find roughly $1.7 billion in additional funding. The list included cuts in state agency contracts, consolidation of state agencies, enhanced Medicaid fraud coordination, a freeze on state purchases of recreational lands, elimination of existing balances in the governor’s own budget accounts, the sale of surplus property and other proposals.

“He hasn’t done one consolidation of any state agency,” Maziarz said.

Maziarz noted that earlier this year, Paterson wanted to save money through a hiring freeze for state workers. Maziarz said that instead, 35,000 more employees have been added to the payroll. He also criticized Paterson for doling out federal stimulus dollars for back-to-school supplies to parents receiving welfare in New York.

“Those federal dollars could have been better spent,” Maziarz said.

Paterson said Maziarz and fellow lawmakers may need to make difficult choices when they return for a special Legislature session later this month. He said New York’s fiscal crisis may threaten funding for public safety and said furloughs for state employees could be an option, as well.

“You’re seeing that in other states,” he said. “We would want to avoid it, but, in the future, not knowing what the consequences would be, I wouldn’t take anything off the table.”

Paterson said there’s one area in which he has no interest — additional hikes in state taxes and fees.

“I think we have pretty much absorbed as much as we possibly can from that source,” he said.

Contact reporter Mark Scheer at 282-2311, ext. 2250.