June 15 (Bloomberg) -- The unraveling of Democratic control in the New York Senate threatens Governor David Paterson’s ability to lead the state out of its worst fiscal crisis since the Great Depression, placing his political future at risk, pollsters and analysts said.

New York City’s budget, due June 30, requires approval from Paterson and the Legislature on sales-tax increases and less- generous pensions for public workers. The Democratic governor’s efforts to enact property tax and spending caps, obtain U.S. infrastructure funds, attract jobs and improve public schools and universities are jeopardized, he has said.

Democrats lost control of the Senate last week when Hiram Monserrate from Queens and Pedro Espada of the Bronx sided with 30 Republicans on key votes to change the leadership. At the time of the switch, Paterson’s job-approval rating had slipped to 19 percent, one of the lowest ever for a governor, said Lee Miringoff, director of the Marist Institute for Public Opinion in Poughkeepsie, New York.

“This is an unelected, unpopular governor who has hit rock- bottom,” Miringoff said. “As the most visible member of a dysfunctional government, he’s the most vulnerable.”

The governor, who assumed power last year after Eliot Spitzer resigned amid a prostitution scandal, faces his first statewide election for governor next year.

Paterson’s strategy is to “do the work of governor, get the economy on track, focusing on the well-being of New Yorkers,” said Tracy Sefl, 37, his campaign communications adviser. “He’s also made it clear to everyone else in Albany that they have to cut out the antics and get to work, and he thinks the people will appreciate that.”

Setting Positions

After shifting policy positions and staff shake-ups, Paterson staked out positions since February promoting legalized gay marriage, union concessions, economic development and fiscal austerity.

Just hours before the Senate turmoil, Paterson addressed Manhattan’s New York Academy of Sciences with what he billed as a “Major Speech on Economic Development.”

“Every time he regroups, something goes awry,” said William Cunningham, an aide to former Governors Hugh Carey and Mario Cuomo, and former U.S. Senator Daniel Moynihan. “In the latest ‘forceful new governor chapter,’ he laid out his economic vision and it became a sidebar to a Senate coup d’etat.”

Paterson, 55, graduated from Columbia University and Hofstra University Law School. He won election to the Senate in 1984, and served as Senate minority leader from 2002 through November 2006, when he became Spitzer’s lieutenant governor.

Starting Amid Crisis

Upon taking office in March 2008, Paterson confronted an economic crisis in a state where Wall Street accounted for about 20 percent of tax revenue in 2007.

While he managed to steer the Legislature through a process that closed a $17.7 billion budget deficit, Paterson drew criticism from Republicans and the Citizens Budget Commission, a business-funded fiscal monitoring group, for using one-time U.S. stimulus funds and a tax increase on incomes over $200,000 to spend a record $131.8 billion.

After proposing a budget with new taxes on sugared soft- drinks and cable-television service, he abandoned them under industry pressure, said Cunningham, who successfully lobbied the Legislature on behalf of several cable-TV firms.

“People began to wonder, ‘What does this guy stand for?’” said George Arzt, a political consultant, in an interview last month. “Transparency, frugality, they seemed like empty promises. It doesn’t feel like he’s in control of the government.”

A Positive Start

Paterson enjoyed initial popularity. An Oct. 28 Marist poll found a 57 percent job approval rating among voters. By May 13, Marist showed only 21 percent of Democrats would favor Paterson if he were challenged by state Attorney General Andrew Cuomo, who received 70 percent support.

His slide, as measured in the surveys, began with his handling of the vacancy created when former U.S. Senator Hillary Clinton became U.S. Secretary of State.

He chose first-term U.S. Representative Kirsten Gillibrand on Jan. 23, disappointing more experienced congressional Democrats such as Steven Israel, Carolyn Maloney and Carolyn McCarthy. His approval rating dropped further after he admitted aides leaked derogatory false statements about Caroline Kennedy, daughter of the slain president, who also sought the job.

“That took the air out of the balloon,” Miringoff said.

Pension Guarantees

On June 4, Paterson used his veto to end pension guarantees for future police and firefighters in place since 1976, while other state workers’ benefits had been reduced. He persuaded lawmakers to strike down mandatory prison sentences for drug- possession crimes created by former Governor Nelson Rockefeller.

The next day, he achieved a deal with the state’s two largest public-employee unions to support a new pension category that would reduce benefits and save the state $30 billion over the next 30 years.

“In recent weeks he’s stood up to the special interests that Albany politicians protected in the past,” said Kenneth Shapiro, an Albany lobbyist and chairman of a June 11 Paterson fundraiser at Manhattan’s Mandarin Oriental that featured rapper LL Cool J and raised about $2 million. “The election isn’t until 2010. In politics, they call that a lifetime.”

To contact the reporter on this story: Henry Goldman in New York at hgoldman@bloomberg.net.

Last Updated: June 15, 2009 00:01 EDT