New York Governor David Paterson said next year’s record budget gap may be $3 billion greater than the $16.2 billion he announced earlier this week and hinted a tax increase on higher incomes is possible.

[efoods]The newly estimated gap for the year beginning April 1 was 25 percent more than projections six weeks ago, he said.

“We are right now on the verge of cuts and service reductions that I would have to describe as life threatening,” Paterson said. “With situations like that, everything is on the table,” he said in response to a question about increasing the state’s income tax for high earners.

Paterson and legislative leaders said earlier this week that the deficit continues growing because of falling tax collections in a shrinking economy with rising unemployment. If next year’s deficit exceeds the $16.2 billion estimate, the spending plan would be amended, as lawmakers did twice in the current year.

The state Labor Department said yesterday that New York’s unemployment rate rose by a record 0.7 percentage point in February to 7.7 percent, the highest since 1993. In New York City, the jobless rate rose 1.2 percentage points to 8.1 percent in February.

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