ALBANY — Gov. David A. Paterson — whose tumultuous 23 months in office have been

consumed with fiscal calamities, battles with the Legislature and eroding voter trust —

declared an end to his gubernatorial campaign Friday.

But the governor vowed to finish out his term until Jan. 1, brushing aside calls by some

Democrats that he also resign amid the latest scandal to shake his administration.

The governor's decision, a week after formally declaring his candidacy at a West Seneca

restaurant, clears the way for Attorney General Andrew M. Cuomo to unlock his sizable campaign

war chest and declare for the Democratic nomination. However, Cuomo, who has been eyeing

Paterson's job for a year or more, remained silent Friday about his campaign plans.

But Rick Lazio, the Republican's Party's likely candidate, who had been looking forward to

running against a weakened Paterson, said Cuomo now needs to stop hiding and start answering

questions about the state's problems.

"Let the campaign begin," said Lazio, a former GOP congressman from Long Island.

Waiting in the wings, to run possibly against Cuomo or Lazio, is Suffolk County Executive

Steve Levy, a conservative Democrat.

"Andrew Cuomo will be our nominee," said state Democratic Party Chairman Jay Jacobs, who

dismissed Levy as without the "wherewithal or credentials" to challenge Cuomo.

For Paterson, Friday was a far cry from the day in March 2008 when he suddenly found himself

being told by aides that the then governor, Eliot Spitzer, had just been caught up in a

prostitution scandal and was preparing to resign.

Throughout the past two years, Paterson has been dogged by one fiscal crisis after another

— the state is more than $8 billion in the hole in the upcoming budget — and a

series of missteps that forced the public to abandon support for the state's first black

governor.

"It is discouraging. It never happened before that we had an African-American governor, and

you would hope that when that time comes we'd get the best that there is, and we haven't

gotten the best. I'm disappointed," said Assemblywoman Crystal D. Peoples-Stokes, a Buffalo

Democrat who only last Sunday joined Paterson at his election announcement.

Paterson's announcement, coming after months of a steady drumbeat that he could not

resurrect his political fortunes, was almost anticlimactic.

"There are times not to strive for service but to step back. That moment has come for me,"

Paterson told reporters at a Manhattan news conference. He said his decision was not driven by

a new scandal that erupted this week — which he called the "latest distraction" —

but by an "accumulation of obstacles."

The governor said the political obstacles are many. "It has become increasingly clear to me

in the last few days that I cannot run for office and try to manage the state's business at

the same time, and right now, New York state needs a leader who can devote full time to

service," he said with his wife, Michelle, at his side.

Democrats say talks will continue this weekend among different factions to determine

whether to turn up the heat to try to get Paterson to leave office early.

"Now let me make this very clear. There are 308 days left in my term. I will serve every

one of them," Paterson vowed.

The governor, though, still faces the findings of an investigation that he asked Cuomo to

perform into allegations that Paterson and the state police may have pressured a woman to drop

a domestic violence case against David W. Johnson, a top aide to the governor.

Critics have called Cuomo to hand the case over to a special prosecutor to avoid a conflict

of interest; how the case is decided also could pose sticky political issues for Cuomo. The

case could be wrapped up in a couple weeks, sources say.

For his part, Paterson said he is "looking forward" to the probe's findings. "I have never

abused my office, not now, not ever," he said, holding his right hand up as if he were under

oath.

The governor's exit from the race came after a New York Times article this week exposed the

possible harassment of the woman in the domestic violence case; Paterson has said he did talk

to the woman, who he has known for years, but his allies say he put no pressure on her to drop

the case. The woman did not show up for a court appearance the day after she talked to

Paterson, and the case was dismissed.

While a small chorus of county party leaders and elected officials Thursday began calling

on Paterson to drop out of the race, Jacobs, who was handpicked by Paterson to lead the party,

said the governor came to his own conclusion not to run.

Just last Sunday, Paterson was at Christe's Restaurant in West Seneca before about 200

supporters to announce his campaign — despite months of sour polling news and lackluster

fundraising. "They have not knocked us down yet, and they will not knock us down further,"

Paterson said of his opponents at the rally.

Sen. Bill Perkins, a Harlem Democrat who has known Paterson for more than 20 years, called

the governor's decision "the right thing."

Perkins, who was chairman of Barack Obama's presidential campaign in New York in 2008, warned that Paterson

should resign if he knows he did anything wrong in the new scandal that will later come out in

the Cuomo investigation.

"If he knows something was wrong, then I would suggest rather than subject the people to

the trauma of that investigation he should resign," Perkins said.

But the senator added that Paterson may have to resign simply because he is too damaged to

lead the government at a critical time.

"I would like to talk to him and make sure he's up to it, because he's in a sinking ship

and the captain of that ship is crippled in terms of his ability to govern," he said.

Republicans — who saw one of their political titans, former Senate boss Joseph Bruno,

fall to scandal — seized on the Paterson decision as another dark moment for statewide

Democrats, following the episodes involving Spitzer in 2008 and former Comptroller Alan Hevesi

in 2006.

"The state is lurching from ethical crisis to ethical crisis and fiscal crisis to fiscal

crisis and the Capitol is in political chaos. It's clear to me that the political culture in

Albany is probably the most toxic in America," Lazio said in an interview.

Lazio said Cuomo's hide-and-seek gubernatorial campaign is over.

"He's got the responsibility to share with the people of New York where he stands on a

whole host of issues," Lazio said, checking off a list of fiscal and policy matters on which

Cuomo has declined to state his positions.

Cuomo, son of former Gov. Mario M. Cuomo, declined interview requests. In a written

statement, he called Friday "a sad day" for Paterson. He said state government must "function

through this difficult time and address the pressing budgetary problems we face." He would

only say his political decision will come "at the appropriate time."

If Lazio is the nominee, he would face a considerable challenge against Cuomo, who is

better known and has far more money in the campaign bank in a state with 5.3 million

registered Democrats and 2.7 million Republicans.

"I'm betting Cuomo, but I also bet the Colts against the Jets in 1969. The impossible

happens in politics with some frequency," said Douglas Muzzio, a political scientist at Baruch

College.

The state is facing at least an $8 billion deficit for the 2010 fiscal year that begins

April 1. Among the long line of former Democratic allies abandoning Paterson on Friday, state

Comptroller Thomas DiNapoli did not say if he thought Paterson should resign but did say the

governor should step aside and let Lt. Gov. Richard Ravitch negotiate the upcoming budget

talks with the Legislature.

Democrats say Paterson forces reached out to the White House and the Democratic National Committee on Friday morning to inform them of his decision. Obama last year sent signals he did not want Paterson to run again, in part, for fear a weak top of the ticket in New York could drag down other candidates, such as Democrats running on the U.S. Senate and congressional lines.

Paterson took over the governor's office at a sour time in the state's economic history and

pushed fiscal remedies that made him enemies with lawmakers and special interest groups.

The legally blind governor, who came from a well-known Harlem Democratic family, was often

criticized for backing down too quickly from his proposals, such as providing property tax

relief for homeowners, and for adopting budgets with big tax increases.

Friday, Paterson said much work remains given the state's current fiscal crisis that has

forced him to propose cuts to schools, hospitals and other popular programs.

"I hope history will remember that I fought the good fight," he said.