The honeymoon isn’t over for Gov. David A. Paterson.

Despite delivering bad news this morning to a room of business leaders, educators and legislators about the economy including staggering unemployment, fewer homes being sold, and the failure of programs organized to employ people, the governor’s speech was punctuated by lengthy outbursts of applause.

Before the speech, former Mayor Ed Koch said that the crowd—roughly 740 people all seated at tables in the midtown Hilton grand ballroom—was the largest turnout for an Association for a Better New York breakfast he could remember.

“He has a great opportunity to be heard because these are all the movers and the shakers in the city,” he said.

Paterson drew laughs and humbled himself in front of the audience, before he briefly addressed his entry into the governorship and discussed the state budget.

Paterson announced that he thought the budget would be approved later today, a budget he called too big and too bloated. He said that the budget growth should have been conservative, rather that one that “ballooned out of a lot of our revenue forecasts and our expenditures.”

“Even if we were wrong, we would have then returned a-billion-and-a-half dollars to a sagging economy,” he said, adding, “even if we had misestimated we would have addressed our problems down the road.”

He said that signs were in the air of the recession the country has entered well before the budget was drafted.

He said that by the third week of March, when he became governor, the state had received $461 million less in taxes from the 20 largest payers than it had by the same time last year. As a result, he cut the budget, lowering its growth from 4.8 percent to 4.4 percent over last year’s budget.

However the savings of that cut will be used up this month if the economy continues in the same direction.

“Though our budget is sound now, it will be dependent on whether or not people get the message that we so vitally need to understand, which is that our economy is reeling,” he said.

Paterson addressed the lack of employment opportunities in the city. He drew parallels between the present economic situation and that of the state in the early nineteenth century, when shipping along the Erie Canal brought economic growth to New York City despite the deficit of the budget.

“People moved where the jobs were. Now the people are moving away,” he said.

The government, he said, needs to spend its money more wisely and asked the audience to be a part of the solution.

Paterson said he hoped that projects like the Second Avenue subway line and the development of Stewart Airport, near Newburgh, N.Y., Hudson Yards and Moynihan Station on Manhattan’s west side will foster economic growth and offer new employment opportunities downstate.

After the speech concluded and as the plates of eggs and potatoes and dishes were being cleared away, Jeffrey Horn, a representative from 100 Black Men of America, Inc., a group dedicated educating and empowering youth, said that he would like to see the amount of money being put towards those projects going towards health care and education for more people.

But, he said, anything that brought jobs to the city was a worthwhile investment and was hopeful that the governor could bring action.

“I think he’ll make the smart cuts,” he said.

John Banks, vice president of government relations for Consolidated Edison, Inc., said that the governor’s reluctance to solve the state’s economic problems through taxation of citizens is refreshing.

Shira Phelps, of consulting firm Harris Rand Lusk, said she was impressed by Paterson’s numerous historical references and timelines of major construction projects in the 1930s and quotations of men such as President Franklin D. Roosevelt and Robert F. Kennedy.

In his speech, Paterson acknowledged the long hard road before him but is confident the government and business leaders can prevail.

“If we try hard enough, we may be able to look back in just a few years and be very proud of the work we’ve done,” he said.