ALBANY, N.Y. -- Lawmakers from across the state are back to work for the special session called by Governor David Paterson and it appears that it has worked. Reports out of the capitol are that a spending reduction agreement is close to being reached.

Assembly sources say the bill plans to cut about $300 million while the Senate Majority says the cuts will total closer to $500 million. Exactly where the cuts will be made is still unclear, though there are concerns about healthcare, Medicaid funding and aid to higher education.

Sources on both sides of the aisle say there will likely be cuts to pork barrel spending or member items. Senate Majority Leader Dean Skelos says there will be no new taxes.

Lawmakers say they are optimistic the plan can and will pass and stay they will continue to work until something gets done. Governor Paterson says it's important for the entire state.

"We may be as challenged as we have been since the great depression, so this might be worse than the 70s. Some say you are not in crisis till you are in default. No. We are in crisis when you are getting close to that, and that is when government should act," Paterson said.

Meanwhile, the Assembly took care of another piece of business Tuesday. They addressed high property taxes by passing a circuit breaker bill, which factors in income when determining a homeowner’s property tax burden. Last week, the Senate passed the Governor's property tax cap bill, which limits growth to four percent a year. So, the Assembly's move means that it is unlikely that any agreement will be reached on property tax reform this summer.