State lawmakers agreed to cut hundreds of millions of dollars in the current state budget Wednesday, with overall spending to be slashed by nearly $2 billion over the next two fiscal years.

The Democrat-controlled Assembly worked past midnight to approve most of the cuts Gov. Paterson had been seeking from the Legislature's special session. The Senate returned in the morning to give final legislative approval to the deal.

The governor had called the special session to deal with looming deficits projected in the billions of dollars. The state's deficit should be around $5.4 billion with the cuts.

Despite the budget cuts, no definitive plan on property tax relief came out of the special session. The Republican-led Senate and Gov. Paterson are pushing a measure that would cap yearly spending increases by schools. The Assembly, under pressure from the teachers' union, has rejected the cap and is pushing for middle class tax credits paid for by the very rich.

Gov. Paterson says he'll push aggressively after Labor Day and the political conventions to hammer out a property tax relief package that works.

Associate Press wires contributed to this article.

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