by Nicholas Confessore

ALBANY — Throughout the Capitol, from the vaulted Assembly chamber to the first-floor cubicles of the Budget Division, officials are frantically slashing budgets, trimming headcounts and freezing salaries to deal with the worst fiscal crisis in decades.

But in Room 246, a high-ceilinged suite recently turned over to Gov. David A. Paterson’s new economic recovery cabinet, there is a different problem to tackle, courtesy of the federal stimulus passed last month: How to spend billions of dollars as quickly as possible.

Nearly every day, officials from 20 agencies meet there to sift through hundreds of proposals, from waste-treatment plants to courthouses to emergency wireless systems. On one wall is a map of New York’s 62 counties, marked with the number of projects each has submitted for approval. On another is a list of the pools of federal money available to the state: $404 million to weatherize homes, $1 billion for highways and bridges, even $75 million for nuclear waste cleanup.

“It’s better than being on the other side,” said Timothy J. Gilchrist, in between hurried bites of a salad. As the senior adviser for infrastructure and transportation, Mr. Gilchrist was appointed by the governor to oversee the distribution of the federal funds. “I’m Captain Asphalt,” he said.

While the stimulus package includes money that New York and other states can use to close their budget deficits, much of it is reserved for large-scale capital projects, money that must be spent quickly — in some cases in a few months — to help jump-start the economy.

New York is expected to receive $4 billion — a sum that has drawn contractors, local officials and lobbyists to the halls of the Capitol to push for a share. And it is potentially a political gift to Mr. Paterson, now facing the lowest recorded approval ratings of any governor in decades. Every new project offers the chance to earn a glowing headline in the local paper and win points with legislators and municipal officials, many of whom are still smarting at the budget cuts that Mr. Paterson has proposed for next year.

But the money also brings headaches. Every project must navigate a labyrinth of regulations or risk being challenged by federal overseers. And if Mr. Paterson and his aides move too slowly, New York could lose hundreds of millions of dollars.

Of course, every new courthouse or sewer is a potential embarrassment akin to the Bridge to Nowhere. Any political fallout from waste or corruption will settle on Mr. Paterson, who, like all governors distributing stimulus money, must approve each project and certify its legitimacy. And even with $4 billion to spend, there is not enough to go around: local officials have submitted 7,675 projects totaling $41.8 billion, with more coming in each day.

“Things have been so bleak for so long, where there was no money for any kind of project,” said Steven B. Weingarten, a lobbyist for several transportation agencies around the state. “Once they saw there was money on the table, they said, ‘We need to take a shot, any way we can.’ ”

At many state agencies, the rush of stimulus spending presents a bewildering dual reality. Since July, there has been a strict hiring freeze. Now officials must find consultants and staff members for new projects, even while they consolidate or close bureaus and offices. Some programs that faced severe budget cuts, like road and highway construction, are now awash in money.

Merely reading through the 1,000-plus-page stimulus bill took Mr. Gilchrist and his staff several days and at least one all-nighter. (The transparency requirements run to 60 pages.)

As the days go by, they must stroke and soothe New York’s Congressional delegation, which played a pivotal role in getting New York’s billions and has a keen interest in how the money is spent. In Albany, lawmakers are already complaining that Mr. Paterson and his team have not consulted them enough.

The complaints are likely to keep coming. Because of the requirements that the money be spent on projects that have already undergone environmental reviews and met other technical requirements, many pet projects will not qualify, no matter who supports them.

Local officials are in much the same position. The stimulus is a gold mine for capital spending, but has relatively little money for operating expenses, which county governments say they desperately need. For many of them, getting stimulus money is like being handed the keys to a brand new car while months of back rent go unpaid.

“The repairing of bridges and building roads are a good thing, and they will help us,” said Steve Levy, the Suffolk County executive, who announced this week that the county could run out of cash by the end of the year. “But they don’t give a county government cash to pay its bills.”

Of course, that doesn’t mean they won’t take as much money as they can get. Erie County, home to more than its share of crumbling highways and bridges, has submitted nearly 700 projects to the Paterson administration, several times more than any other county. And last week, Mr. Levy created his own stimulus team to comb through the stimulus package and determined what projects might qualify.

“These monies,” Mr. Levy noted, “are very competitive.”