ALBANY - A $6 billion property tax cut plan aimed at middle class families is the newest element to emerge from Gov. Eliot Spitzer's first state budget proposal, which is scheduled to be released Wednesday.

Spitzer's property tax cut would be phased in over three years by expanding the state's STAR school tax subsidy program.

An average middle class taxpayer would receive a typical savings of $763 in Suffolk County, $558 in Onondaga County, $421 in Erie County and $497 in Albany County, Spitzer said.

The tax breaks would decrease for upstate households making $60,000 a year or above and for downstate households making more than $80,000.

Spitzer called for a $1.5 billion subsidy for property tax relief in the fiscal year beginning April 1, $2 billion in 2008-09 and $2.5 billion in 2009-10.

“Soaring property taxes are devastating to our state's families and our economy as well,” Spitzer said of New Yorkers, who pay the highest combined taxes in the nation. “In the past five years, real property taxes have increased 32 percent - fully three and a half times faster than wages have increased.”

Spitzer would also relieve local governments and schools of state mandates that have driven up local costs of operation and construction, forcing higher local taxes.

Tuesday's proposals will be part of a state budget that will also include an overhaul of the health care system. Spitzer said he will cut billions of dollars in waste while insuring more New Yorkers and improving care for all New Yorkers.

Spitzer is also budgeting a phase in of his $5 billion to $7 billion a year increase in state school aid aimed at high-needs schools including New York City's school system. But his school aid plan comes with required fiscal reforms and accountability, including sanctions that include closing failing schools and firing their administrators and school board members.

The health and education reforms Spitzer seeks fly in the face of two of Albany's most powerful lobby forces and a Legislature that has approved record spending for both.

Although only a proposal to the Legislature that faces months of difficult negotiations, the executive budget is important because it traditionally has been more than 90 percent of the adopted state budget. And in New York, the state budget drives most of what state government does for New Yorkers. The current budget totals $115 billion.

Spitzer's first budget proposal is also the Democrat's biggest test yet, after eight years as a popular attorney general gathering international headlines as a crusader without having to balance a state budget.

To pass his budget, Spitzer will have to win over - or run over - a Legislature with which he has noted is part of the fiscal and political problem with Albany. He is feuding with Republican Senate Majority Leader Joseph Bruno over a hotly contest special election for a Senate seat on Long Island and Spitzer also appears at odds with Democratic Assembly Speaker Sheldon over selection of a new state comptroller.

So lawmakers, who would have to approve Spitzer's reforms, are waiting, if a bit uncomfortably.

“We'll see what type of reform and changes is going to be presented, but certainly, in the beginning, I'm open to see if benefits constituents,” said veteran Republican Sen. Thomas Libous of Broome County. “I will be looking for accountability. I will be looking for property tax relief and fair and equitable distribution in education.”

That's one of the likely flashpoints. Spitzer is calling for an end of “shares” in state school aid that has split about $15 billion a year in aid between upstate, New York City and Long Islands roughly equal to their shares of enrollment. Spitzer would direct aid based more on financial need.

On Tuesday, Bruno said Spitzer is “very astute” in his prediction there would be a fight over “shares” in education funding.