ALBANY - Gov. Eliot Spitzer's state budget proposal on Tuesday that must deal with a deficit and declining revenues is expected to ignite a fight with the Legislature because it includes less of an increase for New York City and suburban schools than local officials had expected.

School districts statewide will see an average increase of about 7.5 percent in state aid for daily operations and construction under the budget Spitzer will present on Tuesday.

New York City schools will get $8.1 billion in state school aid under Spitzer's 2008-09 budget proposal, compared with about $7.5 billion this year, according to a Spitzer administration briefing.

That includes $490 million more in operating aid, the money used to run the schools day to day, or about a 7-percent increase over current operating aid.

Billy Easton, executive director of the Alliance for Quality Education, said Spitzer's proposal will provide 28 percent less of the “foundation” formula than was projected a year ago for the 2008-09 fiscal year.

But Spitzer budget spokesman Jeffrey Gordon said that when all aid is considered - $900 million in foundation aid, $180 million in academic achievement grants and $100 million proposed for “high tax aid” - the total proposal is worth about 94 percent of the $1.25 billion projected a year ago for the 2008-09 fiscal year.

Easton said the plan intended to respond to a court order against the state for failing to properly fund New York City schools, was meant to keep Albany from balancing budgets at the expense of students.

“We recognize it is a difficult fiscal year, but in last year's historic education deal New York state made a bargain with kids that we would fully fund quality education without further delays,” Easton. He said less of an increase in funding means fewer additional teachers can be hired to reduce class sizes among other measures.

“The ball will now be in the legislature's court to fill the gap for local schools left by the governor's budget,” he said.

Statewide, the governor will propose $21 billion in total school aid, compared with $19.5 billion this year, according to Paul Francis, Spitzer's director of state operations. Breakdowns of aid to districts will be released Tuesday.

Spitzer's budget proposal will face opposition from the Democrat-controlled Assembly and the Republican-led Senate during this legislative election year. Spitzer's proposal for school aid, usually the most contentious issue in state budgets, comes when the Democrat is already at odds with the Senate's Republican majority and many Democrats.

Changes last year in the formula that determines how much aid school districts get left Long Island schools - most of which are in Senate districts represented by Republicans - facing smaller increases than in previous years.

The Republican-led Senate fought back and got another $100 million in “high tax aid” statewide for districts with some of the highest local school taxes. Long Island schools received 70 percent of that aid for the current fiscal year.

On Tuesday, Spitzer will propose that Long Island schools get 60 percent of the $100 million high-tax aid in the 2008-09 fiscal year beginning April 1.

The Democratic governor's plan appears to give Long Island about 8 percent of the state's increase in school aid, compared with the 12.9 percent of the increase in aid they typically have gotten.

That would likely set off another battle between Spitzer and Senate Republican leader Joseph Bruno, who are still trying to decide if they can work together and avoid the sort of conflict that has gridlocked much of Albany since June.

Francis said that over two years, Long Island gets about 10 percent of the statewide aid.

A new funding system that Spitzer had sought to take the politics out of school aid didn't work as planned. In part, the so-called “foundation formula” needed to be adjusted because property values - rising higher in Manhattan than anywhere else - would have caused less aid to be sent to New York City.

So Spitzer is now proposing adding to the foundation aid for New York City, including $180 million in an “academic achievement grant.”

The other “Big Five” districts of Yonkers, Syracuse, Rochester, and Buffalo will get an average increase of 7 percent in school aid.

But as with New York City, more of the aid will be in the form of building aid, which can't be used for daily operations. That could create a bind for schools that expected more building aid based on the state's forecasts in November, the middle of the fiscal year. That forecast, however, was before a drop in projected revenues from Wall Street and from the real estate market, Francis said.

The biggest hit from state aid will be in what is considered the low-needs or wealthier suburban districts, many of which are in Westchester and on Long Island. Spitzer's budget calls for the minimum increase in school aid to be 2 percent in the fiscal year beginning April 1. This year, the minimum was a 3-percent increase.

The spending reflects some of the hard decisions Spitzer has warned of in the budget that will have to cover a $4.4 billion deficit and slowing revenue growth. Layoffs of big-salary Wall Street jobs continue and the national economy is slumping toward what some economists warn could become a recession.

But a governor's budget proposal traditionally provides negotiating room for the Legislature, even though Spitzer has said he wanted to avoid that political game.

“I think people will view New York City as having done very well in this budget by having realized about the entire amount that was expected at the midyear update given a difficult budget,” Francis said.