Against the backdrop of national economic turmoil, Governor Spitzer’s second executive budget is triggering a backlash from a wide circle of powerful critics, among them the state’s legislative leaders, businesses, fiscal groups, education activists, and the Catholic Church.

Mr. Spitzer yesterday delivered to lawmakers what he considered a compromise — a $126.5 billion spending plan for fiscal 2008–09 that he said avoids serious cuts but contains prudent measures to deal with a spiraling deficit approaching $5 billion.

While Mr. Spitzer won praise from some quarters — congestion-pricing advocates applauded his plan to require the Metropolitan Transportation Authority to create a separate account for a traffic reduction program, and health clinics and doctors cheered his move to pour more money into outpatient care — they were in the minority.

The most scathing response came from the archbishop of the Roman Catholic Archdiocese of New York, Edward Cardinal Egan, who said he considered the governor’s decision to omit a $1,000-a-student private and parochial school tuition tax deduction a breach of trust.

In October, Mr. Spitzer had assured religious groups that the deduction — which was blocked by the Assembly a year ago — would return in his second budget.

“Our respective faiths instruct that commitments are to be taken very seriously,” the cardinal wrote in a January 11 letter to the governor, co-signed by several Jewish leaders. “You can imagine our great concern when we learned of the possibility you would not be fulfilling your commitment to include the deduction in your Executive Budget.”

In the Legislature, which is preparing for a drawn-out battle that some predict will spill over beyond the April 1 deadline, the flashpoints are taxes and school aid.

The Republican Senate majority leader, Joseph Bruno, said he found Mr. Spitzer’s plan to freeze spending on a major property tax relief program to be “unconscionable,” and said the governor broke his promise not to increase taxes by proposing $1.1 billion in fee increases and code regulation changes, including a move to force major online retailers, such as Amazon.com, to start charging state residents an 8.375% sales tax.

Venting the same complaint aired by the city’s teachers union, the Democratic speaker of the Assembly, Sheldon Silver, criticized the governor’s decision for not delivering more of a type of school aid to New York City that comes with union-backed restrictions on how Mayor Bloomberg can spend it.

At twice the pace of inflation, the 5% rate of state spending growth proposed by Mr. Spitzer about matches the average increases that took place during Governor Pataki’s three terms, and is a slight drop-off from a year ago. Lawmakers, who face re-election in November, are likely to try to push the figure even higher.

Mr. Spitzer argued yesterday that pegging spending to what the state estimates as the long-term rate of personal income growth, 5.3%, is “intellectually correct,” saying it would generate surpluses in better economic periods.

“We have dramatically reduced the rate of increased spending,” Mr. Spitzer, comparing his budget to those passed toward the end of Mr. Pataki’s term, said.

Mr. Spitzer, who engaged in bitter, often profanity-laced disputes last year with Mr. Bruno and Senate Republicans, refused to rule out signing a budget that eclipsed his 5.3% benchmark, saying he didn’t want “veto threats” to ruin what he described as a “cordial relationship” with lawmakers.

Administration officials said bringing down the 5% figure further would backfire by forcing localities to increase their own spending and raise taxes.

Critics of the governor warned that Mr. Spitzer is setting the stage for a huge deficit, given the volatility of the national and global markets and mounting fears of a coming recession.

“The prospects for the economy are so uncertain that a 5% increase in state spending seems like a pretty significant leap of faith in terms of where our revenues are going to be,” the president and CEO of the business-backed Partnership for New York City, Kathryn Wylde, said.

A fiscal analyst at the Manhattan Institute, E.J. McMahon, said the governor is “determined to spend everything he’s got,” saying the administration’s prescribed rate of growth would make it impossible for New York to afford broad-based tax cuts.

In designing the budget, the administration assumed a $4.8 billion deficit for the upcoming fiscal year. Mr. Spitzer brought that number down to zero by proposing $2.2 billion in cost-cutting measures, $1.1 billion in fee increases combined with imposing new tax regulations to bring in more revenue, $1.1 billion in nonrecurring revenue sources, and siphoning $337 million from a “rainy day” reserve fund.

One of the biggest cuts was to the School Tax Relief program, which uses state money to lower property taxes by subsidizing school districts and sending rebate checks to homeowners. Mr. Spitzer froze spending on the program, which totals about $4.7 billion, in part by tabling a plan to give middle-class homeowners increases in their rebate checks.

In what is the largest “one-shot” of revenue in his spending plan, Mr. Spitzer is assuming the state will take in $250 million in proceeds from the sale of rights to develop video lottery terminals at Belmont Race Track.

Mr. Silver said he’s firmly opposed to installing the machines at the Elmont track because of his concerns about the effects of gambling on New Yorkers, saying the governor “should not be tempting them to play with limited resources.”

The speaker cited the same point to attack Mr. Spitzer’s plan of leasing the state lottery to a private company to generate billions of dollars in revenue for a higher education endowments for SUNY and CUNY.

Mr. Spitzer, who said in his State of the State address this month that the deficit and the worsening economy would force the state to make “tough choices,” coupled spending cuts with significant growth in a number of areas.

The governor is proposing to increase education aid by $1.4 billion, to $21 billion, and to add $1 billion to the Medicaid budget, which would grow to $46 billion, including federal-matching grants. He preserved the state’s Medicaid benefits, which are among the most generous in the nation, and included funding to cover the federal share of a program that provides subsidized health insurance to children in middle-income families.

Under his budget, the state would also spend more than $1 billion more in capital versus last year, including $2.2 billion for statewide economic development grants, raising its existing outstanding debt, to $53 billion from $50 billion.

The total state workforce, including public university employees, is expected to grow by about 4,000 to almost 200,000 people. The state’s major agencies are growing by 2,000 employees. A top aide to Mr. Spitzer, Paul Francis, said the state would be forced to “outsource” services to more expensive consultants if it had chosen to shed employees.

For Mr. Bloomberg, the governor’s budget was a mixed bag of news. While Mr. Spitzer stuck with his promise to deliver $530 million in additional operating aid to city schools, he sliced in half a revenue sharing program, known as Aid and Incentives for Municipalities, reducing expected state aid this year by about $165 million.

The governor also wants the city to pay $10 million more for the state to administer its personal income taxes and to eliminate a flat refundable tax credit for New York City personal income tax payers earning more than $250,000, a move that city officials say will cost taxpayers $60 million.