ALBANY, N.Y (AP) – Republican candidate for governor Bill Weld proposed Tuesday eliminating the personal income tax for people making up to $75,000.

“That’s a living wage,” he said. “I think that would be a great step” to stemming the flow of New York college graduates leaving the state for better opportunities.

Weld spokeswoman Andrea Tantaros said the tax cut plan would cost the state, and save taxpayers, $6.9 billion annually. A single person making $70,000 a year, and taking the standard deduction, would save $3,884 a year, she said. A family with two children making $70,000 would save $2,864.

Weld, the former two-term governor of Massachusetts, said he would pay for the cut, in part, by reducing the state’s spending on the Medicaid health care program for the poor. Weld said New York could save $5 billion a year if it only reduced Medicaid spending to twice the national average. New York now spends more than $40 billion annually on Medicaid, more than any state in the nation.

Weld seeks to be the second person to be governor of two states. Sam Houston was governor of Tennessee from 1827 to 1829 and Texas from 1859 to 1861.

“As one who thinks there’s no such thing as government money, there’s only taxpayers’ money, I don’t generally start out, when I see a tax cut, thinking how am I possibly going to pay for this,” Weld said. “That’s looking at it from the point of view of the government … government doesn’t own that money, taxpayers own that money until government takes it away from them in taxes.”

But another Republican candidate, John Faso, said Weld’s “numbers are wrong.” Faso, the former minority leader of the Assembly, said Weld’s plan actually refers to a savings in federal and local costs _ as well as state _ if Medicaid spending was reduced to twice the national average.

“I’m all for tax cuts,” Faso said, “but it has to be in the context of a balanced budget.”

The annual state Business Council forum featuring Weld and Faso was briefly stolen by small business operators in a question-and-answer session. One woman who started three businesses in the economically hard-hit western New York said she’s heard promises of economic renewal for decades and still there is a “hopelessness” in much of upstate New York.

“The reality is in western New York we are struggling so hard … for 30 years,” said Kathy O’Keefe, whose businesses include Discover N.Y. West in Niagara County. “The problem is in inspiring them to have hope when the government for 30 years has failed them, and that’s the truth.”

She said her tourism office sends people to the Canadian side of Niagara Falls because New York’s Niagara Falls, once “such a jewel” of the state, “looks like Baghdad … How can that possibly happen?”

She said she at first bristled at Democratic candidate Eliot Spitzer’s recent comparison of upstate to Appalachia, but now thinks it’s needed to draw urgent attention to the economy. “I’ve heard the words before. I want to see action,” she said in an interview after.

Wendy Loomis, owner of Loomis Tax Service in Binghamton, said there’s a “prevailing apathy” in the upstate business community. “We’re all feeling it … how are you going to overcome it?”

Faso and Weld said they would turn the nagging problem around by reducing the restrictions on business growth.

Faso said he also pushed for a cap on local school taxes, which polls show are the highest taxes most New Yorkers pay. He pushed, too, for reduced leverage for public worker and teachers unions in negotiating contracts and cuts in the cost of workers’ compensation, pensions, and other obstacles to business growth. He also brought up a case to eliminate the so-called Triborough Law, where benefits and even automatic “step” raises are protected for public unions even after a contract expires.

Faso called these added costs to public spending enacted by Albany the “hidden thief of the taxpayer.”

Faso also called for local “tailoring” of Medicaid to an individual county’s needs, which the Chemung County executive said would save his county as much as $10 million a year.

“This is the type of creative thinking we need,” Faso said.

“Our economic distress is self-inflicted,” Faso told the business operators. “Albany can affect your bottom line often more than your competitors … It’s like Albany designed a car with an accelerator but no brakes … you’re going to crash.”

While GOP Gov. George Pataki called Weld’s income-tax proposal “excellent … a very sound program,” Democrats took aim.

“As with gay marriage, abortion, and eminent domain, Mr. Weld appears to have experienced yet another change of mind,” said Blake Zeff, spokesman for the state Democratic party. “While he may now call for cutbacks in New York, during Mr. Weld’s tenure as Massachusetts governor the rate of spending rose 2.5 times the rate of inflation.”

“Getting lectured by Mr. Spitzer and his mean team on fiscal discipline is ridiculous,” said Tantaros, the Weld spokeswoman. She said Massachusetts increased spending only over Weld’s vetoes, and that Weld hasn’t altered his positions on the other issues.