Gov. Eliot Spitzer proposed a lean $124 billion budget Tuesday, and said his plan would close a more than $4 billion deficit.

Spitzer plans to hold spending growth to about 5 percent, the lowest increase since the mid-1990s. He wants to enact a 2.5 percent cut in the growth of funding for state agencies, the State University of New York and the City University of New York.

The governor is also seeking to cut costs by closing facilities such as state prisons, where the inmate population has decreased. Spitzer said he doesn't plan to cut the size of the state work force or propose a hiring freeze.

The budget includes $1.46 billion for schools, $1.2 billion for Medicaid, $1 billion for the state economy and $37 million for child health care. Additionally, Spitzer wants to create a commission to hammer out details of a planned $4.8 billion tax rebate. Under the plan, seniors are expected to see a 40 percent increase in rebates.

The Legislature will propose its revisions to the budget and then pass the measure before Spitzer signs off on the plan.

The budget is for the 2008-2009 state fiscal year that starts April 1.

AP wire reports contributed to this story.For an excerpt of Spitzer's budget address, go to channel 612 on your iO digital cable box and select iO Extra.

Related information:New York State Division of BudgetOfficial budget press release