The New York Sun is reporting that Spitzer is planning on cutting $1 billion from Medicaid:

New York's health care industry is bracing for Governor Spitzer's first budget proposal, which is expected to trim about $1 billion out of projected growth in Medicaid, sources said.

Mr. Spitzer and his budget director, Paul Francis, are wrapping up the governor's spending plan for the 2007–2008 fiscal year, which the governor is due to present to the Legislature by the end of the month.

Perhaps the most closely watched element of the budget is in the area of Medicaid, whose growth the governor has pledged to curtail to pay for high-profile priorities, such as Mr. Spitzer's plan to give homeowners a $1.5 billion property tax break and a campaign promise to settle a multibillion-dollar lawsuit brought by the Campaign for Fiscal Equity that concerns funding for New York City public schools.