In a speech in Hollywood, Angelides unveiled a budget plan that promised $788 million in the "middle class" tax cuts.

At the same time, his plan pledged to eliminate an anticipated $4.5 billion structural budget shortfall during his first 18 months in office through remedies including tax hikes on high-income Californians, closing corporate tax "loopholes" and making state government more efficient.

"As governor, I’ll give a break to hard-working, middle class families for a change," Angelides said in his speech at the Boys and Girls Club of Hollywood. "I will begin by cutting taxes for the people who really need it."

The Angelides campaign said his plan would provide a maximum of $660 in annual tax relief to families earning about $46,000 a year.

In addition, Angelides called for increasing the state’s dependent child tax credit by $200 per child - for taxpayers earning up to $100,000 a year. Under his plan, a two-child family would save $400 in taxes and a four-child family $800, the Angelides campaign said.

Angelides, who previously championed hiking taxes on upper income Californians to raise money for schools, has been roundly attacked by the campaign of Gov. Arnold Schwarzenegger on taxes. The Schwarzenegger camp claims the sum of Angelides proposals would actually cost Californians $18 billion.

Meanwhile, Schwarzenegger appeared Wednesday morning in Sacramento at a news conference with leaders of anti-tax groups, who praised the governor's record and criticized Anglides' plan.

The governor said he would continue to work to solve the state's financial problems by helping the workforce and businesses.

"What is important is for us is to stimulate the economy so that people can benefit," he said.

At the news conference, Dean Andal, a former member of the state Board of Equalization, said Angelides had proposed more than $18 billion in expanded state programs.

"Now he has a middle-class tax cut that he just dreamed up today that he has no way to pay for," Andal said. "I ask you, where's the money going to come from?"

In an effort to deflate such criticism, the Angelides campaign Wednesday released the 2007-08 budget plan that Angelides pledged to present to the Legislature in his first 100 days in office.

He said he would restore the 11 percent tax bracket - in place under former GOP Govs. Pete Wilson and Ronald Reagan - to generate an additional $3.1 billion from California couples with a taxable income of more than $500,000 a year and individuals with taxable incomes of more than $250,000 a year.

In addition, Angelides pledged to raise $2 billion by cutting tax loopholes for corporations and $1.15 billion by cleaning up inefficiencies in state government.

He claimed those remedies, plus a $1.6 billion carry-over balance from this year’s budget, would eliminate the 2007-2008 budget deficit and pay for more than $2 billion in tax cuts and rollbacks in college tuition and fees.

By Peter Hecht and Clea Benson, The Sacramento Bee