Governor David Paterson unveiled a set of sweeping proposals Wednesday to crack down on political corruption -- including term limits for all state office holders -- and promote financial stability, during his second State of the State Address.

"I stand before all New Yorkers with a bold and decisive plan to rebuild our State’s economy into a national model of ingenuity and strength, to rebuild our people’s confidence in the stability of our state," Paterson said in his second State of the State address, "To rebuild our manufacturing base to meet the energy standards of this enlightened age and to rebuild the trust that the citizens of this great state once had in their government."

Paterson called for more ethics oversight and to limit statewide officials to two four-year terms and members of the state Legislature to six two-year terms.

That reform would require an amendment to the State Constitution.

Known as the Reform Albany Act, it would also create an independent Government Ethics Commission to monitor campaign finance, pay-to-play, and good government groups.

The state would provide matching funds to candidates for state office, limit lobbyist contributions, and ban corporate contributions.

“The days of running New York like a payday loan operation must come to an end," said the governor.

It would also strip lawmakers of pensions if they are convicted of a felony.

New York State Attorney General said that Paterson touched upon many issues important to improving the state, but that action is needed instead of just talk.

“To solve these problems in these times will require sustained effort, seriousness of purpose and the ability to build a coalition for change," Cuomo said.

Paterson also renewed his call for a spending cap, once again saying he will not "mortgage our children's future."

“I know this idea has met resistance from the usual suspects in the past,” Paterson said. “But, just as I had fought for reforms to the Rockefeller drug laws, I will fight for this spending cap no matter how long it takes, even if it requires a constitutional amendment.”

In response to the governor's address, State Senate Minority Leader Dean Skelos, a Republican, blamed Democratic members of the Legislature for the state's financial crisis.

"Instead of using stimulus funds to balance the budget, reduce taxes or create jobs – the Democrats in the Senate and Assembly spent every dime, then they raised your taxes and spent even more," said Skelos, pictured right. "Now, Governor Paterson says things will be different. He again said he will not raise spending or taxes. We certainly hope this time he really means it."

Skelos says his conference will fight to restore the STAR property tax rebate program, and fight higher property and school taxes.

Republican candidate for governor Rick Lazio also criticized Paterson's speech, saying the governor is ignoring the state's budget deficit.

Lazio, who earlier in the day marched in the Three Kings Parade, also told NY1 that Paterson isn't getting enough support from those in his own party and took a swipe at another potential rival in the race for governor.

"I'd like to see the attorney general, frankly, Andrew Cuomo, step up more and provide some leadership and have some positive statements about the need for dramatic declines in some of the spending, and getting our fiscal house in order," Lazio said.

Cuomo declined to comment.

The attorney general is said to be weighing a challenge to Paterson in the Democratic primary, but has not yet announced his intentions

In addition to introducing ethics and economic reform, Paterson unveiled the Excelsior Jobs Program, which will provide tax incentives for targeted growth industries; the Sustainable Neighborhoods Project, which will revitalize housing in urban areas; and, the Manufacturing Legacy Program, to promote manufacturing in the state.

State Comptroller Thomas DiNapoli said that while he does agree with all of Paterson’s proposals laid out Wednesday, he said he believes change is necessary.

“Governor Paterson has laid out an ambitious agenda to try and restore some of that faith. I don’t agree with everything in that agenda, but I do agree that state government needs to take a serious look in the mirror. And that self-examination should include a real reconsideration of our budget process.”

Meanwhile, a fiscally-conservative think tank is proposing a few ideas to bridge the state's multi-billion dollar budget gap.

A report from the Empire Center for New York State Policy suggests freezing the salaries of teachers and other state workers, putting caps on school aid and Medicaid spending, and selling off state-owned golf courses, ski resorts and off-track betting agencies.

The group says all the proposed changes would save the state $30 billion over three years.

And while he's normally vocal about the state's affairs, Mayor Michael Bloomberg did not have a strong reaction to the governor's speech, because the address did not offer many specifics for the city.

However, the mayor did say if Paterson's budget address later this month includes tax hikes, it could have a negative impact on the city.

"If Albany were to try to balance its deficit, its budget and eliminate its deficit by raising taxes on people in New York City that create jobs in the city and they leave and take their jobs with them or if they want to cut the aid that's really our money that we send up to Albany, if they want to cut that then all bets are off," Bloomberg said.

Paterson also wants term limits for state officials -- something Bloomberg says he supports, under most circumstances.

He says that last years term limit extension, that allowed him to run again was needed because it was "a unique time."