Jan. 1 (Bloomberg) -- Eliot Spitzer was sworn in as New York's 54th governor today, pledging ``to change the ethics of Albany'' and put state government behind ``policies of opportunity and prosperity.''

Spitzer, 47, a Democrat, took the oath of office in a private midnight ceremony at the governor's mansion in Albany. He was to deliver his inauguration speech in an outdoor ceremony this afternoon on the west side of the state Capitol.

State government failed in the past decade to meet the challenges of ``burdensome property taxes and the health care we can't afford; in the jobs that have disappeared from our upstate cities and the schools that keep failing our children,'' Spitzer said in advance excerpts released by his office.

Spitzer pledged in his campaign to spend billions of dollars more on school aid and work to reduce New York's property taxes, which are 49 percent higher than the U.S. average. He said both goals could be met by extracting savings from elsewhere in the state's $113 billion budget, including the $47 billion Medicaid program, and without raising other taxes.

He was elected by a record 69 percent of voters on a reputation built as state attorney general for eight years, winning multibillion-dollar settlements in investigations of Wall Street, mutual fund companies and insurers.

In his first official actions this morning, Spitzer signed executive orders setting ethical guidelines for state employees, including restrictions on receiving gifts and a ban on campaign donations to the governor and lieutenant governor from appointees to state jobs.

Open Government

Spitzer has vowed to make government more open and eradicate what he calls a ``pay to play'' culture in Albany. Tighter limits on contributions, gifts and legislators' private business interests are needed, he has said.

In the month before Spitzer's inauguration, Senate Majority Leader Joseph Bruno, a Republican from Brunswick, revealed the FBI was investigating his private business activities. Bruno has denied wrongdoing. State Comptroller Alan Hevesi, a onetime Spitzer ally, was forced to resign in a criminal plea-bargain deal for using state workers to drive and care for his wife.

Assembly Speaker Sheldon Silver, 62, wields the most power in the Legislature over the process of selecting a new comptroller and says he will consult with Spitzer on the choice.

The new governor's mission to shake up Albany extended to the decision to hold the state's first outdoor inauguration in more than a century. He called it ``the first test of people's hardiness and willingness to participate in the rigors of government as we envision it.'' The forecast temperature for the ceremony of 41 degrees Fahrenheit (5 degrees Celsius) under cloudy skies was 10 degrees above normal.

No Tax Boosts

Spitzer is due to outline his proposals in more detail Jan. 3 in a State of the State speech and to present a budget plan Feb. 1. He has said larger-than-expected tax collections from Wall Street's record profits and bonus payments last year won't solve the state's chronic problem with spending that exceeds revenue.

Recognizing that New Yorkers already pay the highest combination of state and local taxes in the country, Spitzer said in the campaign that tax increases weren't part of his fiscal strategy. He said higher taxes would hamper economic development, especially in upstate New York, where the population has shrunk as jobs have grown scarcer over the past 30 years.

His property-tax plan would reduce bills $1.5 billion next year and $2.5 billion in three years, with the size of the cut based on the homeowner's income.

Spitzer is the son of Bernard Spitzer, a wealthy New York City real estate developer. He attended private schools before graduating from Princeton University and Harvard Law School.

Attorney General

As attorney general, Spitzer invoked seldom-used state laws to attack abuses in industries whose primary regulators had seen no offenses or overlooked them.

In the securities industry, Spitzer exposed conflicts of interest at investment banks whose stock analysts ridiculed companies in private while publicly recommending them to help their bank win more corporate business. In 2003, 10 Wall Street firms agreed to a $1.4 billion settlement and a reorganization of their research departments.

Spitzer's prosecutions of mutual fund companies, accused of giving guaranteed profits to favored clients by allowing them to trade improperly after the close of business, led to 21 settlements with $3.9 billion of customer restitution. Insurance companies and brokers have agreed to settlements exceeding $3 billion for bid-rigging and accounting irregularities.

Andrew Cuomo, 49, a Democrat taking over today as attorney general, will pick up the unfinished prosecutions, including an attempt to force former New York Stock Exchange Chairman Richard Grasso to give up $190 million of compensation that Spitzer called excessive.

To contact the reporter on this story: Michael Quint in Albany mquinth@bloomberg.net.

Last Updated: January 1, 2007 12:06 EST