how do i remove my encrypt local backup password

You can't remove it. You'll have to restore ypour phone and start all over again, the password is part of the backup and can't be removed.

In the iTunes Summary screen, select "Encrypt iPhone backup" if you want to encrypt the information stored on your computer when iTunes makes a backup. Encrypted backups are indicated by a padlock icon, and a password is required to restore the information to iPhone. You may want to write down the password for your backup and store it in a safe place. If you use a Mac, when you set a password you can select to store the password in the keychain. With iOS 4 and later, you can transfer the iOS keychain backup to a new device if you encrypt the backup.

Warning: If you encrypt an iPhone backup in iTunes and then forget your password, you will not be able to restore from backup and your data will be unrecoverable. If you forget the password, you can continue to back up and use the device, however you will not be able to restore the encrypted backup to any device without the password. You do not need to enter the password for your backup each time you back up or sync.

If you cannot remember the password and want to start again, you must perform a full software restore and when iTunes prompts you to select the backup from which to restore, choose set up as a new device.

copied from iTunes: About iOS backups