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Rich Pedroncelli, Associated Press
Gov. Brian Sandoval waves to people in the Assembly gallery after making his first State of the State address before a joint session of the Nevada Legislature in Carson City, Nev. Monday Jan. 24, 2011.

CARSON CITY, Nev. — Gov. Brian Sandoval unveiled his vision for a lean, business-friendly government Monday in a sweeping speech that also urged Nevadans to embrace hard, painful solutions to the state's deep recession.

"The Silver State has a long history of economic peaks and valleys, but the state of our state this evening should not be described as just another dip in the road," Sandoval said in his first State of State Speech since taking office this month. "Instead, we find ourselves on the new terrain of a changed global economy, and the crossing is hard."

Sandoval, 47, who took office with a promise to hold the tax rate steady amid record unemployment, bankruptcies and foreclosures, cast himself as the patriarch of a citizenry still reeling from an "economic earthquake" that has stifled consumer confidence and depressed the housing market.

"It is as if the collective Nevada family has gathered around the table — each member learning forward in his or her chair, eager to hear the news," he said. "In this time of sacrifice, our Nevada family looks to us for reassurance, for solutions and for leadership."

But if Sandoval hoped his familiar tone would reassure a state grappling with a 14.5 percent unemployment rate, his speech made clear who his favorite relatives were.

The Republican who promised on the campaign trail to rebuild Nevada by personally recruiting businesses to the low-tax state continued his pro-business message, at one point delivering a sales pitch directly to any out-of-state CEOs who might be listening.

"Nevada is a place you can call 'home' and 'headquarters' with equal measure," he said. "We love our state, and you will, too."

Sandoval, the state's first Hispanic governor, also unveiled his budget proposal Monday, calling on lawmakers to close a $1.2 billion deficit by returning many agencies to spending levels from 2007, before Nevada's tourism-rich economy began to crumble.

Sandoval reinforced his small-government philosophy by announcing a nearly 6 percent reduction in K-12 public school spending and a drop of nearly 18 percent in higher education spending.

He blamed incapable educators for the state's low graduation rates, lingering achievement gap and unsatisfactory test scores, and reprimanded those who blame such failures on inadequate funding instead of embracing reform. Sandoval proposed Nevada transform its schools — some of the worst in the country and among the most underfunded — by eliminating teacher tenure and social promotion, and promoting performance pay and vouchers to private schools.

"It is unacceptable that children in classrooms literally across the hall from one another achieve at dramatically different levels because of the quality of their teacher," he said.

At the university and college level, he championed higher tuition rates as a solution to uncompetitive degree programs and called for higher education leaders to dedicate 15 percent of those tuition increases toward financial aid for low-income students.

Critics have called on Sandoval to reconsider his no-tax pledge given the state's already austere funding of education, social services, infrastructure and other programs tied to Nevada's future financial health.

The Nevada Legislature is controlled by Democrats, but they lack two-third majorities required to pass new taxes or override a veto.

The Nevada Assembly's top Democrat offered tentative praise for Sandoval and promised cooperation.

"Governor, we agree with you on many of the issues you presented," Speaker-elect John Oceguera said in the Democratic response. "We are ready to begin working with you to achieve our goals."

But he suggested the budget problem needs more time to consider.

"We believe the size and scope of Nevada's financial difficulties are greater than the governor indicated — and demand still more thought if the job is to be done right," he said.

Oceguera also urged the governor to think more long-term and commit to a budget that invests in Nevada's outdated infrastructure and underfunded schools.

"A lesson I learned early — you get what you pay for," he said. "We can't stay at the bottom of funding and get to the top of education."

Oceguera said Nevada can be rebuilt. "But we cannot expect businesses to invest in Nevada if we aren't willing to invest as well."

Sandoval, however, said the state's future would be charted by private investments. He unveiled his vision for a new public-private state agency designed to lure entrepreneurs called Nevada Jobs Unlimited, a board whose majority would include business leaders as well as Sandoval and other elected leaders.

He vowed to invest $3 million in rural northern Nevada's broadband technology capabilities and called for a high-speed rail linking Las Vegas to Phoenix and Southern California.

In a speech rich in emotional narratives — Sandoval singled out the plight of two injured servicemen, an overworked police spokesman and a small business being strangled by federal regulations — he mentioned the state's poorest and most troubled only in a passing reference to the evils of big government.

"Our friends have seen their credit ruined," he said. "Someone in our family has lost a job. The house around the corner stands vacant. A neighbor has closed her business. A relative is one trip to the doctor away from financial or physical ruin. Some believe government is the only solution to our current plight. I disagree. Unemployment, foreclosures, bankruptcy — the cure is not more government spending, but helping businesses create jobs."

Sandoval suggested government should play a role in retraining unemployed workers whose job skills do not match the needs of employers. He offered $10 million in a job training program called "Silver State Works."

Sandoval acknowledged in his speech that his ideas will likely spawn debate, but he urged lawmakers to make unpopular but necessary decisions. As if to make his point, he introduced Michelle Rhee, the polarizing former Washington, D.C., schools chancellor who became a public face of education reform.

"We are leading the Nevada family onto a new path and I submit that it is one of progress and ultimate prosperity," Sandoval said. "If we have the courage to make the tough decisions, and there will be many, we will succeed."