RALEIGH — In his first State of the State address, Gov. Pat McCrory put his task in sobering terms, saying “too many people are hurting” and vowing to improve the economy in a state with the fifth-highest unemployment rate in the nation.

McCrory, who has been in office six weeks, offered the broad outline of a legislative agenda that includes lower income tax rates, a revamped education system that uses technology in the classroom and a streamlined government that makes customer service its mission.

“Achieving these goals will not be easy. ... But we will do it. We must do it,” said McCrory, who entered through the 11-foot golden doors into the House chamber.

Republican lawmakers gathered for the joint legislative session frequently interrupted the 45-minute speech – the first by a GOP governor in 20 years – with applause and even hoots and hollers, giving the speech a pep rally feel at moments.

McCrory called the economy his No. 1 priority, and said the state needs to get into the drilling business, overhaul its incentives program and cut taxes to improve the business climate.

“We cannot accept the status quo,” he said. “We cannot live off of a brand that needs updating and major revamping to not only compete with our neighbors but compete with the rest of the world.”

McCrory’s remarks strayed little from his campaign message and inaugural themes but did not offer detailed plans. He embraced GOP messages, but also reached for a broader audience with topics such as drug addiction and education. He appeared to read much of his speech from a prepared text, looking down often at a binder on the lectern. Unlike most major speeches, his office didn’t release a text of his remarks.

Response from Democrats

In the Democratic response after McCrory’s address, Durham state Rep. Larry Hall, the House minority leader, cast an alternative vision for the state, calling for boosts in education spending and training programs “to help workers who have lost their jobs retrain and find employment in the new economy.

“Our Democratic philosophy is this – everyone who pays their fair share, works hard and plays by the rules should have a fair shot at success,” Hall said.

Earlier in the day, McCrory signed his first bill into law – a measure that requires the state to label high school diplomas as “career ready,” “college ready” or both after graduation. The effort is designed to put an emphasis on vocational education, an area of concentration for the governor, who campaigned on creating two tracks in the state’s education system to prepare students to fill needed jobs.

“There are two pathways to success,” McCrory said. “This will empower students to achieve their goals.”

McCrory said he would sign his second bill Tuesday, a controversial measure to curtail unemployment benefits for jobless workers. In explaining his support, he said the state needs to pay off the $2.5 billion borrowed from the federal government to pay unemployment benefits to “ensure the unemployment safety net is secure and financially sound for future generations.”

In one of his biggest applause lines of the night, he said: “We are not going to borrow money from Washington with no idea” of how to pay for it.

Republicans pleased

Republican lawmakers reacted with pleasure to McCrory’s speech, saying the governor struck the right tone and pledging to work with him.

Rep. Nelson Dollar of Cary, a leading Republican, said McCrory showed a “cohesive and coherent plan to move our state forward.”

Rep. Bert Jones, a Republican from Reidsville, said McCrory “laid out his priorities well” and that he didn’t expect the governor to give many details. Jones said it was clear that McCrory wants to improve education and make the state “better for jobs and for businesses.”

McCrory won big applause from lawmakers in his call for N.C. Education Lottery money to “actually be used for education.” He wants a portion of the money “from a bloated and frankly annoying advertising and administration costs” to go toward technology for classrooms.

State law currently caps lottery spending on advertising at 1 percent of revenues. No more than 8 percent of revenues can be used for lottery expenses.

Other legislatives measures McCrory requested from lawmakers included a smaller state vehicle fleet with a better tracking system and changes to state personnel law to make it easier to get rid of those state employees who are just “seat warmers.”

Even amid his vision for a smaller government, McCrory emphasized the need to combat drug addiction. He recognized Mike and Rebekah Allred with the Durham Rescue Mission who sat with first lady Ann McCrory in the gallery above the red-carpeted House floor.

He called them “two heroes” who fought off their drug addictions and turned around their lives. “As a former mayor, I have seen firsthand the collateral damage to families, our communities and taxpayers if we continue to sweep these issues under the rug,” McCrory said.

To help addicts, McCrory said, the state needs to spend more on drug courts to divert offenders from the criminal justice system. Republican lawmakers cut $2 million from drug courts in 2011, forcing some to shut down and others to survive solely on local money.

Another institution McCrory wants to revive that Republicans cut in the latest budget is the Education Cabinet, which brings leaders of all levels of education – from K-12 through the universities – together to set strategies. Former Democratic Gov. Bev Perdue kept the Education Cabinet going for a few years, but Republicans cut funding for its coordinator.

Dollar, a House budget writer, said the Education Cabinet under Perdue wasn’t doing anything, but McCrory is serious about bringing them all together. “It’s something the General Assembly has been working on in the last two years,” Dollar said. “The governor’s leadership is going to be very welcome.”

McCrory didn’t offer specifics about one of the major issues looming this legislative session: a possible overhaul of the state’s tax system. In his speech, McCrory said North Carolina needed to lower its personal and corporate income tax rates to the level of surrounding states but he offered limited details on how to recoup the billions in lost revenue, other than closing existing tax loopholes.

In his Democratic response, Hall made it clear he would oppose any effort to cut personal and corporate income taxes by applying the state sales tax to services, such as hair cuts and doctors visits, as Senate Republicans have suggested.

“This means that hardworking taxpayers will have to pay more in taxes overall, while millionaires and big corporations pay less,” he said. “I will not support any tax reform plan that balances huge cuts for billion-dollar corporations on the backs of middle-class families.”

Frank: 919-829-4698