With the General Assembly's "short session" already under way, there is very little time to advance new ideas that could help North Carolina's economy. Even if economists cannot yet officially declare a recession, many people in the state are experiencing hard times and few expect the situation to improve in coming months.

North Carolinians are feeling the squeeze of rising gas prices along with the rest of the country. We're also dealing with plant closings (16,000 manufacturing jobs lost in the past year) and rising unemployment (up from 4.5 percent last March to 5.2 percent this March).

Given national and global economic trends and uncertainties, how can a state really help mitigate the pain and woe? The state can't, nor should it, indulge in the deficit spending of the federal government. Nor do we have the monetary and fiscal tools powerful enough to move the economy as whole.

However, North Carolina is running a budget surplus. This expands the state's potential options and suggests that more could be done to aid dislocated workers and their communities.

The normal reaction to an economic downturn is to pursue policies to ease the pain -- helping the jobless avoid housing foreclosure, upgrading vocational skills and helping families meet basic needs.

Such actions will save many workers from the worst. But the state might do better by taking a different tack to experiment with proactive policies to stem the tide of a recession.

Using hiring subsidies in a counter-cyclical fashion might help encourage business expansion at the very time the rest of the economy is contracting.

Two innovative policies that could hold potential for assisting struggling counties are job growth credits and direct hiring subsidies for unemployed jobseekers. Both these policies could provide a stronger stimulus for hiring new employees and be more cost-effective than current incentives while offering more to smaller firms.

In addition, they could foster development in urban and rural areas across the state and aid directly those workers and communities that are suffering the most economic distress.

The first idea could be set up rapidly and would be attractive to a fairly wide spectrum of different-sized firms. This proposed Job Growth Tax Credit would provide a 30 percent tax credit on the first $14,700 of wages paid for each additional employee over a baseline of employment (perhaps 102 percent).

This would mean that lower-wage jobs are subsidized at a higher rate and more such jobs will be generated. By tying the credits to an indicator, such as a high unemployment rate, the program would automatically end when unemployment rates drop to an acceptable level.

Current programs take a less direct approach, by subsidizing capital investment to increase production and hoping for increased job creation. A Job Growth Tax Credit would be a more direct and cost-effective approach to job creation and would lower the cost of labor for employers and hopefully spur a substitution of labor for capital.

The second idea is a targeted Job Creation Grant program, which would offer small existing businesses direct wage and benefit subsidies for hiring workers who are currently unemployed.

Although more complex to administer, the program could target the 15 most disadvantaged Tier 1 counties (essentially the state's poorest) on a pilot basis. Subsidies could be provided from six to 18 months. The state would pay roughly $6.75 per hour for wages and $1.75 for benefits. This design provides more opportunities than the Job Growth Tax Credit for those most deeply in need of a break.

Discretionary wage subsidy programs have been tried in the past and have shown promising results. One successful example of an employment subsidy program was the Minnesota Emergency Employment Development program. It was started in the 1980s to help address that state's unemployment during a severe economic downturn. The program offered employers wage and benefit subsidies to hire state residents who were unemployed and ineligible for unemployment insurance or workers' compensation. The program enrolled over 42,000 employees and created over 18,000 permanent jobs at a cost of $3,100 per job.

Because such a program utilizes grants, not tax credits, these subsidies would be ideal for new, young and/or small firms. Its funding can be used immediately, not just when the firms have profits or when they file taxes. Moreover, the upfront nature of a grant also means that it could improve a firm's financial position for obtaining bank loans.

We do have some high-potential anti-recessionary options and the time to succeed. We only have to seize it.

(William Schweke is vice president of learning and innovation at the Corporation for Enterprise Development's Durham office. Frank DiSilvestro is a graduate student in public policy at Duke University and a research assistant at CFED.)