"I am proposing modest but significant, common-sense proposals that include changes to our tax system that will help those earning the least; tax credits to stimulate the economy in an area of chronically high unemployment; fairness in our financial relationships with the counties; help for families dealing with the high cost of long-term care; and continued support for alternative energy use."

While Lingle delivered her speech in the House chamber, dozens gathered in the Capitol atrium to witness the first State of the State address by Hawai'i's sixth governor since statehood and the first Republican governor in 40 years. However, the audience came far from filling the 500 chairs set up in the atrium near six 61-inch monitors showing the televised speech.

Lingle emphasized the importance of restoring trust and integrity to public office. "(The people) must know that at the core of every decision is careful planning, hard work, and unbending integrity rather than partisanship or self-gain. They must trust that the awesome power of government is not being abused."

On that note, Lingle asked lawmakers to ensure that any public official who abuses the public trust will face harsh consequences that include mandatory jail time.

Large gifts to public officials, such as exclusive golf outings and lavish entertainment "will be presumed attempts to bribe and treated as such," Lingle said.

She also said that steps would be taken to take politics out of government, so that no state worker will feel compelled to attend a political fund-raiser or wave signs on the side of the road.

As for concerns about nonbid contracts being awarded to businesses that made large political contributions, "I ask that you enact a law prohibiting contributions by anyone benefiting from nonbid contracts."

She added that she also will propose an omnibus procurement law that will use bidding for state conttracts on the Internet.

The governor said she has asked her budget director for an audit of the state's finances.

Lingle said the Department of Education's "school Community Based Management" has not worked and renewed her call for seven locally elected school boards, saying that she would ask for a statewide ballot referendum on the issue.

She also said the state should support other educational options, such as schools within a school, magnet schools, e-schooling and homeschooling.

A strong proponent of charter schools, Lingle said that the state should open more charter schools and provide them with full financing. "The current DOE attitude toward charter schools is benign neglect at best and antagonistic at worst," she said.

Charter schools should be allowed to hire their own personnel, regardless of unions.

She also called for all public school principals to be removed from labor unions. "Principals are part of management. They have no place in a union. Sure, union leaders and many existing principals like it, but it has proven to be disastrous for children."

Regarding the economy, Hawai'i has one of the highest tax burdens of any state in the nation, Lingle said, noting that she will call for a repeal of taxes on food and medical services when the economy improves.

In the meantime, she asked legislators to reduce income taxes for those who earn the least. "We do this by increasing the standard deduction with a goal of raising it to 50 percent of the federal standard deduction within three years, and eventually to 100 percent."

She said that will mean that 18,000 taxpayers will no longer have to file a state income tax return, while 44,000 will no longer have to itemize their deductions.

"Even though this first step is not as big as I would like, on principle alone this tax-fairness journey must begin now."

Tax relief also was a focus of Lingle's proposals on health care. She wants to eliminate the 4 percent excise tax paid by health insurers on their policies. Lingle said this would "increase dramatically the chances of new (insurance) providers entering the market."

The governor also said officials of HMSA and Kaiser Permanente should be prohibited from sitting on the board that recommends which insurance companies can enter the market in Hawai'i, also as a step to increase competition in the marketplace.

To help people afford long-term care for people who are elderly and have a debilitating illness, Lingle proposed a 30 percent tax credit on the cost of long-term care insurance, to be phased in over a three-year period.

Lingle announced that she has put together a public-private partnership that will provide free prescription drugs "to our most vulnerable citizens." She estimated that this program, already operating at Maui Medical Center, would serve about 20,000 low-income individuals in its first year.

Lingle, a former Maui County mayor, proposed turning back some power to the counties. She wants to let the counties establish their own civil service system, bargain separately with unions, keep revenues from traffic tickets, and set their own fireworks laws.