Gov. Linda Lingle expressed concern about the condition of the state's economy this morning but remains optimistic that bipartisan efforts will help navigate the state through the current crisis.

Lingle, delivering her seventh state of the state address before a combined session of state legislators in the House chambers, called 2009 "one of the most challenging years in our nation's history as we confront one of the severest economic crises we have ever faced."

"The daunting task we face in the months ahead is making some very difficult decisions in order to address our immediate fiscal problems," said Lingle, according to the text of her remarks. "These are not decisions that any of us want to make, but they are decisions that must be made."

Lingle noted that the struggling economy has "created a deep hole in our budget that we need to dig out of this session."

"The Council on Revenues has never in its history lowered its projections by so much in such a short period of time," said Lingle. "This downward projection reflects an unprecedented decline in tourism, construction, business activity, and consumer demand brought about by national and international events beyond our control."

Lingle said the state cannot "afford business as usual" and warned that the economy will continue to soften in the near term.

Lingle cautioned that some "unpopular" choices will be made that will reduce services and change the way others are delivered.

A number of projects will be delayed, curtailed, or possibly eliminated, she said.

"We will have to ask government employees, like those who work in the private sector, to accept some reduction in wages and benefits," said Lingle. "Not because we want to, but because we can't afford business as usual. This is a time of shared sacrifice when everyone must be willing to give up something."

With less than two years left in her second term, Lingle has to help navigate the state through what could be painful spending cuts and politically unpopular ideas to raise revenue.

Unless steps are taken, the state has estimated a $75.6 million budget deficit for the fiscal year that ends in June, a $315.4 million deficit in fiscal year 2010, and a $549.8 million deficit in fiscal year 2011.

"Together we will meet both our near-term and long-term obligations by making those decisions necessary to navigate through the the turbulence of the current fiscal crisis and achieve our preferred future," said Lingle. "That future includes energy independence, increased food self-sufficiency, and a 21st century infrastructure that supports existing and emerging industries."

Lingle praised her administration's efforts to combat homelessness, noting that since 2006, the state has built nine emergency and transitional housing projects for "many who previously could only find a night's rest in our parks, beaches, doorways or in their cars."

Nearly 2,800 have utilized the shelters and corresponding social services, Lingle said.

Revising Hawaii's energy production and consumption practices is vital to not only saving money but to furthering the creation of a sustainable state.

Lingle mentioned geothermal projects in Hawaii County, and wind farms on Maui as the type of energy projects the state needs to be supporting.

She noted that Hawaii is the "most oil-dependent state in America."

"A key area where we must bring innovation to bear is ending our over-reliance in imported foreign oil," said Lingle. "Oil pollutes the environment, it sucks billions of dollars out of our economy, and leaves us dependent on the goodwill of foreign countries and companies for our very survival."

She touted a partnership with the federal Department of Energy called the Hawaii Clean Energy Initiative with an established goal of a 70 percent clean energy economy by 2030.

In addition to cutting the amount of imported foreign oil to the islands, Lingle spoke of the need to increase Hawaii's food self-sufficiency and preserve agriculture.

"Increasing our food self-sufficiency will contribute to the state's economic recovery by keeping more of our money here at home," said Lingle. "If we keep just 10 percent of the food we currently import, it would create more than $300 million in economic activity, generate $6 million in taxes, and create 2,300 new jobs."

Lingle said she will direct state agencies, such as schools, prisons and hsopitals to purchase locally grown fruits, vegetables, poultry, eggs, and meat.

Under new rules, Hawaii farmers will receive a 15 percent price preference when placing their bids for state purchases, said Lingle.