LANSING – Michigan is fully committed down the difficult path of renewal and rebirth, having endured some of the most heart-wrenching and painful economic times in history, and it will continue to a newly diversified economy to replace the industrial economy that has gone, Gov. Jennifer Granholm said Wednesday in her final State of the State address.

And hinting at a major budget proposal, that could include a tax restructuring plan coming in a week, Granholm also said approving the 2010-11 budget will require “a large measure of courage.” It will need compromise, she said, and require members of both parties to “put narrow ideologies aside and put the common good ahead of the interests of key constituencies.”

In one of the few allusions to this being her last State of the State address, Granholm said she has been asked about what it has been like being the governor of the state that has been hit harder than any other. “To be honest, it’s had its moments,” she said. But, “I am overwhelmed by a great sense of pride to have shared this moment in history, above all others, with the people of Michigan.

“And in the their strength, their optimism and their contagious courage, I find nothing but hope for the new Michigan on the other side,” she concluded.

In the address that lasted some 57 minutes, Granholm also offered a rebuttal to the assailing of her economic record by Republicans, several independent observers, some Democrats and the 68 percent of Michigan residents who give her negative marks on her job performance. She outlined many areas where the state has been successful in attracting new companies and jobs during the decade where the state suffered more than any other state economically.

Naming several dozen companies that have come into Michigan in areas like alternative energy, the bio-sciences and new automotive developments, Granholm brought lawmakers of both parties to their feet, cheering.

And she made a major corporate announcement in the speech: that Dow Chemical will locate the manufacturing site for its new “Powerhouse” solar roofing shingle to Midland. The product line could mean as many as 1,200 new jobs by 2014.

“We have pushed forward into an uncertain future determined to find in this new era the opportunity that always defined this amazing place we call Michigan,” she said.

Saying whoever succeeds her and whoever is in the Legislature in 2011 will have new ideas and “that’s good. But, Democrats, Republicans and independents alike will have to confront this truth: We cannot turn back. This plan, diversifying our economy, educating our people, protecting them along the way, this is the path forward.”

She also cautioned and counseled that developing a new, diversified economy will take time. “We didn’t get her overnight,” she said of the state’s depressed economic situation, “and we’re not going to get out of it overnight. There is no silver bullet. I don’t have it; the next governor won’t have it either.” But she said the plan the state has undertaken during her administration to emphasize education and diversify the economy will help the state recoup its economic vitality.

However much the governor painted an optimistic and hopeful portrait of the state’s future, Granholm could not escape the ongoing fiscal and budgetary crisis that has dogged her administration, especially in the last four years when the state has endured two short government shutdowns.

She did not give a hint of her financial proposal that will be included in the budget she outlines next week that most observers expect will include a major tax restructuring proposal.

But she was sharply critical of the Legislature for the budget process that has plagued the state. She demanded that the Legislature complete the 2010-11 budget by July 1, saying the budget process lawmakers have followed in the last years is broken. “It’s a last-minute, crisis-driven disaster. We must do better,” she said.

In enacting a new budget, however, Granholm also called on the Legislature to approve funding for the “Pure Michigan” ad campaign. She also called for more revenues to finance transportation and road improvements.

To applause and cheers, she also said the state had to restore the Michigan Promise Scholarship which was cut in the 2009-10 budget. She said she would put the scholarship back in her budget, saying there would be a novel way to finance the scholarship and that it would be geared toward keeping graduates of state universities in the state. But neither she nor her staff at a briefing before the address would provide greater details of the proposal, saying those would come at the budget presentation.

However, state Republicans in a Twitter message (see related story) charged that the promise of a way to finance the scholarship was the hint of a tax increase.

She also said she would not support any more cuts to education. She did not specify if that applied to all levels of education in the state – K-12, community colleges and universities – or just to K-12 schools. University of Michigan Regent Andrew Richner said Granholm’s Chief Operating Officer, Daniel Krichbaum, told him the pledge applied to both K-12 and higher education.

Unlike previous State of the State addresses, Ms. Granholm introduced few new proposals, and those she did focused on the state doing more to promote entrepreneurial development. Several will be implemented unilaterally by the Michigan Economic Development Corporation and do not require legislative action.

The proposals included:

The state expanding training programs for individuals wanting to become entrepreneurs at 12 sites across the state. The program will work in tandem with the Kauffman Foundation of Kansas City which specializes in entrepreneurial education and development to help graduate 1,000 students in a 10-week program that will provide a kind of mini-business degree on the elements of developing markets, getting financing and customer service. MEDC President Greg Main said the state would put $200,000 into the program.

A program working with the Michigan Credit Union League to help expand lending to small businesses. The credit unions have committed $43 million for loans that would likely average about $20,000 for companies, Mr. Main said. The state will help line up borrowers through the training program it is creating, he said.

Changes to the state’s angel financing tax credit. As it is now structured, an investor does not get the tax credit until some years after making the investment. Under the change, investors will be able to get some of the credit in the year the investment is made. Legislation will be required to make the changes, but officials were hopeful the changes would restart a dormant credit that has been little used, if at all, since being created early in the last decade.

The emphasis on entrepreneurial development drew praises from some business officials, including Rob Fowler, CEO of the Small Business Association of Michigan. Entrepreneurial development has been a major focus of the organizations, and Fowler said he was pleased with the emphasis Granholm gave to the issue.

Granholm also said the state had to take steps to boost funding for transportation. The state has to come up with the necessary money to help meet federal matching funds, she said, which can help spark as many as 10,000 jobs a year.

Not taking advantage of federal funding is like “leaving an 80 percent coupon on the table,” she said. She called for lawmakers to take up the funding proposals outlined in November 2008 by the Transportation Funding Taskforce. That group called for changing the gasoline tax to one based on wholesale prices and to boosting registration fees. Granholm herself, however, has been hesitant to call for fuel tax increases, at least direct fuel tax increases, and that opposition was repeated by her