LANSING – A somber vision of a Michigan future that is less auto-reliant and home to new jobs in the energy sector was painted by Governor Jennifer Granholm in her seventh State of the State address. But the governor also pointed to successes even as the state endures the nation’s longest and deepest recession, notably in attracting film facilities spurred by deep tax cuts and showcasing individual examples of jobless workers who took advantage of retraining and education programs.

The economic problems which have been front and center for virtually the entire six years of her tenure will mean more painful cuts when the governor submits her 2009-10 budget next week, she said as Michigan deals with problems that in the short term will get worse.

Restructuring government over the next year, curbing the use of coal-fired power plants over the next 11 years as a consequence of expanded use of alternative energy and conservation and holding the line on higher education tuition and auto insurance rates were among the issues outlined to a joint meeting of the Legislature.

Befitting the times, the speech did not include proposals for new spending programs, which were present in prior years – such as 2006’s health care plan for low-income persons – even as the economy stumbled.

“The days when our government could be all things to all people are behind us,” Granholm said. “Any honest assessment of our state’s economy has to recognize that things are likely to get worse before they get better. But if there is one thing I want you, the citizens of Michigan, to know this evening, it is this: Things will get better,”

She only touched an a federal stimulus plan that could bring billions of dollars to the state, but said President Barack Obama’s programs are in sync with the state’s plan to reinvigorate the economy with alternative energy, education and training. That stimulus plan is expected to provide substantial infrastructure assistance, and Granholm said her own proposal for funding for roads and bridges will not be detailed until a later time.

What she did declare was that the stimulus plan would not be used for earmarked projects or to prop up state spending, as many states will be forced to do. “While other states will use this federal recovery funding simply to survive, Michigan will use it to move further and faster into a better future,” she said. “But let there be no confusion about this: If anyone thinks we should use the stimulus package to create a bigger government in Michigan, they should think again. I have a veto pen and I will use it.”

She devoted the largest share of her time in the speech to energy, led by the “45 by 20” plan to reduce the state’s use of imported coal and natural gas for power plants by 2020.

“The demand for wind and solar power in this country is about to explode,” Granholm said. “We will seize upon this surging demand for renewable energy to increase the supply of good-paying jobs in Michigan.”

The permitting of several proposed coal-fired power plants, some of which are also tied up in lawsuits, by the Department of Environmental Quality will be delayed while it and the Public Service Commission review the necessity for those projects as well as “all feasible and prudent alternatives.” Officials said it is likely some will not get built.

Stanley Pruss, director of the Department of Energy, Labor and Economic Development and the governor’s chief energy advisor, said it’s important for the state to find ways to expand use of alternative energy. “It is irresponsible for Michigan to not have a balanced energy portfolio that includes renewable sources,” he said.

Pruss said the state is now getting about 24 percent of its electric power from nuclear plants and that the state is saving 2 percent per year with energy conservation, which helps make realistic the goal of cutting imported fossil fuel use.

Also part of the governor’s energy plan is legislation that would allow homeowners and businesses to sell to utilities power they generate with solar panels or wind turbines and new PSC rate-setting rules to capitalize on the alternative energy production by customers.

Customers would also be able to install energy-saving furnaces and make other improvements with no up-front costs, while paying it off with utility bills and through the energy savings.

Pruss said third parties or utilities could front the money for the energy upgrades, which would then be paid over time with energy bills with customers also benefiting from the long-term energy savings.

A proposed upgrade of the energy distribution system is a long-term proposition and will cost billions of dollars, which Pruss said means it will be paid in incremental steps and with offsetting savings from lower costs as renewable sources become less expensive.

The governor also proposed creation of a Michigan Energy Corps under which unemployed workers would install weatherization on public buildings and homes and install renewable energy technology, with a goal of completing work at 100,000 homes and 1,000 public buildings in the next year.

Energy is the state’s single biggest hope for replacing jobs lost in the manufacturing sector, but the governor said other plans are paying off as well. She announced plans by three companies to build $156 million in production facilities in Michigan, which aides said is a signal of success of last year’s film credits in attracting not just specific projects but permanent facilities.

The largest will be at a former General Motors plant in Pontiac where 3,500 jobs are expected to be created by Motown Motion Pictures, with others in Detroit and Northville.

The downsizing of government that Lt. Governor John Cherry is to lead will take place over the next year and will involve citizen input on what services the state should provide, officials said. But they also said changes will likely be recommended and put into place before that year is out, building off of the impending demise of the Department of History, Arts and Libraries, elimination of state support of the State Fair and Upper Peninsula State Fair and a recommended 10 percent pay cut for top elected officials.

Among the goals are to reduce the number of departments from 18 to eight, reform the civil service system, create more public/private partnerships and take advantage of technology to make state government more of a 24/7 operation. Yet to be seen is what operations the state might stop providing, but aides said Cherry’s charge is to set priorities for what the state can operate.

Granholm also said she will ask the federal Environmental Protection Agency take over regulation of the state’s wetlands from the Department of Environmental Quality. The announcement was popular with Republicans, less so with Democrats and environmentalists who worry about the ability of the federal agency to watch over the state’s waters.

Granholm also drew some of her loudest applause, led by House Speaker Andy Dillon (D-Redford Twp.) when she called for the Legislature to move quickly on legislation giving homeowners additional protections against foreclosures.

Move as if it were your house threatened with foreclosure, she said to lawmakers. The measure would not stop foreclosures but provide homeowners with greater protections by requiring advance notice of impending actions.

Other highlights of the address (though some were not enunciated in Granholm’s spoken address):

The Michigan Economic Development Corporation will sponsor a competition among the state’s universities to develop a new curriculum to encourage entrepreneurial education and development in the state.

A Michigan College Access Network will be created using private institutions along with businesses and labor to help ensure students are heading towards college and advanced training.

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