CHICAGO — Michigan Gov. Jennifer Granholm Wednesday night delivered her eighth and final state of the state address, saying 2009 was a dividing line after a “a decade of hell.”

“The old Michigan economy is gone,” she told lawmakers at the state capitol, where protesters opposed to some of the governor’s recent proposals gathered outside.

Recalling last year’s automobile makers’ bankruptcies, Granholm said: “Anyone who believed that Michigan would just naturally rebound without making deep and lasting change had a rendezvous with reality in 2009.”

No one could have predicted how bad things were going to get in Michigan, which has been hit by the economic recession harder than any state in the country, the two-term Democratic governor said.

“No state in our nation has had to experience the concentrated job loss Michigan has endured over this last decade.”

The speech comes a week before Granholm will unveil her proposed 2011 budget. She offered few specifics on the spending plan — except to warn that passing the budget would take “courage” — and focused instead on the importance of federal funding and saving money by cutting the size of the government and its health and pension plans.

She singled out Detroit for its recent challenges and new leadership under Mayor Dave Bing, and said the state had secured federal dollars to help tear down the abandoned properties across the city.

A top priority for the state, said Granholm, is capturing more than $2 billion in federal funding that could be lost if the state is unable to come up with 20% matching funds. Lawmakers are considering a number of options to drum up new revenue for the depleted transportation fund, including raising the state’s gas and diesel taxes. The tax hike, which Granholm has supported in the past, is one of several proposals recommended by a task force the governor assembled to study transportation funding.

“You can continue to ignore this problem or you can follow the bipartisan transportation funding task force recommendations on how to fix it,” Granholm told lawmakers.

She also urged lawmakers to support a constitutional amendment that would require the Legislature to pass a final budget by July 1, ahead of the current deadline of Sept. 30. Under the measure, legislators would be required to pass a balanced budget by July 1 or face having their pay docked every day it is not passed.

“The budget process is broken — it’s a last-minute, crisis-driven disaster,” Granholm said. “The pundits are already saying you won’t agree to a budget in this election year. For Michigan’s sake, prove them wrong.”

She told lawmakers that she had spent the last seven years laying a foundation for six new industries to flourish in the struggling state.

“Where the old Michigan economy was all about autos and manufacturing ... the new Michigan economy is much broader: clean energy, life sciences — like bioeconomy and medical devices — homeland security and defense, advanced manufacturing, film and tourism,” she said. “This plan — diversifying our economy, educating our people, protecting them along the way — this is the path forward.”

Also on Wednesday, Oakland County Executive L. Brooks Patterson delivered his 16th state of the county address.

He touted Oakland’s triple-A bond rating, and while warning of problems ahead — including a likely decline in state aid and failure of school districts across Michigan — said the county was well positioned for growth.

With the recent passage of a 2010-2012 budget, Oakland Couty became the only government in the nation to pass a three-year budget, according to Patterson.

“It’s a long-range view of the horizon which gives us plenty of time to make corrections before some distant problem becomes insurmountable,” he said.

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