PORTLAND, Ore. (AP) - Gov. Ted Kulongoski told Oregonians that the economic outlook for the state is still bright, despite the dark national picture, and detailed plans to improve it in his state-of-the-state address Friday.

"I recognize, as every person in Oregon recognizes, that this is a difficult time," Kulongoski told a crowd gathered in Portland. "It is a time that tests our courage and resolve. But I believe that Oregon's economy is on the right track."

The governor said while job growth is flat in the state, innovative companies and people continue to come here. And he announced broad-ranging goals for education, transportation, health, sustainability and fiscal responsibility he says will bolster the state's future.

His plans ranged from increasing investments in education to raising the corporate minimum tax to grow the state's rainy day fund.

"We are better prepared to weather an economic dip in the short-term, and invest in new funding for education, health care, transportation and sustainable development in the long term," he said.

By the end of the year, Kulongoski said he plans to make it easier for children to enroll and stay on the Oregon Health Plan. And by the end of 2009, he plans to have a cap-and-trade system in place to crack down on polluters.

He said he'll introduce a transportation package that is "larger, greener, safer and more strategic" than anything the state has had.

Kulongoski also said he will push for the Legislature to create a new tobacco tax statute to provide health insurance for children. The issue failed before voters as a constitutional amendment this fall after the tobacco industry led a major campaign to defeat it.

"If tobacco companies think the $12 million they spent ... bought them a permanent victory in this battle, they are sadly mistaken," Kulongoski said.

Republicans were quick to protest the plan.

"The government shouldn't look for somebody, some third party, to always pull money out of," State GOP Chairman Vance Day said.

Day was also less enthusiastic about Oregon's economic picture, saying the state needs to avoid any moves, such as raising a corporate minimum tax, that he said would hurt existing companies. He also discounted some of Kulongoski's other plans to expand services in the state.

"The Democrats are very creative in finding out different ways to take money from us and the return is very minimal," Day said.

(Copyright 2008 by The Associated Press. All Rights Reserved.)