Asheville, N.C. — During an economic roundtable Thursday, Gov. Beverly Perdue said her proposed budget would invest in jobs initiatives and provide tax breaks for small businesses.

The announcement provided the first hints at how Perdue will address a ballooning deficit and rising unemployment when she submits her proposed budget to lawmakers next Tuesday.

“We must continue to move North Carolina forward even in these challenging times," Perdue said. "In my budget, I will make targeted investments to create jobs and prepare North Carolina to be an economic leader as our nation recovers. Helping small businesses compete more effectively, developing our work force and fostering innovation and entrepreneurship are all vital to a strong business climate.”

State Employment Security Commission officials reported Wednesday that North Carolina has a record number of people out of work, and the state's 9.7 percent unemployment rate is the highest in 26 years. The unemployment rate also is the sixth-highest in the nation.

Perdue's budget director, Charlie Perusse, said Wednesday that state revenues are more than $1 billion below projections for the year. The state budget will likely have a $3.4 billion hole for the 2009-10 fiscal year, which starts in July, Perusse said.

Perdue's budget plans include allowing businesses with profits of less than $100,000 to exempt the first $25,000 of net income from state tax. Businesses with profits between $100,000 and $200,000 will be able to exempt the first $15,000.

The governor said she also will include several jobs initiatives in her budget:

• Jobs Now: More than $17 million for community college and vocational education courses and programs focused on job training and preparing students for 21st-century careers.

• Green Business Fund: $5 million to encourage the growth of North Carolina businesses that focus on using fuel and other natural resources more wisely and effectively.

• Defense and aerospace: $3 million for expanding North Carolina’s defense and aerospace industry to create jobs.

• Water and sewer infrastructure: More than $47 million to maximize federal resources for water, sewer and other similar infrastructure projects that support economic growth.

• Main Street Solutions: $7 million to create a comprehensive economic development tool to drive regional job creation in small and medium-sized towns and cities.

• Destination N.C.: $1.5 million to brand the state as a business and tourism destination.

Other proposals include expanding the Earned Income Tax Credit from 5 percent to 6.5 percent in 2010, establishing a "founder's credit" to exclude initial stock investments in some start-up companies from capital gains taxes and creating a One North Carolina Small Business Fund to provide $2 million for small companies to match federal innovation grants.