Easley, Perdue confident proposed stimulus will help N.C.

"We intend to put tax cuts into the pockets of hard-pressed middle class families in your states. And we intend ... to start making a down payment on the critical investments that are going to be necessary to sustain long-term economic growth as well as pull us out of the current slump," Obama said as he sat down with governors, nearly all of whom are struggling with budget deficits at home as a result of the recession.

North Carolina Gov. Mike Easley and Governor-elect Beverly Perdue attended the two-hour meeting and said afterward that they were confident the proposed stimulus plan would boost the state's struggling economy.

Declining sales tax and personal and corporate income taxes will likely create a deficit of more than $1 billion in the coming months, according to fiscal forecasts. Some analysts have projected that the deficit could top $3 billion in the budget year that starts next July.

Easley has ordered state agencies to cut up to 5 percent from their budgets, and last week he proposed fast-tracking more than $700 billion in planned construction projects to boost the state economy.

"We tried to figure, is there a dollar figure of projects ready to go," Easley said Tuesday.

Vice President-elect Joe Biden told the governors Tuesday that hopes they will not criticize the incoming administration for raising the deficit as it tries to help them. Many states have constitutions that prohibit deficit spending.

"Forty-one of the states that are represented here are likely to face budget shortfalls this year or next forcing you to choose between reining in spending and raising taxes," Obama said. "Jobs are being cut. Programs for the needy are at risk. Libraries are being closed. Historic sites are being closed."

The recession and the accompanying increase in joblessness translate into higher health care costs for the poor, greater use of food stamps and added strain on welfare programs, and the governors are seeking help in coping.

They have asked for at least $40 billion to help pay for health care for the poor and disabled and perhaps $136 billion more in infrastructure projects like road and bridge repairs in the legislation, which Democrats hope to have ready for Obama's signature as soon as he takes office on Jan. 20.

"I'm not at all naive, but I'm not going to let this whole budget crisis derail the future for North Carolina," Perdue said.

Easley, who led the state through rough economic times in 2001 and 2002, said he told his fellow governors and Obama what has worked before and what hasn't. He also provided them an overview of North Carolina's new mortgage protections, which other states are looking to copy.

Easley said Obama's team wants states like North Carolina to identify specific projects to help create jobs and boost the economy.

"(We're looking at) roads bridges, schools, university projects, maintenance, renovations and repairs – things that have been long put off," he said.

Obama has said he will make an economic stimulus his top priority, and his aides and congressional leaders have been discussing the outlines of a measure that could exceed $500 billion over two years. The president-elect has said his goal is to secure 2.5 million jobs.

Perdue said she hopes a new federal partnership will improve access to the nation's health-care system.

"If the federal government would partner with the states in solving that one dilemma around health care, I believe we could fundamentally rewrite health care services not just in North Carolina but the country," she said.

In his brief remarks, Obama pledged a partnership with the governors, Republicans and Democrats alike.

"As president, I'm not simply asking the nation's governors to help implement our economic plan," he said. "I'm going to be interested in you helping to draft and shape that economic plan."

He made a point of promising Republican governors "the hand of friendship, the same commitment to partnership as a do my Democratic colleagues."

Obama spoke to a bipartisan group of state chief executives at historic Congress Hall that included former and possibly future political rivals. Among those in attendance were Republican Govs. Bobby Jindal of Louisiana and Sarah Palin of Alaska, the GOP vice presidential nominee in this year's campaign.

Speaking to reporters after the meeting, Palin said she was "optimistic" about Obama's bipartisan outreach. She also praised him for inviting governors into his Cabinet.

"On the campaign trail, I tried to convince a majority of voters that governors knew best. Obviously that didn't work, and I'm here and V.P.-elect Biden is there," she said of her former adversary.

Republican and Democratic governors sat at desks in the hall, with no separation by party, and gave Obama and Biden a standing ovation.

Biden singled out Palin for thanks and said his former rival's presence there is a sign that both parties are now confronting problems together. "Maybe walk outside with me later and say hello to me," he said to laughter from the crowd.

"We're going to be talking about what the elements of an economic stimulus plan will be," said Massachusetts Gov. Deval Patrick, a Democrat.

Although no financial solutions were identified during the meeting, many governors acknowledged having an open line of communication with the White House is a step in the right direction.

"I'm really excited to hear both the (president-elect) and the vice president-elect talk about the 'green' economy," Perdue said. "I intend for North Carolina to have a strong 'green' economy, and I believe we're going to have a strong federal program making that happen."

Pennsylvania Gov. Ed Rendell, a Democrat who chairs the National Governors Association, told reporters there are upward of $136 billion in infrastructure projects that are "ready to go," chiefly road and bridge repair projects that can get started especially quickly. Water and sewer projects and school repairs are other needs.

"We are not here asking for money for governors. If we're asking for any money at all, it's for the citizens of our states," Rendell said.

Rendell and NGA Vice-Chairman Jim Douglas, R-Vt., met Monday with House Speaker Nancy Pelosi, D-Calif., who said Democrats will work to have the economic stimulus measure ready for Obama's signature as soon as he takes office Jan. 20.

It's expected to blend funding for infrastructure projects and Medicaid aid to the states with tax cuts, a temporary increase in food stamp payments, as well as investments in renewable energy projects and other "green jobs" initiatives. The NGA has proposed $40 billion over two years to temporarily increase the federal government's contribution to the Medicaid program for the poor and disabled.