RAY HENRY, Associated Press

ATLANTA - Gov. Nathan Deal outlined his agenda Tuesday for Georgia lawmakers, calling for a boost in education funding, new ways to steer drug addicts away from the state's overcrowded prison system and tax breaks that he said would stimulate the economy.

The Republican governor described Georgia's situation as "strong" in his annual State of the State address to lawmakers now that tax revenues are rebounding following a bruising recession that prompted massive cuts in state spending. Despite the signs of a gradual recovery, nearly 10 percent of workers remain unemployed. Deal used the bulk of his address before lawmakers to outline proposals contained in his spend plan that's set for release on Wednesday.

"With a sluggish global economy we still face challenges, but we are beginning to see indications that things are stabilizing," Deal said in prepared remarks.

Among his top goals is increasing funding for beleaguered school systems repeatedly hit with funding cuts over the last few years.

"Our schools are the front line in our effort to create prosperity," Deal said. "It is here we make our most strategic investment in the future."

The governor proposed tapping increased tax collections to boost state spending by roughly $147 million for the K-12 system and $111 million for higher education. He also proposed roughly $60 million in funding to increase pay for teachers and to fund school nurses, two groups that took big financial hits during the recession. He proposed spending nearly almost $2 million on a program that would use mentors to help students read on their grade level by third grade.

Deal repeated an earlier promise to increase the school calendar by 10 days for children enrolled in state-funded pre-kindergarten classes, restoring half of the days he cut last year to help the program stay afloat. The governor will help pay for the extra days by cutting slots for 2,000 pre-k students.

The governor also asked lawmakers to support an overhaul of the state's tax code that he said would improve the business climate and attract jobs. He repeated a call to eliminate the state sales tax on the energy used by manufacturers. He asked to eliminate the sales tax on construction materials for what he described as "regionally significant" projects. Deal also called for retooling existing tax credits so they benefit smaller businesses.

Besides increasing funding for the education system, Deal asked lawmakers to overhaul the criminal justice system in an effort to cut down on prison expenses.

"While these reforms require an initial investment, they will increase public safety, and ultimately save money by creating a more effective corrections system that rehabilitates people, closing the revolving door," Deal said.

He asked state lawmakers to spend more than $15 million to create substance abuse treatment centers in the prison system. That funding would also support specialized courts that offer troubled addicts and veterans an opportunity to stay out of prison if they seek treatment. Deal's budget will include $35 million to pay for new beds in the prison system for those offenders who are deemed a threat to public safety.

"We must make this investment," Deal said. "If we fail to treat the addict's drug addiction, we haven't taken the first step in breaking the cycle of crime - a cycle that destroys lives and wastes taxpayer resources."

Sen. Steve Henson, the Democratic leader in the Senate, said his caucus generally supported Deal's goals, but he still wanted to know where the Republican governor would find the money for his proposals. By law, Georgia must have a balanced budget. Increasing funding for one program can require cutting spending on another. Henson said that Democrats want to carefully examine new tax breaks for businesses since they do not believe that existing tax breaks have created many jobs.

"I wanted to see where he was going to get the money to do each of the things he said," Henson said in an interview. "He didn't say where he was cutting."