HELENA --Declaring "Montana is open for business," Gov. Brian Schweitzer pledged in his State of the State address Wednesday night that he would not raise taxes and will eliminate property taxes on equipment for more than 13,000 small businesses.

"A better Montana begins with the best business climate a state can have because a better business climate means more good-paying jobs," Schweitzer said. "It is time to say that Montana is open for business. This means keeping taxes low, growing existing businesses and marketing Montana to the world.

"We will grow this state's economy, and we will do it without raising taxes," the Democratic governor added, drawing applause.

Schweitzer's pledge rules out any tax increases for any additional money he and the Legislature may have to find to better finance Montana's schools. His budget calls for a $58 million increase over the next two years in school funding, far less than education lobbyists are demanding. The Montana Supreme Court ruled in November that state's current K-12 school funding system is unconstitutional.

Schweitzer did urge lawmakers to fix the K-12 funding problem during the 90-day session, suggesting he didn't want to see it drag out into a special session later this year.

"Please put together a funding formula to invest in the future of Montana, our elementary students," he said. "Please finish the work in 90 days. Invest in the future today."

Much of Schweitzer's 40-minute speech was a repeat of what he has said for the past two years as a candidate for governor and proposals he has announced after his election.

Some of the new or fleshed out proposals in his speech included:

--Expanding the exemption for the state's property tax on business equipment. At present, businesses with business equipment with a total market value of less than $5,000 don't have to pay this tax. Schweitzer would extend that so 13,324 more businesses with equipment of $20,000 or less are exempt. Their savings will be $25 million in taxes over the next decade. Schweitzer also called for freezing the business equipment tax at 3 percent and not letting it phase out if an economic trigger is met.

- Supporting a forthcoming bill by two Butte Democrats, Rep. Art Noonan and Sen. Steve Gallus, to have the state reimburse the cost of premiums for additional life insurance coverage for the 1,370 Montanans serving in Iraq. At present, the federal government provides troops with a $10,000 life insurance policy. If the soldiers buy supplemental life insurance coverage up to $250,000 each, their premiums would be $16 a month each. The bill would have the state later reimburse the Montanans serving in Iraq for the costs of buying the additional life insurance. It would cost $263,040 a year if all of Montana troops participated.

- Backing House Bill 31, by Rep. Don Roberts, R-Billings, to create a state commissioner of substance abuse, prevention and treatment in the governor's office to help lead the fight against substance abuse, especially illegal drug use and particularly methamphetamine. The office would include two other employees and cost about $200,000 a year to fund.

"We are a state of dreamers, we are a state that can make those dreams come true," Schweitzer said. He called Montana "the greatest place on Earth, the greatest place to start a business, raise a family and build a community."

The Whitefish farmer-rancher said he wanted to talk about how he and legislators could take "the greatest place on Earth and make it a little bit better."

His economic development plan called for endorsing proposals by Sen. Jerry Black, R-Shelby, and Rep. Bob Bergren, D-Havre, to require that every gallon of gasoline sold in Montana contain at least 10 percent ethanol manufactured from grain.

Schweitzer called for adding value to energy, mineral and timber resources, developing Montana's coal, natural gas and wind and hydrogen power. He wants to market Montana's products nationally and internationally and recruit new companies here.

"We are committed to a significant effort to bring economic development to the first Montanans," Schweitzer said, referring to the state's seven Indian reservations.

Schweitzer also repeated calls to offer tax credits to the film industry for shooting movies in the state so Montana can once again be "the film capital of the West."

He put in a plug for spending more money on higher education, particularly a series of scholarships he had proposed previously.

As for health care, Schweitzer endorsed proposals by state Auditor John Morrison, Senate President Jon Tester, D-Big Sandy, and House Democratic Leader Dave Wanzenried, D-Missoula, to form insurance purchasing pools for small businesses, offer small businesses tax credits to buy health insurance for employees and expand the Children's Health Insurance Program. He also supports increasing Medicaid reimbursements for health-care providers.

As a 2000 candidate for the U.S. Senate, Schweitzer chartered buses to take Montanans to pharmacies in Canada where they could buy prescriptions for far cheaper.

"I won't rest as your governor until world-class medicine can be purchased at a world price in our Main Street pharmacies," Schweitzer said.

He endorsed tobacco prevention efforts, passing a law banning open containers of alcoholic beverages in moving vehicles in Montana and pledged to play a leadership role in fighting illegal drug use in Montana, especially methamphetamine.

As for recreation, Schweitzer said, "Nothing is more important to Montanans than their ability to access our public lands to hunt, fish and recreate, and nothing will be as central to my administration as protecting those rights and preserving our heritage."

He cited his plan to have Lt. Gov. John Bohlinger head a committee of business people to review state spending to comb state budgets and programs for savings. The goal: $60 million in savings..

He said the administration would solicit ideas from state employees to run government more efficiently. An employee would be honored for the best idea each month by receiving a $1,000 and a specially cast palladium medal.

"It's like silver," he said. "It never loses its shine, just like state employees."

Schweitzer also urged legislators, his Cabinet and staff not to forget they work for the families back home.

"We do not work for the lobbyists that prowl the halls of the Capitol building," he said. "Do not forget who we work for. We work for the families back home."

He called on legislators and his administration to take a hard look at the state ethics code to make sure they keep in mind they work for the folks back home, "not the interests of the special interests who may employ you after you leave the service of the executive branch and the legislative branch."