PROVIDENCE -- Governor Carcieri waited almost 15 minutes before acknowledging “the elephant in the room.”

“This has been the most difficult budget since I took office,” Carcieri said this evening as he delivered his State of the State address to a joint session of the General Assembly. “The combined, two-year projected excess of expenditures over revenues was almost $360 million.”

“Balancing this budget has required sacrifices everywhere. We must further reform our entitlements, demand more cost-effective services from our vendors, develop new service models, and reduce our personnel costs. In short, we must reduce our spending,” Carcieri said.

But in his 5th State of the State address, speaking to a host of state leaders gathered in the House chamber, the governor offered no more details on his plans to plug the $360 million shortfall.

The governor is scheduled to release his 2008 budget proposal at 2 p.m. tomorrow.

He did, however, announce major initiatives aimed at improving urban education, transportation and the environment.

Carcieri outlined a plan to pursue renewable energy sources such as wind, water and solar power. In the coming weeks, he said, he will announce the results of a study that determined the best sites for wind turbines across the state. The governor also proposed creating a Rhode Island Power Authority to help manage the state’s renewable energy sources.

And following recent criticism for Rhode Island’s lack of participation in regional efforts to reduce global warming, Carcieri announced that Rhode Island would join the “Regional Greenhouse Gas Initiative.”

“While I am still concerned about how this agreement will impact the cost of energy in Rhode Island, I have been assured that those costs can be offset by credits we will receive from other states,” he said in a copy of the speech provided in advance by his office .

The governor then discussed his plan to improve the state’s transportation infrastructure. Sixty percent of Rhode Island’s bridges need major repair and more than 20 percent of its roads are in poor condition, he said.

“That is why I propose a bold new $70 million highway investment plan. We will fund this effort with a one-time source of funds that can only be used for capital projects. My budget will outline this effort in detail,” he said in the prepared remarks.

In addressing education, Carcieri said that suburban and rural schools “compete well with those in other states.”

Still, he said that in his new budget he would propose increasing state aid to secondary and elementary schools by $46 million.

“This was not easily done,” the governor said. “But if we’re serious about education, we’ve got to push ahead."

Carcieri suggested lifting the moratorium on new charter schools, which he said are getting “good results.” And the governor proposed a new initiative focused on one troubled school district.

“Tonight I am requesting that the University of Rhode Island and the Central Falls school district partner to develop an Urban Academy at Central Falls High School. Bringing the university’s prestige and resources to partner with the high school will be a wonderful boost to the teachers, students, and administrators,” he said in the prepared remarks.

Overall, the governor said, the state of the state is improving.

“I am pleased to say tonight, that with much effort from everyone, the Rhode Island ‘ship of state’ is turning and heading in a new and exciting direction,” Carcieri said. “Steady as she goes.”