By Brendan O'Brien
MADISON (Reuters) - Wisconsin's Republican Governor Scott Walker, whose tumultuous first year in office saw partisan budget battles, massive street protests and a statewide recall effort against him, focused on job creation and ridding government of wasteful spending in a 'state of the state' speech on Wednesday disrupted by heckling.
During a 45-minute address to members of the state legislature and Supreme Court justices, the first-term governor touted an improved business climate he said has created "thousands of new jobs" after the state lost 150,000 jobs during the three recession-hit years before he took office.
"I believe it is the people of this state who create jobs and not the government," he said.
The governor asked small business owners to hire one new employee this year, in an attempt to invigorate the job market even more throughout the state.
"Imagine how many more people we could get working if we all pitched in together," the governor said.
Five protesters shouted at the governor during his speech and were escorted out of the chamber's upper gallery.
"Liar. Recall. Liar!" one woman screamed from the top row of the gallery before being led out of the chamber by security personnel.
Walker, looking back on his first year in office, said the state is "headed in the right direction." He took credit for a state budget that was balanced without raising taxes, a decreasing statewide unemployment rate, and a decline in school tax levies during his first year.
"We balanced it, without raising taxes, without massive layoffs and without budget tricks," he said of the state budget approved last summer after months of contentious debate centered on Walker's successful push to cut the power of public unions.
Walker lauded those collective bargaining rule changes along with health care reforms he contended saved school districts millions of dollars. He also mentioned creation of the state's "Read to Lead" program, intended to improve the state's reading scores that have slipped in recent years.
Before Walker spoke, a group of more than 100 protesters gathered outside of the Capitol building to decry the governor's conservative agenda. Protesters were also heard chanting in the Capitol rotunda as a protester band played outside, below the Assembly chamber windows.
State Senate Democrats last winter fled the state for a time to prevent a quorum for a vote on Walker's collective bargaining curbs. Hundreds of anti-Walker protesters occupied the Capitol for days while tens of thousands attended rallies outside.
In the end, Walker's Republican allies in both houses of the legislature engineered passage of his reform measures. But the partisan atmosphere still dominates the state with Walker the lightning rod for Democrats and their backers.
Walker in his speech tried to stick to business. He announced a group of business leaders who will be on a Small Business Regulatory Review Board. The panel will have the authority to review and eliminate bureaucratic red tape that stifles job creation, he said.
"I will direct our agencies to work with them to remove antiquated and unnecessary regulations that pose a threat to creating new jobs," Walker said.
He also announced creation of a taskforce charged with finding ways to eliminate wasteful or what he termed fraudulent spending on the part of state government.
"Because I respect the hard working people of Wisconsin, I will continue to be a good steward of the taxpayers' dollar," he said. "Eliminating waste, fraud and abuse is a top priority of my administration."
The Waste, Fraud and Abuse Elimination Taskforce will be charged with creating policies to eliminate $400 million in wasteful spending outlined in a report recently completed by the state's Commission on Waste, Fraud, and Abuse.
Walker's opponents were not mollified by the proposals.
"The governor did not lay out a new course for Wisconsin tonight," said Senator Lena Taylor, one of the Democrats who fled the state last year, after Walker's speech.
Wisconsin has lost jobs for six straight months, according to the state's Department of Workforce Development, she said.
"Instead, Wisconsin was fed a terrible meal of the cruel dishonesty that he has served time and time again. Talks of balanced budgets, lower taxes, job creation and a brighter future simply do not square with the facts," she said.
Walker, elected in the national Republican sweep of 2010, faces a recall election after he forced through the legislature the measure stripping public sector unions of some powers, which set off a firestorm of criticism.
Opponents of Walker last week submitted petitions with more than 1 million signatures to force a recall vote, far more than needed. But Democrats have yet to settle on an opponent to face Walker in a recall election, and he retains a strong base.
A Marquette University Law School poll on Wednesday showed Walker leading Milwaukee Mayor Tom Barrett, whom he beat in 2010, by 50 to 44 percent. Dane County executive Kathleen Falk, who has announced she will run for the nomination to challenge Walker, trails Walker by 49 to 42 percent.
The poll also showed Walker leading former congressman David Obey by 7 percentage points and state Senator Tim Cullen by 10 points. Cullen said last month he would run. The survey of 701 registered voters was taken by telephone from January 19 to 22.
No date as yet been set for the recall election.
(Editing By Peter Bohan)