By Corrie MacLaggan
AUSTIN, Texas (Reuters) - Texas Governor Rick Perry on Tuesday called for returning excess tax money to taxpayers and tapping the state's rainy-day fund for water and transportation infrastructure.
Perry, 62, the longest-serving governor in the nation at just over 12 years, touted the success of Texas in creating jobs and luring companies to the state.
The Republican called for changing the constitution of the state, the nation's second most populous, to allow the return of tax money to the people who paid it when the state brings in more than needed.
"We've never bought into the notion that if you collect more, you need to spend more," Perry said in his state of the state address, which he delivered to a joint session of the Texas House and Senate.
He also suggested providing at least $1.8 billion in "tax relief." He did not offer details but invited taxpayers to submit ideas online.
He said that to pay for water and transportation infrastructure, $3.7 billion should be taken from the nearly $12 billion rainy-day fund.
Perry has urged lawmakers to resist pressure to spend money freely despite a state forecast of a 12.4 percent increase in revenue available for the 2014-2015 budget compared with the previous two-year budget.
In 2011, lawmakers, facing a budget shortfall, made cuts to education and healthcare. Democrats are calling for restoring those cuts.
"I'm not sure what parallel universe Governor Perry is living in," state Representative Naomi Gonzalez, an El Paso Democrat, told reporters. "We are fortunate we have a surplus, but how are we going to spend that money? Now, we heard from the governor that he doesn't want to spend that money, that we're fine, that everything's rosy."
Perry on Tuesday reiterated his stance that Texas will neither expand the federal-state Medicaid health program for the poor nor create a health insurance exchange, two key parts of President Barack Obama's signature health law.
"Texas will not drive millions more into an unsustainable system, a system that will drive this state into bankruptcy," Perry said. "And we have not changed and will not change our position on that one iota."
State Senator Kirk Watson, an Austin Democrat, said it is important to keep pushing for Medicaid expansion and not to take "no" for an answer.
Perry boasted that other states have been taking cues from Texas, citing Louisiana Governor Bobby Jindal's recent proposal to do away with a state income tax (Texas has no state income tax). Another neighbor, Oklahoma, has considered cutting taxes to compete with Texas.
"If imitation is the sincerest form of flattery, you all should be flattered," Perry told lawmakers.
In Florida, Governor Rick Scott has challenged colleges to offer a $10,000 bachelor's degree. Perry made a similar proposal two years ago and said on Tuesday that 13 Texas universities have announced plans for such a degree.
The universities can offer the cheaper degrees by relying on web-based instruction, having students earn an associate's degree while still in high school, or having students attend a community college before transferring to the university.
Perry's speech did not focus on hot-button issues such as immigration, guns or abortion. The governor, who opposes abortion, has said that he supports banning late-term abortions, a proposal based on controversial medical research suggesting that a fetus feels pain starting at 20 weeks of gestation.
Perry, who a year ago dropped out of the race for the 2012 Republican presidential nomination, has said that he will wait until after the legislative session is over at the end of May to announce whether he will seek re-election as governor or try again for the presidency.
Just 31 percent of Texas voters think Perry should run for re-election, and 62 percent said it is time for him to step down, according to a new poll on Tuesday from Public Policy Polling, a Democratic polling firm. He is one of the most unpopular governors in the country, with a 41 percent approval rate among voters and 54 percent disapproving, the pollster said.
(Reporting By Corrie MacLaggan; Editing by Greg McCune, Tim Dobbyn and Steve Orlofsky)