Addressing the state at a dark hour and calling it "a time of sacrifice," Gov. Jim Doyle sought to bolster Wisconsin's spirits Wednesday with the bare planks of his seventh and bleakest State of the State speech.

"It is a time when we will be responsible with what we have. This not a time for big new programs," Doyle said in a 43-minute speech devoid of the splashy spending initiatives of past addresses. "What isn't needed will be cut. And unfortunately, some of what is needed will be cut, too."

The speech comes as the state and nation undergo a sharp shift in political leadership and deep financial turmoil, with Wisconsin hemorrhaging nearly 63,000 jobs in the last year. The state now faces a $5.4 billion budget deficit that Doyle acknowledged is likely to grow — nearly the only news in the speech. For the first time in his tenure, the Democratic governor addressed a Legislature now controlled by members of his party following their takeover of the state Assembly in the November elections.

Doyle and Democratic leaders are looking to an $819 billion federal stimulus bill approved by the U.S. House of Representatives Wednesday to help them balance the state budget without steep tax increases or deep cuts in school services and the state's health programs for the needy.

Assembly Minority Leader Jeff Fitzgerald, R-Horicon, rejected Doyle's argument — made using electronic charts in the Assembly Chambers — that the state's financial troubles were due to the recession alone. Fitzgerald attributed them to state spending increases that Doyle had supported.

"We need to put a higher priority on family budgets than the state budget. We need to stop spending more than we are taking in," he said.

U.S. Rep. Tammy Baldwin, D-Madison, a supporter of the House stimulus bill, said in a statement the bailout would provide at least $4.3 billion for Wisconsin, creating or saving more than 67,000 jobs.

But even with billions of dollars in federal help for Wisconsin, the state's condition will remain challenging, Doyle said. The state's unemployment rate, though lower than the 7.1 percent national rate, climbed half a percentage point last month to 5.8 percent — the highest in more than two decades.

Earlier Wednesday, the Legislature voted nearly unanimously to use more federal money to pay extended jobless benefits, saving some $40 million for the state's nearly bankrupt unemployment insurance fund.

Doyle didn't say what spending cuts or tax increases he'd use to close the gap in the budget he's expected to introduce Feb. 10.

But with Democrats now in control of the Legislature, Doyle now stands a much better chance of pushing through proposed taxes on hospitals and oil companies, which were both defeated in the last session by Republicans who then held the Assembly.

Doyle wants to use $70 million of the money generated by the hospital tax over the next 2� years to expand the state's Medicaid health program for the poor to cover an estimated 41,000 uninsured childless adults — his only major new program announced so far and one he didn't mention in his address.

Doyle recognized a Medicaid recipient and medical school student, three members of the Wisconsin National Guard who have served overseas, and Jeffrey Skiles of Oregon, the U.S. Airways co-pilot who helped safely crash land a jetliner in the Hudson River earlier this month, saving all 155 passengers.

Assembly Speaker Mike Sheridan, D-Janesville, praised Doyle's speech as a bipartisan overture that tried to give citizens a "sense of reality" about the challenges ahead.

But Senate Minority Leader Scott Fitzgerald's take on the speech gave a sense of partisan budget fights ahead.

"It was setting us up for the tax increases that are coming," said Fitzgerald, R-Juneau. "The governor painted a picture of gloom and doom."

-- State Journal reporter Mark Pitsch contributed to this report