"All state agencies will need to dial back their spending,"Perry said during his annual "state of the state" address beforethe Dallas Regional Chamber. Nearly 300 officials, businesspeopleand civic leaders were on hand for the luncheon at the DowntownSheraton.

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"We will be taking a look at the difference between a want and aneed," the governor stressed, citing the Texas Gulf Coast as anarea of extreme need. He estimates the damage toll will top $11billion. His team is keeping "steady pressure on FEMA" to getreimbursements comparable to Louisiana after Hurricane Katrina in2005, but he added "Ike's financial impact is going to be with usfor awhile."

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In terms of prospective cutbacks, Perry said there is a need for"greater truth in budgeting." He said the reality is state agenciesmust function like Texas businesses and families, both of which aretightening belts and cutting spending.

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Perry indicated the belt-tightening won't be at the cost ofTexas' growth strategy. The upcoming legislative agenda willinclude a governor-backed proposal to use the state gasoline taxfor infrastructure improvements and transportation. Perry ispushing to fund the Department of Public Safety from the generalrevenue coffer to free up the gasoline tax for highwayprojects.

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Not to be ignored is the border. Perry said signs are evidentthat the clamp-down is choking off transit routes although there iswork to be done to cope with transnational gangs that have muscledtheir way into the state.

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Perry reminded the crowd that Texas is the envy of its peers,but it's not sheltered from the global financial storm. "Oureconomy is better than other states to weather the financial stormthat's roiled the nation and the globe," he said. "But, we need toapply the mindset that's made Texas a leader: plan for the worst,pray for the best."

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Perry said the state is well positioned to work through thetough times, with a low unemployment rate and more Fortune 500companies in its bounds than any other state. "These are crucialpillars to continue to strengthen a state that's the envy of thenation," he said. "We need to be good shepherds of the resourcesthat we have."

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