DES MOINES, Iowa (AP) — Despite a crushing budget shortfall, Iowa Gov. Chet Culver asked the Legislature on Tuesday for a 2 percent increase in local school budgets and wants lawmakers to restore $100 million that was cut from education in an across-the-board spending reduction.

“This will be a real shot in the arm for some of our schools, especially in rural districts which are already cash-strapped, with depleted reserves,” the governor said in his third report on the state’s condition. “My commitment to education transcends even our most difficult budget challenges.”

Culver outlined his budget priorities in the speech to a joint session of the Legislature, though details of his spending plan wouldn’t be released until the end of the month.

In his condition of the state speech, Culver said he would push to continue expansion of health care insurance to all Iowa children, shift about $50 million from the state’s road construction fund to help pay for the Iowa Highway Patrol and support the recommendation of a panel he created to reorganize state government.

He also repeated his call to offer preschool to all children, saying his budget would include the last installment of a four-year, $60 million commitment to preschool.

The government reorganization panel also proposed changes estimated to save up to $341 million in the first year $1 billion over five years.

“A major reorganization of state government is the next step,” Culver said. “I believe it’s time to rethink the way state government does business. This will also move us closer to the kind of smarter, more efficient government that is our goal and that taxpayers deserve.”

The speech outlines the broad goals that Culver will pursue this session, heading into an election campaign where four Republicans are lining up for the right to oppose him in November.

Culver last month ordered state spending cut 10 percent across-the-board because of a recession-driven drop in state tax collections. Critics have claimed the cut would lead to an increase in local property taxes as local governments and schools scramble to cover the shortfall.

The governor asked lawmakers to head off that possibility.

“I am asking you to pass legislation that requires school districts to spend down a portion of their cash reserves instead of shifting the burden to local property taxpayers,” Culver said.

Local school budgets are a combination of state dollars and local property taxes and lawmakers each year decide how much they will allow those local budgets to increase. Culver asked lawmakers to allow a 2 percent growth for those local budgets, despite the state’s shortfall.

Culver noted he was a teacher at a couple of Des Moines high schools before getting into politics, and schools would always be at the head of the budget line.

“As governor, and as a former teacher my commitment to education transcends even our most difficult budget challenges,” Culver said.

The governor spent much of his speech touting a big borrowing plan he pushed through the Legislature last year. The bonding program spent about $800 million to pay for flood recovery and infrastructure upgrades.

“We’re literally rebuilding our state and our economy at the same time,” Culver said. “And this focus on building for the long haul is now paying big dividends.”

Culver said the effort is helping to pull Iowa out of a deep recession.

“Our business climate — even during this difficult recession — continues to outperform our neighbors, putting us on a clear path to recovery,” he said.

The governor also pushed the Legislature to continue investing in the Iowa Power Fund, which offers money to the alternative energy industry.

“Today there are more than 8,000 new, green jobs in Iowa,” Culver said. “Let’s talks about building the green-collar economy of tomorrow. The Power Fund is allowing us to fast become the silicon prairie of the Midwest and the renewable energy capital of the United States.”

Culver hasn’t declared his candidacy but has made clear he’ll seek a second term. His third report on the condition of the state is likely to serve as a blueprint of his re-election campaign, sketching out what he views as his accomplishments during his first term and his ambitions for his second.

Republicans argue Culver’s ambitious, and costly, agenda is in part to blame for Iowa’s economic problems, but he said he’s dealt with the worst economic times in decades as well as record flooding in 2008.

While Culver conceded his recovery programs have come under fire, he defended his aggressive efforts and fired back against critics of his spending.

“Some politicians and armchair quarterbacks appear to be confused about our current budget situation,” Culver said. “Today the budget is balanced and it has been balanced every single day I’ve been governor.”