COLUMBIA | Gov. Mark Sanford put South Carolina's economy and future into a global picture Wednesday during his third State of the State address.

While stressing the themes of his election campaign and of the past two legislative sessions, Sanford attempted to describe how his vision puts the state in step with global trends.

His programs of income tax cuts, government restructuring, more education choice and tort reform help to make the state more competitive not only with other states but globally, the Republican governor said.

The changes he wants would also help ensure South Carolina's safe footing in an international scene that threatens stability at home, he said.

"I don't know how the situation in Iraq sorts itself out, but I do know the war spreads a gray cloud over what happens in any economy until it is settled," Sanford said.

The nation is spending $6 billion a month on the war, more than the state's annual budget, a $650 billion federal deficit looms over all taxpayers and the dollar is growing weaker.

These trends will have their effect on South Carolina, and the state must prepare for it by being on sound financial footing, Sanford said.

"I can't emphasize enough how important I think it is that we start paying back money borrowed from trust funds before we add new and additional spending," he said.

His budget pays back about $200 million of the $400 million borrowed from state trust funds in the last few years to make up for revenue shortfalls.

Beyond stability, "the question of the night is not how do we survive, but literally how do we thrive?" he asked the lawmakers gathered for his speech.

The changes he wants in taxing, spending and operations will help the state thrive, Sanford said. He credited legislators with making a start but said more is necessary.

"One, we've always got to look at our tax load, and ask the fundamental question, 'How can we lighten it?'" he said.

His proposed income tax cuts will help create jobs, he said, because every location is competing for jobs with tax rates.

"If pieces of the former Soviet Union can be competitive on tax rates, then we can in South Carolina, as well," Sanford said.

Lower taxes can be used to draw more retirees to the state. He said "one of the megatrends in American society" is the retirement of baby boomers, and the state should cash in on it.

"You look up and down the coast, you see an economic engine in the form of retirees," Sanford said.

Competitiveness also means reforming the state education system by making it competitive. He wants to do that by offering income and property-tax credits for private school tuition, as well as fees for attending school in another public school district and for home schooling.

There have been improvements and increased funding for public education, but it is not enough, he said. He doesn't see politics allowing significant changes such as consolidation of school districts, so "what politics won't change, market forces can change," he said.

Other states that have tried expanded school choices have seen improvement in public schools, he said, urging lawmakers to pass the Put Parents in Charge Act that provides the income tax and property-tax credits.

State Rep. Thad Viers, R-Myrtle Beach, said he agrees completely with Sanford on the school tax-credit proposal.

"He hit the ball out of the park with education reform," Viers said. "He couldn't have been more eloquent on the need for it."

But Viers said Sanford's references to global trends were not all relevant to South Carolina, and he wished the governor had put more stress on tort or lawsuit reform.

State Rep. Tracy Edge, R-North Myrtle Beach, said he agrees with most of Sanford's proposals because they could have a lasting impact.

"We have been steeped in some traditions too long and there may be better ways of operating," Edge said.

Sen. Dick Elliott, D-North Myrtle Beach, also said he likes most of Sanford's proposals but his school tax-credit plan must have some accountability in it to pass.

"I thought his issues were right on target with what we probably should be doing in South Carolina today," Elliott said.