Wisconsin Governor Scott Walker has put forward a budget that would cut school spending and public worker compensation.
The Republican's bid to balance the budget comes amid protests by public workers against his efforts to restrict their collective bargaining rights.
He said his proposal would balance the state's budget without raising taxes or cutting jobs.
His economic plan stalled last month when senate Democrats fled the state.
"The facts are clear," Mr Walker said on Tuesday. "Wisconsin is broke and it's time to start paying our bills today, so our kids are not stuck with even bigger bills tomorrow."
He said the budget - which cuts $1.5bn (£921m) in aid to public schools and local government - would enable the private sector to create 250,000 jobs in the next four years.
Wisconsin faces a $3.6bn budget deficit over the next two years, and Mr Walker says the restrictions on public-sector unions are necessary to give local governments the flexibility to make cuts quickly in order to meet budget shortfalls.
"Where we must make reductions, we do so wisely, by giving local governments the tools to save even more money than overall reductions in state aid," he said in Madison.
Mr Walker's budget proposal, which must pass in both chambers of the legislature, came as part of a broader economic policy that aims to get the state's budget deficit under control in part by restricting public employees' collective bargaining rights and by requiring them to contribute more to their pensions and healthcare.
The fight, pitting Mr Walker and state house Republicans who control both chambers of the legislature against public sector unions and their supporters, has gained national attention.
And it has come to symbolise broad disputes over who should shoulder the crushing US debt burden, analysts say.
Republicans who in November took control of the US House of Representatives and state capitols across the country praise Mr Walker's bid to balance the budget without raising taxes.
But Democrats and liberals say his proposal unfairly burdens middle-class teachers, prison guards, rubbish collectors and other public workers.
The fight over the Midwestern state's economic policy began last month, when Mr Walker and Republicans introduced a "budget repair bill" that would have barred public workers from collective bargaining over issues other than base wages.
In response, public-sector unions and their supporters massed at the state capitol in protest, and have accused Mr Walker of trying to destroy the unions, which tend to favour the Democrats in elections.
In a bid to force Mr Walker to negotiate, Democratic senators fled the state to deprive the Senate of quorum for a vote, knowing they had no chance of blocking Mr Walker's bill in an up-or-down ballot.
Mr Walker has held firm, on Monday warning that if they did not return, he would be forced to make redundancies.
The latest New York Times-CBS poll suggested 45% of those surveyed across the nation believed states were seeking to limit public employees' benefits in order to balance the budget, while 41% thought the states' goal was to weaken the power of the unions.