AUGUSTA — Maine heard from a kinder, gentler Gov. Paul LePage in his State of the State address Tuesday night.

Picking battles on his most common fronts — notably public education — and highlighting Republican-led reforms from the last Legislature, LePage struck an overall conciliatory tone, which Democratic leaders called encouraging.

“Maine families need help, and they are fed up with the partisan political rhetoric,” he said. “They are asking for a lower cost of living and opportunities for the bigger paychecks. That’s all Maine people are asking for. They’ll do the hard work.”

Still, LePage stuck up for his proposed budget for the next two fiscal years. Its most contentious element, cutting revenue sharing to municipalities for a more-than-$200 million hit over the two years, is seen by many as a political non-starter, even among Republicans.

“I do not take pride in this budget,” LePage said in his address. “In fact, I do not like it at all.”

But he pitched it as the best of many evils, saying he could suggest cutting welfare or schools, or raising taxes, which he asked the Legislature not to do.

After the speech, Democratic leaders called that an example of “rhetoric versus reality.”

Assistant House Majority Leader Troy Jackson, D-Allagash, suggested that municipalities would have to make up for the loss of revenue sharing by increasing property taxes.

LePage spoke off-script for most of his speech, which lasted just over an hour, before a joint session of the Legislature in the House chamber.

He spoke of the need for job creation and “bold action” to increase investment in Maine.

He also introduced a smattering of policy initiatives, including saying he would fast-track development of natural gas, which he pitched as a far cheaper alternative to fossil fuel, because “we’re killing ourselves with higher energy costs.”

He also said that, in days, the state will unveil a website showing how “precious tax dollars are spent.”

The most notable new proposal, perhaps, was for education. He said he’s directing Education Commissioner Stephen Bowen to set up an A-to-F grading system for Maine’s public schools, because they aren’t doing what they must to help children.

He also continued his pitch for expanding the state’s charter school system.

“If you believe the status quo is working, you are part of the problem,” LePage said. “You are not part of the solution.”

David Connerty-Marin, a spokesman for the Department of Education, said the grading system won’t come with any penalties or incentives. It will incorporate performance and growth, and for high schools it will include graduation rates and won’t be based on single test scores, he said.

“This is really just about reporting for transparency’s sake,” he said. “At the moment, it’s just a broad set of parameters and it hasn’t been finalized.”

Senate President Justin Alfond, D-Portland, said he needs more details on the grading system proposal to comment, but Jackson feared negative effects on rural schools.

“I’m very concerned about this ranking, how it’s going to work and what it’s going to do to the underserved children,” he said. “Are they going to be asked to leave the school so they can get their ranking up? I feel all kids deserve an education, even the ones that don’t perform as well.”

LePage referred to his past as a homeless youth in Lewiston, saying education saved his life.

“I cannot accept children falling through the cracks and no one doing anything about it,” he said, drawing applause from Democrats and Republicans.

He challenged the Maine Education Association, the teachers union, to set aside a portion of union dues to put “into the classroom,” which he said he would match with a portion of money.

He said Maine has the highest per-pupil administrative costs in the nation.

U.S. Census data doesn’t quite support that claim. In 2009-10, it says, Maine was behind Vermont and the District of Columbia, spending $1,220 per student.

LePage also urged legislators to support his plan to borrow money to pay the state’s $186 million debt to Maine’s hospitals. The borrowing would be repaid with money from a renegotiated wholesale liquor contract.

LePage called it “embarrassing to work for a state government that doesn’t pay its bills.”

In a news conference, Democrats said they are committed to paying hospitals, but liquor money should be looked at in the context of the entire budget.

Despite many quibbles on policy, both sides praised the governor’s tone in his speech.

“I think the governor struck the right tone of passionate advocacy for Maine children and families,” House Minority Leader Kenneth Fredette, R-Newport, said in a prepared statement. “Our policies must, above all else, ensure that Mainers have bigger paychecks, lower bills, and our children have a brighter future right here in the state that we love.”

The governor, wearing a blue tie, gave Alfond a one-armed hug near the House rostrum just before the speech. They have had a publicly chilly relationship so far this session.

After the speech, Alfond, fresh off a long-awaited meeting Monday between LePage and Democratic leaders, said he thinks bad blood may have subsided.

“In 24 hours, it’s ‘Kumbaya,’ ” Alfond joked. “Now it’s time for us to do the important work that’s ahead of us.”

Michael Shepherd can be contacted at 370-7652 or at: [email protected]