South Carolina should invest in education and infrastructure while continuing to lower taxes and reject federal Medicaid dollars, Gov. Nikki Haley told a joint session of the Legislature Wednesday night.

The speech marked the final "State of the State" address of Haley's term, and comes in the midst of her re-election campaign. The governor touched on many of the points that were expected: job growth, education, ethics reform, the restructuring of South Carolina's government, and Obamacare. She told legislators in the 37-minute address that her administration has helped foster a low-tax environment that has driven down the unemployment rate and brought jobs to the state.

"The state of our state is strong and we're just getting started," Haley said.

The governor said that legislators should fund new road infrastructure, but vowed to take a stand against any hike in the state's gas tax.

"I will veto any bill that reaches my desk that raises taxes on gasoline," she said. She also said that South Carolina should continue to lower its income tax rate.

Haley also said that more funds should go toward education, particularly in poverty-stricken areas. Democrats were quick to pounce on Haley's focus on education in recent weeks, which they say she only turned her attention to as she began her re-election efforts.

"Leadership makes public education job one, day one instead of waiting four years, until election time, to make our children's future a priority," said Rep. James Smith, D-Richland, according to prepared remarks. Smith delivered the Democratic response to Haley's speech.

Smith described what he called "failings" during Haley's tenure, in particular the hacking of computers at the South Carolina Department of Revenue that revealed millions of residents' personal credit information.

South Carolina also should not reject federal Medicaid dollars, he and other Democrats said.

"We can and must bring our tax dollars home," Smith said.

Haley recognized her likely opponent in November's election, Sen. Vincent Sheheen, D-Camden, who played a role in a restructuring bill passed Tuesday that would hand more authority to Haley and provide more oversight of state agencies by the Legislature. Haley called the restructuring effort "the biggest and most important piece of government reform South Carolina has seen in two decades."

Unlike other legislators, Sheheen left the Statehouse relatively quickly and did not speak to reporters after the speech. He said in a statement emailed to reporters that Haley should have taken more substantial actions during her term.

"For three years, we've listened to Nikki Haley talk and for three years we've watched her fail to lead," Sheheen said in the statement. "South Carolinians watched her oppose expanding four-year-old kindergarten and fail to put forward any ideas on education until it was election time."

Haley's budget plan - currently being weighed by legislators - would provide more education funding, particularly for poverty-stricken areas. She said her experience being taught in a school she called a "brick box" in her hometown of Bamberg was telling. "When I went back to Bamberg to give an anti-bullying speech, the school didn't even have the equipment to show a video," Haley said. "That's wrong. It's immoral. And it has to change."

She called on legislators to change the state's funding formula for education. "But the most glaring failure on our part has been the failure to acknowledge that it simply costs more to educate a child in poverty," she said. "Research shows that the cost of teaching low-income students with proven methods is roughly $1,200 more per child. As a state, we can't afford to ignore that any longer."

South Carolina has faced a number of ethics-related controversies - House Speaker Bobby Harrell, R-Charleston, is under investigation for ethics-violation allegations, and a number of other politicians have faced charges and allegations related to abuse of power. Haley called for an independent body to be able to investigate members of the Legislature, and for more transparent disclosures for politicians.

"We know that South Carolinians want an investigative process they can believe in, and we know that means a truly independent process," Haley said. "No more House members investigating House members. No more senators investigating senators."

Harrell said after the speech that he supports such efforts, and voted last year for a bill that would establish an independent body to investigate ethics complaints and mandate that politicians disclose their private sources of income. South Carolina is one of the only states that doesn't require elected officials to disclose where their income comes from, Haley said.

The bill is currently being debated by the Senate.

"There's a public trust that needs to be restored," Harrell said. "The public ought to know where legislators earn their money." Harrell also said he would support efforts to stop the implementation of Obamacare.

Harrell said that there were few surprises in the speech. He praised Haley's focus on jobs and economic development - the state's most important issue, he said.

Democrats said Haley should support an increase in the state's minimum wage. House minority leader Rep. Todd Rutherford, D-Columbia, called the speech a "missed opportunity."

"Welcome to the club," Rutherford said of Haley's education proposals. "We're glad you adopted some of the Democratic proposals. We've been talking about this for years."

Haley recognized her husband, Michael, who returned recently from Army National Guard service in Afghanistan. She also praised "American Idol" champion Candice Glover, a Beaufort resident, who attended the joint session.

Reach Jeremy Borden at 843-708-5837. Reach Cynthia Roldan at 843-708-5891.