CHEYENNE - Gov. Dave Freudenthal on Wednesday urged lawmakers to continue to invest in Wyoming's infrastructure even as the state's latest financial projections warn of falling natural gas revenues.

Freudenthal told lawmakers in his fifth State of the State address that Wyoming needs to continue to spend on highway construction, education and child care to make sure the state remains an attractive place for young, working families.

Freudenthal said the state must resist the call from citizens who say Wyoming should plow all its energy revenues into permanent savings.

"We need to understand that it is a view held by some of the citizens, that what we're really trying to do is become a bunch of trust-fund babies," Freudenthal said. He warned that such a view ignores the reality that building the state requires investment.

Estimates released Wednesday project that the state will have about $542 million in surplus revenue. That comes in addition to the $7.5 billion two-year budget that lawmakers approved last year.

Wednesday's projections from the state's Consensus Revenue Estimating Group are down significantly from October, when the group predicted the state would have $812 million in extra money.

Freudenthal told reporters at a press conference later Wednesday that sluggish demand for natural gas around the country is to blame for the decline, but said it came as no surprise.

"It's been incredibly warm," Freudenthal said. "Somebody told me that the blossoms are blossoming in Washington, D.C. I need a really good cold spell in the Midwest and the Northeast."

"The sky is not falling," Freudenthal told lawmakers, adding that if he had predicted at the end of last year's budget session that the state would have half a billion dollars available in the current session, "not one of you would have believed me."

"Now, we're in a condition where we say, 'Oh, my heavens, we only have half a billion dollars,"' Freudenthal said.

In his draft budget released early last month, Freudenthal had asked lawmakers to approve $250 million in property tax relief. But he said at the time that he didn't expect the proposal to pass.

Instead, Freudenthal urged legislators Wednesday to consider "targeted tax relief." He told reporters later that means he supports exempting up to $5,000 in the assessed value of private residences, a move he said would cost the state about $38 million.

State Rep. Keith Gingery, R-Jackson, is a sponsor of the property tax measure and has said it would save the average homeowner about $300 on his annual state property tax bill.

Freudenthal on Wednesday urged lawmakers to earmark $162 million of the supplemental money to improve highways around the state. He said another $18 million is needed to improve airports.

In other issues, the governor said he hopes legislators this session finally pass a bill to ban open containers of alcohol in vehicles. Proposed legislation has been narrowly defeated in the past.

"Drinking and driving under any guise is not something that we need in this state," Freudenthal said.

Freudenthal also encouraged the Legislature to remove the tax on groceries permanently. The Legislature last year approved a two-year suspension of the tax, but it will return unless there's action to repeal it.