Gov. Neil Abercrombie will use the State of the State address on Tuesday to trace Hawaii’s economic recovery, a turnaround essential to the narrative of the governor’s re-election campaign.

The economic rebound has produced a record $844 million state budget surplus and has given the state leeway to replenish emergency reserves and pay down unfunded liabilities in the public-worker health care and retirement funds.

The governor is also expected to renew his call for a minimum wage increase and state-funded preschool, arguing that the economy can bear a pay raise for low-income workers and a state investment in at-risk children.

But Abercrombie has been cautioned by his allies not to boast or overreach, because many state lawmakers, business executives and labor leaders are still skittish about the recovery and the state’s direction. The governor’s low job approval ratings are also warning signs that many voters remain unconvinced about his leadership ability.

"We are on solid financial footing, and we want to continue with that into the future," said Blake Oshiro, the governor’s deputy chief of staff. "We do have very targeted, sustainable programs that we feel are necessary for us to invest in now to secure our future, and so the governor will be talking about those initiatives and why he believes these particular issues deserve some importance and support."

Abercrombie had called for a minimum wage increase in his State of the State address last year. But the issue remains a priority for Democrats in Hawaii and across the nation, who have framed it in terms of income inequality.

State House and Senate negotiators have discussed raising the $7.25-an-hour minimum wage to $9 or more, but have been hung up over how much to increase the 25-cent tip credit, the amount businesses can deduct per hour from waiters, valets and other workers who routinely earn tips.

Abercrombie and other Democrats contend the improved economy justifies an increase to the minimum wage, which has not been raised in Hawaii since 2007. In December, the governor also announced that the state would lower the unemployment insurance tax rate this year on businesses, which could save businesses $130 million, or about $300 on average per worker.

Abercrombie was able to get the Legislature last session to place a constitutional amendment on the ballot in November on whether state money should be used for private preschool, part of the governor’s plan to eventually offer preschool to all of the state’s 17,200 4-year-olds. But lawmakers approved only a fraction of the governor’s preschool spending request, a $6 million expansion of Preschool Open Doors, a child-care program.

Abercrombie is expected to urge lawmakers on Tuesday not to wait for the vote on the constitutional amendment to make additional investments in preschool. The governor has asked for an another $2.5 million for parent subsidies in Preschool Open Doors and $4.5 million for a free preschool program for low-income children at 30 public schools statewide.

Abercrombie is also expected to discuss the homeless, prisons, agriculture and energy. The governor will likely outline the new spending priorities in his $12.2 billion supplemental budget request, a 2.4 percent increase, and $2.6 billion state construction plan, a 218.9 percent increase.

After a difficult first year in office, Abercrombie began using a sports metaphor to mark time in his administration by quarters. The governor is now in the fourth quarter.

The state’s economic recovery should put Abercrombie in a strong position for re-election this year to another four-year term. The last time the state enjoyed such a large budget surplus, Gov. Linda Lingle, a Republican who defied the state’s Democratic tradition, cruised to re-election. No governor has lost re-election since William Quinn, a Republican, in 1962.

But Abercrombie does not have the high job approval ratings that Lingle did in 2006. His fundraising — $3.3 million through last June — has not scared off challengers who are convinced that he is unpopular and vulnerable.

State Sen. David Ige (D, Pearl Harbor-Pearl City-Aiea), the chairman of the Senate Ways and Means Committee, has challenged Abercrombie with an insurgent campaign in the Democratic primary.

Former Lt. Gov. James "Duke" Aiona, a Republican who lost badly to Abercrombie in 2010, said on Friday that he intends to run again. Former Honolulu Mayor Mufi Hannemann, who was beaten easily by Abercrombie in the primary in 2010, has considered switching political parties and running as a Republican.

The Abercrombie campaign is scheduled to debut television advertisements on Tuesday to coincide with the governor’s State of the State address.

Ige, who will be sitting only a few yards away from Abercrombie during the speech in the House chamber, said he does not think it will be awkward.

"I’m out telling my story about why I believe I should be governor," he said. "My conversations and all of my activities are really focussed on that. I’m not trying to be different or trying to highlight the differences. But I think there are significant differences, and those will play out through the campaign."

Ige and state Rep. Sylvia Luke (D, Punchbowl-Pauoa-Nuuanu), the chairwoman of the House Finance Committee, have set themselves up as guardians of the state’s pocketbook. They shaved down Abercrombie’s two-year budget request last session and have strongly hinted they might do the same with the governor’s supplemental budget this session.

Abercrombie’s relationship with majority Democrats in the House and Senate has been bumpy. Although there is always natural tension between the chief executive and the Legislature, many thought that since legislating is embedded in Abercrombie’s DNA — he is a former state lawmaker, county councilman and congressman — he would gel better with lawmakers. Being a Democrat — after eight years of Lingle — was also supposed to help.

Rep. Cynthia Thielen (R, Kailua-Kaneohe) spoke of the fondness that many lawmakers have for former Gov. John Waihee, who received a standing ovation in the House when former lawmakers were honored on the opening day of session Wednesday.

"That isn’t here with Abercrombie," Thielen said. "At all."

Rep. Calvin Say (D, Palolo-St. Louis Heights-Kaimuki), the former speaker, who has been an ally of Abercrombie’s in the House, is more generous about the governor’s performance. He said the governor and his advisers have learned to temper the administration’s approach over the past few years. He also said that Oshiro’s outreach with the House, and the governor’s recent hiring of C. Mike Kido, a legislative adviser who helps with the Senate, has improved the relationship.

"It just shows that he’s learning what it is to be a governor rather than an elected official in the legislative branch," Say said.

Sen. Brian Taniguchi (D, Makiki-Tantalus-Manoa) said Abercrombie still needs to do better at consulting with lawmakers and explaining his policy agenda. Many lawmakers often express surprise, for instance, when the governor announces a policy stand or new state program.

"It’s been sort of hot and cold," Taniguchi said of the relationship. "I think we tend to agree on a lot of things. But there is also a sense that there needs to be a little bit more consultation, even beforehand, before he announces certain things."