BATON ROUGE, La. (AP) - The head of a construction and engineering firm urged lawmakers on Saturday to restore money for state colleges and universities that Gov. Bobby Jindal has proposed to cut.

Warning that Louisiana is on the verge of taking a "permanent step backward" in higher education, Shaw Group Inc. founder and CEO Jim Bernhard urged Senate leaders to fill a budget gap that university officials say would lead to program cuts, furloughs and layoffs.

Legislators are weighing whether to use one-time funds or delay scheduled tax breaks to free up money to offset the steep cuts planned for public colleges and health services next year.

Both ideas face opposition from Jindal, who says the state should shrink the size of government to cope with years of projected revenue shortfalls.

Jindal's executive budget proposes $219 million in cuts for higher education and the reduction would have been twice as high were it not for the inclusion of federal economic stimulus dollars in the spending bill.

Bernhard told the Senate Finance Committee that proper funding for higher education is key to creating a "knowledge-based" economy. The state's failure in recent years to spend sufficiently on higher education has cost Louisiana economic opportunities, he said.

"We have never been able to recruit a knowledge-based company, no matter what incentives we give," Bernhard said.

He blamed the state's historic failure to finance higher education and the educated workforce it produces for his company's decision three years ago to open an engineering office in Charlotte, N.C. The office now employs 1,200 people.

"Certainly, Baton Rouge was not anywhere close to the available talent and labor pool that we needed," Bernhard said.

The comments appeared to strike a chord with some committee members, who are preparing changes to the $27.9 billion state budget. "To have a CEO of a Fortune 500 company come to the Senate to talk to us, I think is impressive," Sen. Jack Donahue, R-Covington, said.

Though the budget bill would cut a broad array of government services, the proposed cuts to higher education have caused the most hand-wringing at the Capitol. Education officials have warned that reduced budgets would destroy progress made in recent years to align Louisiana institutions with its Southern peers.

Bernhard's comments came three weeks after his Baton Rouge-based corporation announced it would return $13.5 million incentives from a state economic-development fund and forgo a forthcoming $28.5 million next year from a "mega-project" development fund. The CEO has said he would rather see the money spent on higher education or other needs.

The House has restored roughly $100 million to education by increasing tuition, recouping the Shaw money and tapping a tax-amnesty program still awaiting approval from the Legislature.

The Senate will debate a proposal to temporarily delay a planned tax cut for middle- and upper-income taxpayers who itemize charitable donations, home mortgage interest and certain medical costs on their state income tax forms.

But Bernhard stopped short Saturday of endorsing that plan.