Obama and Vice President-elect Joe Biden, meeting with state executives in Philadelphia, said they recognize states are struggling to meet constitutional mandates of balanced budgets without sacrificing critical state services or raising taxes.

"Forty-one states are likely to face budget shortfalls this year or next, forcing you to choose between reining in spending and raising taxes," Obama told the National Governors Association in prepared remarks.

Action is needed to jump-start the economy and that action is an economic stimulus for Main Street, save or create millions of jobs, cut taxes for the middle class and "makes a down payment on the investments we need to build a strong economy for years to come," Obama said.

The solution won't come just from Washington but through a partnership between federal and state governments, he said.

"It will come from all of you," he said. "It will come from the White House and the statehouse working together every step of the way."

He said he was looking forward to giving substance to that partnership during his discussions Tuesday with governors on topics such as healthcare, infrastructure, education and home ownership.

As president, Obama said he would ask governors to both design and implement any economic recovery plan.

"Because if we're listening to our governors, we'll not only be doing what's right for our states, we'll be doing what's right for our country," he said. "That's how we'll grow our economy, from the bottom up. And that's how we'll put America on the path to long-term prosperity."