Barbour Delivers State of the State

Mississippi Gov. Haley Barbour spoke to a joint session of the Legislature to deliver his State of the State Address. The transcript of that speech, as provided by the governor's office, is below:

Governor Tuck, Speaker McCoy, Ladies and Gentlemen of the Legislature, fellow Mississippians: It is my privilege to report the State of our State is better today than it was last year but not as good as it will be this time next year.

Billy and Amy, as I think back to your illnesses last year, your being here tonight is the answer to many prayers. All of us are grateful to God, and we look forward to working with you both this year.

I also ask you to join me in welcoming one of Mississippi's most beloved First Ladies: Pat Fordice. Marsha and I have thought about Pat and her family often since Kirk's death. We appreciate you, Pat, and all you continue to do for our State.

Now let me introduce another First Lady who has been my First Lady for 33 years. Without Marsha, being governor wouldn't be possible for me, and I appreciate this opportunity to recognize her and all she means to me and to Mississippi.

People have really embraced Marsha and have been great to her this last year. She's grateful and honored, but the job of First Lady has its challenges. Somebody asked Marsha if it's hard living in the shadow of the governor. Marsha said "It's not hard living in this governor's shadow; have you noticed how big it is?"

Last year was a productive but challenging year for state government, and 2005 is shaping up to be even more challenging. Late last year Rep. Steve Holland told a newspaper that budget problems were so bad the House "might have to shut the government down." You know how Steve is, so I took all that with a grain of salt, until the power failure that closed the Woolfolk Building for a week. I'm not accusing anybody of anything, Steve, but the Capitol Police reported a big black hearse, with Lee County plates and cattle horns on the hood, was spotted leaving the scene.

The state of Mississippi's economy is certainly better than last year. Indeed, the State Economist reports and the U.S. Department of Labor confirms, Mississippi had more net new jobs created in 2004 than in any year since 1999. Where from January 2000 til January 2004, Mississippi had a net loss of 39,000 jobs; in the last 12 months, we've had a net increase of 10,000 jobs.

The manufacturing sector in our state had lost 66,000 jobs in the last 10 years, 51,000 of those in the four years prior to 2004. Last year the number of manufacturing jobs increased for the first time since 1998.

More important, personal income in Mississippi is increasing at the fastest rate since 1998. We're seeing not only more jobs, but higher paying jobs, and the Mississippi Development Authority tells me they've never had as many prospects to work.

One of the reasons we've turned the corner economically is the work done by this Legislature, last year. In total the 2004 sessions were worthwhile and consequential. I thank you for the results, and the people thank you.

This Legislature passed the most sweeping overhaul of our Workforce Development and Job Training programs ever, making Mississippi a national leader in this area and greatly helping economic development. In a few moments, I'll ask you to build on these very positive reforms.

Last year this Legislature passed the most comprehensive tort reform law in the nation, and it is already making a difference. Our principal medical liability insurance carrier is not raising its rates for the first time in years; other insurers like Blue Cross/Blue Shield are actually reducing some rates; while still others like MassMutual are returning to our state. Abusive mass tort cases have been thrown out, with the courts telling out-of-state plaintiffs to go sue in their own states.

Education is the number one economic development issue here and everywhere else, and last year this Legislature not only greatly improved workforce development and skills training, you avoided another major cut in funding for our universities and community colleges; and you increased funding for K-12 by four percent, including fully keeping the commitment to give our school teachers an eight percent raise.

Lost in the disagreements over moving six percent of Mississippi's Medicaid recipients to Medicare coverage were some of the most important Medicaid reforms Mississippi has ever enacted, affecting 100 percent of our Medicaid population. Mississippi is now offering every Medicaid recipient a physical examination and help in finding a reliable place to get preventive health care, and taxpayers should know that, for the first time, Mississippi has started personally interviewing Medicaid recipients to make sure that the only people on our Medicaid rolls are the truly needy.

This Legislature enacted a merger of the Bureau of Narcotics into the Department of Public Safety. Drug arrests are up 73 percent over 2003, and because of the reforms you allowed us to make in our prison system; we're housing these criminals at the lowest possible cost to taxpayers. Safer communities create more jobs.

This Legislature did one more critical thing to help create jobs. You did not raise taxes. Indeed, late last year you passed bonding authority that will lead to the employment of another 3,000 Mississippians.

And yesterday, NASA announced the first direct result of the bond session. Stennis Space Center in Hancock County was named as one of three finalists to be home to the 500-job NASA Shared Services Center. Without the provisions in last fall's bond bill, Stennis would have been eliminated from consideration.

The news media underestimates how productive this Legislature was in 2004, just as they over-emphasize disagreements between you and me. As I hope I've made plain here tonight, while we may have disagreements, I recognize and appreciate what this Legislature achieved last year, from tort reform and workforce to Mississippi's receiving the "2004 Legislative Session of the Year Award" from Americans United for Life, a major national right-to-life organization.

The State of our State is much better than a year ago, but we still have serious problems, especially in the area of state government's financial situation. Yet we have real opportunities to improve education, job creation and crime prevention beyond the good work you've already done.

To that end I am proposing an agenda that can be summed up by three words: Momentum, UpGrade and Streamline. We must continue our Momentum in job creation and economic growth, UpGrade education in this tough budget period and Streamline that budget back into structural balance.

These three subjects are serving the same end: Students in our schools become the workers in our economy, and workers in our economy are the taxpayers who fund our budget. Mississippi students, workers and taxpayers are the focus of my agenda.

Last month the State Economist told the Legislative Budget Committee how Mississippi's economy had grown last year, with more jobs and higher incomes, but he correctly warned that the turnaround accomplished in 2004 is fragile. We can't take this surge of growth for granted; we have to nurture it.

You may recall the Jobs Creation Summit I held before my Inauguration. The three consensus priorities of the 700 business and community leaders were: overhaul workforce development and job training; comprehensive tort reform to end lawsuit abuse; don't raise taxes. You successfully implemented these priorities, and that contributed to our turnaround and job growth.

Later, the McCoy Working Group and Blueprint Mississippi released their recommendations. I took them seriously. In fact, in response to Blueprint's very first recommendation, I formed Momentum Mississippi to act as our state's long-term economic development strategy task force.

Momentum includes more than 100 business, education, development and community leaders from every area of the state. It is chaired by Anthony Topazi, CEO of Mississippi Power, who's with us tonight. Anthony, thank you for your leadership in this critical endeavor.

Momentum Mississippi's first charge was to review the current incentive programs of our Mississippi Development Authority and recommend needed changes. Last week Anthony presented Momentum's recommendations to the Legislature and to me.

After working with Leland Speed, local economic developers and business leaders from around the state, Momentum seeks to align our economic incentives to attract high value, high wage jobs and to increase support for existing industries. Our current incentives are geared almost exclusively to traditional manufacturing and do not encourage high-tech businesses which are likely to pay higher wages, provide greater investment, and have greater potential to expand. While we should and will continue to focus on protecting and expanding our manufacturing base, especially in sectors such as the furniture industry in northeast Mississippi, we must seize the opportunity to attract growing service industries and to build on research and development efforts at our universities by competing with other states for high-technology enterprises.

Our incentives must be flexible enough to serve every area of the state. In a state as large and diverse as ours, one size does not fit all in economic development. Southwest Mississippi's strengths and advantages are different from those of Desoto County or the Coast, and I'm committed to job creation in every part of the state, including southwest Mississippi, which needs and deserves special attention right now.

Momentum Mississippi's plan will accomplish these goals, and I embrace them. Chairman Watson and Chairman Robertson, as well as the Lt. Governor and the Speaker, have been kept apprised of these recommendations, and I urge you to act on them quickly and favorably.

Talking about economic development, I must mention Mississippi Beef Processors. I wasn't Governor when this project was funded, and I have no intention of trying to assess blame. That's the job of the Attorney General and the Auditor. My job is to try to help make sure the taxpayers recover as much of their money as possible, as soon as possible.

But State Auditor Phil Bryant's letter to Governor Tuck and others made me realize I need to discuss this with you and with the public.

In his letter Phil recommended a number of review standards that should be completed before the state commits taxpayer money to an economic development project. Phil is right, but his letter did not make clear that the Mississippi Development Authority already meets every one of those standards of review on every project it does. The public needs to know that. In MDA projects, the private party will put up the lion's share of the investment, and the private investor's money will be at risk. The projects will all be economically viable and able to attract substantial private investment.

The problem Phil identifies comes when MDA is not the lead agency for the state, as was the case with Mississippi Beef Processors. So I agree with the auditor's efforts to require the same high standards that MDA uses, to be used in all state economic development efforts, but I want you and the public to know: MDA already does this.

And please don't let the Mississippi Beef Processors "exception to the rule" prevent you from supporting sound, responsible incentives for job creation and growth. Mississippi will have a lot of opportunities to grow our economy and create jobs for our citizens. In fact, I expect to present a major economic impact project to you in the next 30 days. Please don't let one aberration spoil these opportunities.

Another job creation effort we can undertake this year is to reform the unemployment tax formula. Small businesses in Mississippi are responsible for more than 80 percent of all new jobs in our state. One of the many taxes they pay is the unemployment tax, which goes into an unemployment trust fund and is then used to pay unemployment benefits.
Over the last 20 years, because of flaws in the formula used in our state, we have been collecting much, much more in unemployment taxes than is needed to pay unemployment benefits.

If we don't correct this, every business, large and small, will pay more unemployment taxes than necessary. While none of this excess money can be used for state government costs, we can reduce the tax. And, as other states have done, we can redirect a portion of the new formula to fund additional workforce training programs that help keep unemployment low.

This reform will provide as much as $20 million a year more for our community colleges' workforce programs. With this new money supplementing current appropriations, we can have one of the nation's best programs for attracting and keeping better, higher paying jobs.

Public education, K-12, is the top priority of state government, which is why we spend nearly half the state budget on it. Last fall I made the most comprehensive proposal to reform public education since Governor Winter's 1982 Education Reform Act.

Our Upgrade Education Reform Act of 2005 is the product of a very participatory policy development process, one that involved more than 1,000 educators and community leaders and a number of nationally recognized education experts, such as former North Carolina Democratic Governor Jim Hunt.

Most importantly, in developing these proposals I have benefited greatly from the advice and counsel of more than 200 Mississippi classroom teachers, who serve on the Governor's Teachers Advisory Council. The chairwomen of that Council, five of Mississippi's finest teachers, are here with us tonight. Please join me in thanking them for what they do for our children.

You can look at my entire UpGrade agenda on our website at GovernorBarbour.com, and you will find it focuses on the classroom and puts teaching first. A quality teacher in every classroom is the first element of a quality education, and every child deserves a good teacher.

To put teaching first, I support fully funding the final eight percent pay raise due our school teachers for the next school year. My budget not only funds the teacher pay raise, but it also increases funding for classroom supplies and textbooks as part of focusing on the classroom.

Putting teaching first and focusing on the classroom are about more than money.

Discipline is an indispensable part of any classroom. Teachers can't teach, and students can't learn in an undisciplined, unruly environment. In fact, the Teachers Advisory Council tells me more teachers quit teaching because of discipline problems than because of pay.

My reforms stress discipline: more and better training in classroom management and discipline from our colleges of education where our school teachers are taught themselves. Mentoring. The Teachers Advisory Council stressed the benefits of mentoring, of younger teachers learning from more experienced, successful teachers, especially in the areas of discipline and classroom management.

Strong support of teachers from principals and administrators is necessary. In the worst cases, if we have to use the courts to make parents accountable for their children's bad behavior, we must do it. Our teachers and our children deserve a disciplined environment where learning can take place. I'm going to back up our teachers on discipline, and I ask you to help me.

We must recruit and retain quality teachers, and my plan proposes specifics to try to do so.

And I want us to prepare to pay our better teachers more in the future. My Teachers Advisory Council had concerns that any pay for performance plan be fair, not subject to favoritism and broad enough to make every teacher eligible. I heard them, and I've proposed such a plan for future years; one like North Carolina uses. I urge you to consider it as an initial model for the future.

I also ask you to improve education by liberating our successful schools from the process and bureaucratic requirements of the State Department of Education. Communities whose students score at Level 4 and 5 don't need somebody in Jackson telling them how to run their schools. The people in Jackson County know how to run the schools in Jackson County better than people in Jackson know how to run the schools in Jackson County.

Furthermore, by liberating our best performing schools, we will allow the State Department of Education to give more attention to those schools that aren't yet successful. Liberating successful schools and Home Rule for successful districts will mean more innovation and efficiency in our schools and give taxpayers more for their money.

State Superintendent Henry Johnson has spoken strongly about improving our high schools. Dr. Johnson is right, and I propose redesigning high school to allow every student to choose to earn at least a semester's worth of college credit in his or her senior year. Whether through dual enrollment or Advanced Placement courses, this would be a financial Godsend for parents, who'd save on college expenses, and it would make high school more rigorous.

As an advocate of life-long learning in Mississippi, I propose significant reforms affecting early childhood education. A child who is exposed to letters, words, numbers and conversations will be more ready to learn, and a child who is not, will face sometimes insurmountable obstacles in learning. While the best place to receive this early childhood education is from loving parents who are aware of ways to foster a child's positive development, we must recognize that the ideal is not always attainable or practical.

Because 60 percent of Mississippi's three and four-year-olds are already enrolled in some form of pre-school, we can work through Head Start and private child care to get these kids ready to learn by age five. Programs like Excel by five and others offer enormous capacity to get our pre-kindergarteners ready for school without diverting funds from K-12 and higher education.

I'm grateful to the many of you who have endorsed my UpGrade Education proposal, especially to the Lt Governor and Senate Education Committee Chairman Senator Mike Chaney. Along with Senator Chaney, House Education Committee Chairman Randy Pierce has been helpful and open to considering these reforms, and both have offered excellent ideas of their own.

You know, even in tough budget times, we have to try to improve education. These commonsense reforms are realistic and affordable. I hope you will study them and adopt them.

While my education reforms seek to educate our children, I have another set of proposals designed to better protect our children. We're attacking drug crime in Mississippi because drug crime can destroy our communities and our children. The Bureau of Narcotics, the Highway Patrol, the MS Bureau of Investigation, DPS and our local and federal partners, they are all attacking drug crime, and I want to give them more tools.

I propose we enact laws targeting the manufacture and sale of crystal methamphetamine, which is a horrible plague on our state. Drug criminals use pseudoephedrine, an over-the-counter cold medication, to make crystal meth. Like some other states, we should make pseudoephedrine harder to purchase.

Too often law enforcement finds crystal meth labs in homes where children are present. Those kids are exposed to both the risk of a meth lab explosion and to long-term chemical contamination. We should toughen the punishment for drug criminals who manufacture drugs in the presence of a child, and we should have additional penalties for buying or selling drugs in a child's presence.

To help in this effort, my budget level funds the Mississippi Bureau of Narcotics and the Department of Public Safety, while adding funds for a long overdue trooper school, which will add 50 new, trained and equipped officers to the Mississippi Highway Patrol. Our law enforcement people are doing a great job. Let's strengthen them.

The final set of reforms has to do with our state budget; with taxing and spending.

My solutions were set out in my Operation Streamline II, the Flex Five budget plan.

My budget doesn't raise anybody's taxes. I'm against raising taxes because raising taxes is the enemy of controlling spending, and I believe we must control spending. I propose savings to get our budget back to structural balance.

Under my budget recommendation, most departments and agencies, starting with the Governor's Office, will be required to save five percent, to spend five percent less next year than this year.

Some people believe state government is being run so efficiently that no money can be saved. I am not one of those people. We can run state government much more efficiently, and we can save enormous amounts of money.

To make these savings easier to achieve, I propose every department and agency be given the management authority and flexibility to restructure, right size and operate more efficiently.

This includes removing all departments and agencies from Personnel Board restrictions for one year and providing each with lump sum budgets with the fewest strings attached.

Given the authority and flexibility, we can run state government for less money and provide services at current or better levels. We have proven this can be done.

Last year I asked the Legislature to give all the departments and agencies which report to me such management authority and flexibility. You did not choose to do that, but you did give such authority and flexibility to the Department of Corrections. The Corrections budget had skyrocketed, and it had run large deficits. I appreciate Senate Chairman Bunky Huggins and House Chairman Bennett Malone for supporting these reforms, which have made a difference, and made my point.

What happened? Corrections Commissioner Epps used that authority and flexibility to become more efficient. And this fiscal year the Corrections Department will spend five percent less than last year, not five percent less than predicted but five percent less than in FY '04! And this despite a three percent increase in the number of prisoners incarcerated. That is a $15 million savings in one year by one department. Please join me in thanking Commissioner Chris Epps for getting the job done.

Others can do this, if given the authority. If you will give them the authority and responsibility to do so, other departments and agencies can save at least five percent, a total of at least $100 million next year. That will be a crucial step to returning our budget to structural balance, and it would properly rebase us for the future.

You've seen my budget, so I won't go through it in detail. It gives the highest priority to K-12 education, law enforcement and homeland security and Medicaid.

Under my budget state support for K-12 will be the highest ever, up four percent for the Mississippi Adequate Education Program. MAEP funding will exceed $4,000 per student for the first time ever. The eight percent teacher pay raise is fully funded. Plus, more funds for textbooks and classroom supplies. The K-12 instruction budget would increase 8.3 percent

The non-instruction portions of K-12 would be funded like the rest of state government, requiring a five percent savings, as would universities and community colleges. I worry universities and community colleges are receiving $103 Million less in state support now than five years ago. The community colleges will get some relief if you adopt the unemployment tax plan, and, given flexibility, they and the universities can absorb the savings, but both need and deserve relief soon.

Frankly, that brings us to Medicaid.

The Brookings Institution, a liberal think-tank in Washington, reports many states have had to cut their higher education budgets because of the explosive growth of Medicaid spending. We're one of those. It is why former House Appropriations Committee Chairman Charlie Capps said "Medicaid is a cancer on the state budget."

We don't have any easy decisions about Medicaid. I have proposed savings I believe are necessary and appropriate. Some of you disagree, and that's well and good. I look forward to seeing and considering your proposals.

But I would say candidly, we cannot solve our budget problems or get to structural balance until we get Medicaid spending under control.

While our State has made real progress in many areas, especially job creation, the state budget is a cloud hanging over those of us in state government.

While I propose savings and efficiencies, some propose higher taxes. My opposition to raising taxes remains strong.

I look at our neighbors in Tennessee to reaffirm my position. In 2002, Tennessee passed the largest tax increase in its history, more than $900,000,000; mostly to cover the cost of their version of Medicaid, which they call TennCare. Yet last year they again were faced with a huge deficit and again it was caused by TennCare. A record tax increase
didn't solve the problem because the problem is not that taxes are too low; the problem is too much spending. Now Tennessee Governor Bredesen, a Democrat, has announced that 323,000 people will be removed from the rolls. He is instituting massive savings. He's facing up to the problem. Let's don't make the mistake of raising taxes like Tennessee did. Let's get control of Medicaid spending through savings.

If my savings and reallocations aren't accepted, and if you want to continue Medicaid as is, and fund MAEP at the level some suggest, the tax increase would be in excess of $1 billion, a staggering figure which would stagger our economy. A dollar paid in taxes is a dollar that can't be invested in an expansion or higher wages for employees; that can't pay for your kid's braces or a new set of tires.

These are difficult issues, hard choices. I have made mine; I look forward to working together as you make yours.

The very good news is, if we make the right choices, we can put this budget into structural balance going forward, with our expenditures rebased to fit our revenues. Then next year we will be able to focus on the right new priorities for increased spending.

As I close and we prepare for meeting the challenges of this difficult Session, I remind you to pray for our wonderful men and women in uniform. This month, more than 3,500 of our fellow Mississippians are deploying to Iraq. The 155th Brigade Combat Team. Like a number of you, I was with them at Camp Shelby last month.

These are genuine heroes, who received the call to service, who never hesitated, never faltered. They and their families sacrifice for our freedom, for the cause of freedom in the world. They are fighting a fanatical enemy that is ruthless and hates our very way of life, hates most of all the freedom we cherish.

Marsha and I pray for the 155th and for all our people who wear the uniform of the United States of America. I know you do, too. Let us pray for victory, for their success in destroying fanatical Islamic terrorism and for their safe return to their families and neighbors, to Mississippi, which is so proud of them.

In honor of them and all Mississippians in uniform, wherever stationed, I salute Major General Harold Cross, adjutant General of the Mississippi National Guard, and with him are several Mississippi National Guard Warriors who have just returned from Operation Iraqi Freedom.

Thinking of these men and women surely makes our job seem a lot less difficult, doesn't it?

Be reminded as we depart this beautiful House Chamber tonight, while our challenges are great; our opportunities are greater.

We're on the front edge of a rising tide economically in this country, and we've never been better situated to make the most of it, make the most of it like Delta State's national champion baseball team and Pearl River Community College's national champion football team.

The reelection of the President improves our future. Not everyone here voted for him, but all of you can see how his being in office helps us grow our economy. Senator Cochran, as Chairman of the Senate Appropriations Committee, Senator Lott and our Congressional delegation are tremendous, proven assets. And more and more business leaders, job creators see Mississippi as the best place to locate, to expand, to grow and prosper. And they are right.

As we lift our horizons for Mississippi and raise our expectations for our tomorrows, I'm reminded of William Faulkner's comment in the darkest hours of the Cold War: I believe mankind will not merely endure. We will prevail.

Similarly, I believe Mississippi will not merely come through this budget crisis; we are at the dawn of our greatest hour, when we will usher in for our children a more prosperous, hopeful and rewarding future than our state has ever known.

I look forward to working with you to achieve that future. God bless you. God bless Mississippi and God bless America.


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