JANUARY 9, 2006

“Thank you. Lt. Governor Tuck, Speaker McCoy, ladies and gentlemen of the Legislature, fellow Mississippians. Thank you for being here for my third State of the State address.

I apologize for being hoarse, but I struggled with a bad cold last week…sore throat and all. For you Legislators who think that means my speech will be shorter than last year…don’t get your hopes up!

Last year, I opened my State of the State speech by saying, “It is my privilege to report the State of the State is better today than it was last year but not as good as it will be this time next year.”

In the wake of Katrina, the worst natural disaster in American history, and all the destruction she caused as she made a direct hit on the Mississippi Gulf Coast and slashed through south Mississippi and up through the eastern half of the state, in what condition do we find Mississippi today?

One thing is spectacularly better than a year ago: The return of Mississippi’s 155th Brigade Combat Team from its very successful duty in Iraq. The last few will be home within a week, and several are here with us tonight.

All of us grieve for the families of the fourteen Mississippi Guardsmen who made the ultimate sacrifice in Iraq for the cause of freedom, and I ask that we observe a moment of silent prayer in their honor and memory.

The 155th performed its mission exceptionally well; so we are not only glad to have them home, we applaud their achievements.

When I visited their four forward operating bases in Iraq during the Thanksgiving holiday, I learned they had so successfully cleaned out and cleaned up their area -- which was called “The Triangle of Death” when they were assigned to it in 2004 – that in November, Iraqi Security Forces were conducting the operations the 155th had carried out back in the spring. Their success and that of others like them is why US troops are coming home, turning over their duties to Iraqi forces. Congratulations, 155th, on a job well done.

In the year and a half prior to Katrina, that this Legislature and my Administration had been in office, the state of our state improved significantly and demonstrably.

During that period, on our watch so to speak, the state’s economy grew at the fastest rate since 1995; personal income of Mississippians increased faster than in any year since 1998; and employment – the number of people working – went up the most since 1999.

Those improvements in the state’s economic situation not only helped Mississippi families and businesses; they also helped Mississippi’s government.

The year you and I ran for office, the state’s budget had a $700 million shortfall, a gap equal to 20% of general fund revenue; special funds were raided in the amount of $270 million; one time money was spent on recurring expenses to the tune of hundreds of millions.

The budget you passed in May nearly achieved structural balance, quite an accomplishment in only two years, and it dipped into special funds by only a fraction of the 2003 total. In fact, based on actual revenues collected in the current fiscal year, full structural balance would be achieved in this budget year.

Another major achievement in state finances is that last fiscal year, the state’s bonded indebtedness actually declined for the first time in 18 years. I congratulate State Treasurer Tate Reeves on the job he is doing managing our debt.

The two keys to returning the government to financial balance have been and will continue to be controlling state government spending and increasing state revenue through economic growth and job creation. Remember, we’ve eliminated this $700 million budget hole without raising anybody’s taxes!

I recognize the Legislature has had to make some hard choices…some politically unpopular decisions, and I commend you. The budget for the current fiscal year actually sets spending at 1.75% less than spending for last year.

The second key to digging out of the deep budget hole we found ourselves in has been economic growth. State revenues grew only 2% the year you and I started our 2003 campaigns. The first year of this Legislature and Administration, tax revenue went up 4%; last year it increased nearly 8%. Revenue increases doubled two years in a row, even though we didn’t raise anybody’s taxes. And I hope this makes it easy for you and our viewers to understand why I’m against raising anybody’s taxes. I expect the viewers also understand that in a period fiscal uncertainty this is not the time to reduce revenue by cutting taxes either.

Again, I want to commend you, the Legislature, for making tough decisions. One reason our economy improved and revenue increased was tort reform, which caused insurance rates to fall. Another reason was the reform and increased funding of workforce development and job training. Your passage of the initial Momentum Mississippi legislation will help continue economic growth and stimulate job creation and retention. Getting state spending under control has also been essential to business confidence and maintaining our bond rating.

While the jury is still out on the effects Katrina will ultimately have on our budget, the verdict is clear that Katrina brought out the best in most Mississippians.

Beginning the very night of the storm, my wife Marsha began going to the Coast; working with first responders; finding help for people with special needs; encouraging local officials. She became my eyes and ears, and I’m very proud of you…and grateful to her. One day the SunHerald ran a story referring to Marsha as “an angel among us.”

It was Marsha who first described to me the strength, resilience and self-reliance of the affected people; who told me about both the can-do spirit and the pervasive selflessness she found.

Indeed the single biggest factor in the amazing response to Katrina has been the spirit of Mississippians. From the fateful day of August 29 through every stage of search and rescue, relief, recovery, rebuilding…the affected people in South Mississippi and especially on the Coast have been an inspiration.

Our people didn’t whine or mope around; they’re not into victimhood. Immediately after the storm passed through, they hitched up their britches and began helping themselves and helping their neighbors. The stories of ordinary people performing extraordinary acts of courage and selflessness are extremely common. The first responders, law enforcement, national guard, and military; but also neighbors helping neighbors, churches helping the needy and poor people more interested in others getting assistance. That Mississippi spirit was obvious to people across the country and around the world.

I salute the local elected officials who stayed put, made decisions before as well as after Katrina. Those decisions saved lives, as did the thousands of inland families who took in friends and family before the hurricane struck. The death toll, while large, was remarkably low compared to the enormity of the devastation; the decisiveness of local officials in ordering evacuations played a major role in that. And those local officials deserve immense credit for the fact that continuity of government never broke down in Mississippi as it could have. Those local governments stood tall, and we are going to stand with them, now and in the future.

Three of those outstanding officials are here with us. They are School Superintendents who got their schools back open in record time, helping Mississippians return to their communities and begin rebuilding. Let me introduce Kim Stasny from Bay St. Louis/Waveland, Rucks Robinson from Jackson County and Glen East from Gulfport.

Before discussing our plans to help the devastated areas rebuild and renew themselves, I must again thank the American people for their help.

Katrina, the worst natural disaster ever to hit America, appropriately generated the greatest outpouring of philanthropy and assistance in our country’s history. And that generosity has made a huge difference in our relief and recovery. Corporate America and small businesses, philanthropists and everyday citizens have been incredibly generous; and we genuinely appreciate everyone, especially the thousands and thousands of volunteers who’ve helped.

But I must single out the churches and faith-based groups, who were there on day one and are still there in meaningful numbers today. Theirs were the most powerful and productive efforts, and I must say hundreds of those volunteers – Protestants, Catholics, Jews and believers of other faiths – told me that by God’s grace they feel they got more out of their mission than the people they were helping. What a great blessing these groups, churches, and volunteers have been.

And I’d be remiss not to mention the crucial contributions of our sister states. Those Governors, Democrats and Republicans, sent us their state’s resources in an unprecedented manner, and they made a difference.

There has been plenty of controversy about the federal role in relief and recovery. While it hasn’t been perfect, and in fact couldn’t be, the federal agencies have done a lot more right than wrong. The Coast Guard’s helicopter crews, the U.S. Department of Transportation’s fuel supplies, the Seabees and their expertise all made a huge difference at critical times.

The President has repeatedly extended deadlines for emergency relief and debris removal that provide hundreds of millions of federal assistance dollars. The Bush Administration proposed an unprecedented package of assistance to help the states and people affected by Katrina. And on behalf of a grateful state, I thank President Bush.

A last chapter on the verdict of the effects of Katrina relates to our Congressional delegation, the 109th Congress and its leadership. Mississippi’s delegation worked ceaselessly to get us the assistance we need. Every member, Republican and Democrat; House and Senate. My office and the delegation worked together on a regular, bipartisan basis, and I appreciate the helpful attitude of all six members.

At the end of the day, a few weeks later than had been hoped, Congress passed and the President signed two unprecedented laws to help Mississippi and the Gulf Region not only recover and rebuild but to renew itself. A third important bill will be up for final passage later this month.

The United States government has never given anything like this much money or nearly this much latitude to a state as Mississippi receives under this legislation.

I briefed the Legislature on the details last week, but for our viewers, the Katrina emergency appropriations bill will spend nearly 10 billion in federal dollars in Mississippi, over and above the $15-$17 billion already destined to be spent here under existing federal disaster assistance laws.

Most unprecedented is a program that will allow the state to use approximately $4 billion of federal grant money to help homeowners whose homes were outside the flood plain but were destroyed by Katrina’s storm surge. This was the top priority of the State and for our Congressional delegation, and, even though it had never been allowed before, Congress passed it and the President signed it.

The bill contains funds for highway and bridge reconstruction, to support law enforcement, for environmental restoration, to rebuild our military facilities and for naval shipbuilding. Unprecedented funds for social services and for economic and community development programs are included.

Critically, Congress, with the Bush Administration’s support, amended the original education support provisions so Mississippi would get appropriate assistance for our schools, which have been back open for months. This change was critically important to our state, and we appreciate Secretary of Education Margaret Spellings for helping us get this change made.

Almost simultaneously, Congress passed the Gulf Opportunity Zone Act, which the President had proposed to stimulate private investment in our area. I expect the tax incentives in this law to be extremely important to the rebuilding and renewal of our affected areas. The tax incentives for projects in Mississippi are expected to total in excess of $8 billion, and they will both stimulate essential private sector investment and create jobs.

Our whole delegation worked hard for these bills, but I must specifically thank Senator Thad Cochran, who, as Chairman of the Senate Appropriations Committee, patiently and effectively guided this unparalleled appropriations bill to passage. It is a giant tribute to Thad’s ability and stature that our state is being entrusted with these much needed funds.

The tax bill – the Gulf Opportunity Zone Act – got hung up in the Senate. By the force of his personality and leadership, Senator Trent Lott single handedly broke the logjam and got the law passed.

No state has a pair of U.S. Senators near the equal of Thad Cochran and Trent Lott. They made us proud last month, during our state’s hour of greatest need. We owe them a great debt of gratitude.

We also owe them, the delegation, the entire Congress and the Administration good stewardship of these billions of taxpayer dollars. I take this opportunity to report on behalf of our State, Mississippi will be a good steward of the taxpayers’ money. We are putting into place systems of controls and accountability. We will be held accountable to spend these funds in a reasonable and responsible manner. We will meet that standard.

Because of our Congressional delegation and the federal legislation, we will have the resources we need to rebuild and renew. Because we have strong leaders in local government in the affected areas, continuity of government was never lost and recovery makes progress everyday. And because of the love and commitment of citizens to their communities on the Coast and in South Mississippi, our schools are operating, small businesses are back open, and the vast majority of the people are back in their home communities. All these things cannot help but make one optimistic about the future.

Another special factor makes me even more confident: The work of the Commission on Recovery, Rebuilding, and Renewal. I want to recognize Jim Barksdale, who has done a magnificent job of leading this Commission. Its work has exceeded my greatest expectation.

I was sent the Commission report on December 30, on schedule. It is more than impressive, and it will be – already is – extremely useful as the affected areas go forward.

Importantly, the report is the product of an inclusive, participatory, collaborative process in which literally thousands of Mississippians took part. Although the Commission’s report won’t be available to you and the public until Wednesday, let me mention a few major issues I will ask you to consider after you read the report:

1. Authorizing the formation of regional organizations for delivery of certain public services, as has previously been authorized and implemented by the DeSoto County Regional Utility Authority;

2. Innovative transportation projects that improve evacuation when future storms hit; that divert traffic from Highway 90, so it can again be a tourist-attracting Beach Boulevard; and that allow the Port of Gulfport to recover and rebuild as a stronger maritime cargo operation; and

3. Helping the local governments get back on their feet financially.

On this last point, it is critical to recognize the difference between the fiscal condition of the State and that of many local governments in the lower six counties. At the state level there remains some uncertainty about both revenue and needed expenditures, but as, you will see, of now the State is in good shape on both counts.

On the other hand a number of local governments are drowning from both required extra expenditures and definite losses of revenue. They are borrowing from both the State and federal governments. It will be years before their ad valorem taxes come back, even though there is likely to be a great surge of construction and development in these communities.

To deal with this I will ask the Legislature to authorize – authorize, not require – impact fees to be assessed by these local governments on new development projects in their communities. This will have the effect of advancing revenue on these developments so the local governments can provide services and, indeed, survive.

During the Katrina Special Session in September, the Legislature authorized me to form an office within the Governor’s Office related to recovery, rebuilding, and renewal. I have done that. Because the September legislation did not provide funding or personnel slots, I am paying for this with no state funds. That is not said in the nature of a complaint; it is appropriate that we use federal funds to pay for this office; a part of its mission is to maximize federal funding.

I’d like to introduce Dr. Gavin Smith, Director of the Governor’s Office of Recovery and Renewal, and Brian Sanderson, his deputy.

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