I expect this office’s work with state and local government entities to pay major dividends. I also appreciate State Auditor Phil Bryant for the help his office has been giving local governments in the areas of accountability and documentation of emergency efforts.

For all these reasons and efforts, I’m very bullish on where South Mississippi and the Coast will be in 2, 5, 20 and 30 years. We have a mighty tall mountain in front of us, but that Mississippi Spirit leaves me no doubt about the outcome.

I am pleased to tell you that even in the wake of Katrina, the budget you adopted for the year appears to be holding up. There is still some uncertainty, which is why I think most everybody believes we should not try to do the budget and appropriations until March.

But halfway through the fiscal year, as of December 31, actual revenue collected was $80 million above the estimate on which this year’s budget was based. We don’t know if this growth will continue, but the overage is enough to cover the principal planned budget shortfall, which is in debt service. While we had foreseen and believed before Katrina that actual revenue would more than cover this shortfall, I’m pleased to report that, so far, that’s holding up.

I’m also pleased to report that despite Katrina, no major state department or agency is overspending its current budget; therefore, there is no reason for any deficit appropriation, except for debt service, because actual spending through the end of December is within the amounts consistent with the budget you passed in May.

The ability of our departments and agencies to manage within their budgets is a great testament to their leaders and the state’s employees. And this has been accomplished despite the fact some legislative provisions have actually made it much more difficult for them than it should be to stay within their budgets. I will ask you to lift those counterproductive restrictions so our state’s public servants can produce more for our citizens. Still, you can see why I hope our budget situation in March will allow a pay raise for our state employees this year. And I hope we’ll be able to give them another increase next year. They’ve earned it. They deserve it.

As preeminent as Katrina and its effects are on our agenda, we have all of the state and other important issues to address between now and the end of March.

This year we must address the needs of our foster care system and the more than 3000 vulnerable children and families it serves. The provision of quality foster care is difficult but critical, especially when not only Katrina’s destruction but also the explosion of crystal methamphetamine and other narcotics have significantly increased the number of children needing foster care.

I will ask the Legislature to pass bills to increase both the number and quality of social workers actively involved in direct care, so resources are used more effectively to insure the foster care system is improved.

Shifting our focus, I want to talk to you about an industry and an area that require special attention: Our furniture manufacturing industry located largely in Northeast Mississippi.

The Franklin Center for Furniture Manufacturing and Management at Mississippi State reports our state’s furniture manufacturing firms employ some 27,000 people, down from 31,000 in the late 90’s. That 12% job loss is far less than the job losses that have occurred in the case goods industry in Virginia and the Carolinas, but it is a clear warning. According to the Franklin Center, we must learn how our competitive advantages can be maintained and improved on. I am committed to increasing our advantages and keeping our $4.1 billion furniture industry healthy, and employing Mississippians.

We began two years ago. The furniture industry told former Commerce Secretary Don Evans and me in 2003 that improving workforce quality was the best way to help the industry stay healthy. You know all that’s been done to achieve that, and I know the industry appreciates the Legislature’s efforts.

Tort reform has helped control their cost of doing business. No tax increases also has helped keep those costs down. We’ve helped create a foreign trade zone for Northeast Mississippi to reduce costs for Mississippi companies that use it.

Tonight, I propose using funds you made available when you passed Momentum Mississippi legislation last summer, to help our furniture manufacturers qualify to get the benefits of the Foreign Trade Zone. We’ll match companies dollar for dollar for their costs in applying, activating, training and commencing Foreign Trade Zone participation. It is estimated this program will save some 2000 jobs at a cost to the state of only half million dollars or so.

We will also assist the Tupelo Furniture Market in its national and international promotion in the amount of $200,000 a year, based again on a 50-50 cost share. These funds also will come from Momentum Mississippi legislation. And let me introduce Anthony Topazi, Chairman of Momentum Mississippi.

The furniture industry is hugely important to all of Mississippi. Some people seem to have given up on it; I haven’t. And I oppose using the challenges facing the furniture industry as an excuse to pit the economic development project of one part of the state against the projects of the rest of the state. As a candidate for Governor, I said I wouldn’t play favorites among the efforts by different parts of the state to attract jobs. I said it, and I meant it.

There is another part of the state about which I’m concerned; one I feel it is crucial to help. The area is our Capital City and Hinds County.

Recently, Mayor Frank Melton and Sheriff Malcolm McMillin came to see me. They asked if I’d help them fight crime, especially drug and gun crime in Jackson.

The Sheriff and the Mayor are here with us. I’m pleased to recognize them. I’m more pleased to propose we in state government help our Capitol City become a greater asset to our state as well as a better home to its citizens . I ask the Legislature to pass a bill to allow the Governor to appoint a Special Circuit Judge for Hinds County solely for the purpose of hearing criminal cases involving drugs and guns. This is what the Mayor and the Sheriff believe is needed; it is what they’ve asked for.

Why? The Hinds County jail facilities are so overloaded that misdemeanor criminals aren’t even incarcerated. They’re filled with felons awaiting trial, and the number of untried felons has increased 18% in three years. But Hinds County has lost population, so, under our regular system of adding judges, which is based on population, the statistics say Hinds County doesn’t need more judges. But those statistics are wrong. Don’t take my word for it; ask the Mayor and the Sheriff, the fellows who have to deal with drug and gun crime here in Jackson.

Here are the facts:

• In November, the Hinds County facility in Raymond was over its federal court allowed limit by 43, and 98% of capacity were indicted pre-trial felons;
• Criminals go for years without a trial;
• The overcrowding and delay led the Public Defender’s Office to say “The deals get better for my clients;”
• The cost will be less than $200,000 per year, a bargain if it helps reduce drug crime and gun crime in Jackson.

After I was elected and before I was inaugurated, Attorney General Jim Hood and I discussed the problems facing criminal justice in Hinds County, and he was very helpful. If you allow the appointment of the judge for a limited period, I’ve discussed with the Attorney General insuring there are enough prosecutors to get criminals prosecuted in the Court effectively. I appreciate his help and concern about this problem.

The last issue I want to discuss is the biggest priority we have year in and year out. Even in the wake of Katrina we all know we must continue to improve our education system.

Last year, the Legislature considered my UpGrade Education reform proposal. It was developed with strong support from my 250 member Teachers Advisory Commission. These leaders of the commission are here: Tanza Brown, Josie Williams, and Larry Perdue

I’m grateful that last year the Senate passed it 95% intact with only two votes against it. The House passed it about 80% in that again by a huge margin. However, there was never a conference report, so I will be asking you to consider it this year.

I believe the proposals are not only good policy but will also significantly improve education in Mississippi.

You will recall the leaders of K-12, community colleges, and universities endorsed UpGrade last year. I’ve been working on this with them again, though we have a couple of new leaders in place. I want to recognize and thank them for guiding me on these issues. Let me introduce State Superintendent Dr. Hank Bounds; Community and Junior College Director Dr. Wayne Stonecyper; and the Commissioner of Higher Education Dr. Tom Meredith. They are a very talented and dedicated group, and I appreciate their tireless efforts.

Education is the number one economic development issue and the number one quality of life issue in our state. It is rightly our top priority. We spend 62% of our budget on education. While this year overall budgeted state spending is lower than last year, our school teachers have received a second consecutive 8% pay raise, and they are making 30% more than five years ago. State spending on K-12 education is 7.2%, or $143 million, higher than last year. Per student spending in our public schools is more than $7000 this year, a record amount.

K-12 spending will increase again, but I urge the Legislature to give special attention and priority to higher education needs when we take up the budget in March. While we have had large and appropriate increases in spending for public schools in the last several years, state spending for universities and community colleges has gone down significantly over the same period. But, again, March is the time to take up such budget issues. The UpGrade reforms are not about funding; they are about fundamentals.

• Liberate successful schools and give them home rule. Here is an example of why: In 1994, the Gulfport School District wanted to purchase revenue interruption insurance in case a hurricane devastated their local tax base. But then-Attorney General Mike Moore correctly told them that because the school district did not have home rule, they did not have the authority to make that wise decision.

• Focus on dropout prevention. About 40% of Mississippi school children drop out before they graduate. Think what a difference even a small reduction in the drop out rate would mean.

• Prioritize teacher recruitment and retention. Nothing is as important as a quality teacher in every classroom.

• Recognize discipline is a big problem in many schools, and as my 250 member Teacher Advisory Committee has told me, more young teachers leave teaching over discipline than over pay.

• Hold parents accountable for the behavior of their children.

• Institute a pay for performance program like North Carolina has to reward increases in learning achievement.

• Redesign high school so every student who desires to can get at least a semester worth of college credit in his or her senior year of high school.

• Expand the dual enrollment program and make advanced placement classes available in every school within three years.

• Especially in light of the Cisco and Bell South investments, we must expand the use of technology, online education and distance learning so every child can have access to the best education.

These are several of the goals of my UpGrade Education reform package. I’m grateful to Senate Education Committee Chairman Mike Chaney and House Education Committee Chairman Cecil Brown for their counsel on this package and for their consideration of it.

I ask every legislator to support the final product. I believe as you review it, you will see that it is a common-sense, positive reform that will improve education in Mississippi, not for some but for all.

My speech has covered a variety of subjects – from renaissance after Katrina to cracking down on drug crime to improving education, our perennial priority.

None of these issues or solutions is political or partisan. These are my ideas about what we should do to improve our state and the lives of Mississippians. I offer them with no agenda except that I think they are good policy, and I ask you to receive them that way. That ought to be one effect of Katrina on all our activities.

It is not lost on me that Jim Barksdale, who chaired my Commission on Recovery, Rebuilding, and Renewal after Katrina, was also my opponent’s biggest contributor. That was irrelevant to him and to me; the point is Jim Barksdale wants to help Mississippi, and he was, as he proved, the best man for the job.

Our quest for renewal has produced many such efforts to help, by people who have historically been political opponents. That has been so healthy and so productive.

It is an extension of that Mississippi Spirit; that can do attitude of helping ourselves but also helping our neighbors. It still is an inspiration to me and I hope it inspires everyone to see what Mississippi can be… will be… must be.

Last year’s gigantic catastrophe, with all its destruction, gave birth to a renaissance in Mississippi that will surely result in rebuilding our state bigger and better than ever before, but I believe it will also spread prosperity and dignity across more of our citizens than ever before. I ask you to embrace that vision.”

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