Before we begin, I would like to take a moment to recognize and honor the brave men and women serving in Afghanistan, Iraq and around the world, and all the veterans who have served throughout the history of this great country.

So many have left loved ones, jobs, and school to protect our way of life. Some have come home wounded, showing great courage and dignity. Others have made the ultimate sacrifice, and we will never forget their valor and their service.

Representing those who have been wounded in action, and all our veterans, we have with us Sgt. 1st Class Tim Wicks, who served in Afghanistan.

Also here, representing our National Guard, Reserves and active duty military, is Lt. Dan Murphy, who is home on leave from the Middle East.

And to represent the families and family support groups are Annette Scholl (SHOLE) and Stephanie Entzel of the 188th Family Readiness Group.

Over the past five years, we’ve made tremendous progress. Make no mistake, there is more to do, but we have worked to create an environment in North Dakota that allows and encourages innovation, diversification, growth and opportunity for the people of this great state.

And the people of North Dakota have responded by creating thousands of new jobs and hundreds of new businesses. As a result, our economy is expanding, unemployment is down, and wages and income are growing faster than the national average.

In 2001, at the turn of a new century, we set a course focused on six pillars for growth: education, economic development, agriculture, energy, technology, and quality of life.

In short, we resolved to grow our state’s economy. To do so, we have pursued economic development in new and innovative ways.

We formed a Commerce Department to streamline services and provide one stop shopping for new and expanding businesses.

We developed a strategic plan, with targeted industries – value-added agriculture, advanced manufacturing, technology, tourism, and energy. These are industry sectors where North Dakota has distinct advantages owing to our resources, our history, and our people.

Our plan established partnerships between the public sector and the private sector. We brought together state and local economic developers, all pulling together for the good of their communities and the state as a whole.

We also forged a partnership between higher education and the private sector to drive the development and commercialization of new products and services. We gave developers innovative tools to get them started – tools like our Ethanol Production Incentive, investment tax credits, and Centers of Excellence.

Working with the Legislature, we streamlined our tax and regulatory environment to help build a strong, competitive business climate – an environment where businesses can start and expand without the burdens of bureaucratic red tape or high taxes.

Driving our growth has provided us with a surplus and more revenues for the future – and we’re managing both with the kind of prudence the people of North Dakota expect.

In our budget for the new biennium, we propose investing $188 million in one-time expenditures that will further grow our economy and reduce costs.

Ongoing expenditures rise 7.3 percent annually, which means ongoing revenues exceed ongoing expenditures. Further, even after one-time expenditures, we build a very strong financial reserve of more than $400 million.

With this financial position, we have the resources we need to continue to create opportunity for the people of North Dakota.

For example, six years ago, our challenge was creating jobs. Then our challenge became creating higher paying jobs.

Today, our challenge is finding people to fill those jobs – good jobs ranging the entire gamut, from construction workers, oil rig workers, and truck drivers, to nurses, accountants, software writers, and engineers.

Now, just like when people came to our state to homestead, there’s opportunity – opportunity in manufacturing, energy, technology and other areas.

Like many young people, after college at NDSU, Jody and Marla moved to Minnesota – Jody to take an engineering job and Marla to take a job as a food scientist.

Today, the company manufactures equipment for both agriculture, and the oil and gas industry, as well as electronic circuit boards, with sales across a six state region.

By the way, Marla, a research and development associate for the Schwan Company in Minnesota, didn’t have to leave her job. Thanks to technology, she telecommutes.

Furthermore, their efforts didn’t stop there. They teamed up with others to build the Red Trail Ethanol plant.

And that new ethanol plant is now bringing other couples home to North Dakota, as well. In fact, six of the top seven managers at Red Trail came home to North Dakota.

Let’s show our appreciation for Jody and Marla, and all those who are part of the new face of North Dakota.

Let us resolve together that in this legislative session we will set the framework to create an even brighter future, a higher standard of living and a better quality of life for all North Dakotans.

Because of the success of our economic policies and the perseverance of our people, we can drive new big ideas to improve the lives of all North Dakotans.

And we can continue to drive the transformation of our economy – not just to compete, but to truly succeed in a global marketplace.

For example, in 2000, North Dakotans earned 84 percent of the national average in per capita personal income. As of last year, 2005, we increased that figure to 91 percent.

Today, I challenge us to go further. Working together, we can continue to raise personal income and wages. We can give our citizens the standard of living and the quality of life they deserve.

Let us resolve that we will not only meet, but exceed the national average in personal income, and achieve a higher standard of living for all North Dakotans – and we will do it within the next decade.

How do we accomplish this goal? We do it by continuing to grow and diversify our economy – by building on the strengths of our people and our land – by driving forward with an agenda for growth.

Today, we are the 6th leading energy producing state in the country, but we have only begun to tap the true potential for North Dakota’s energy and agriculture industries.

To realize our full potential, we must look beyond the borders of our state. Our real future in energy is not about what we consume in North Dakota; it’s about what we can supply to the nation – a nation that needs more energy and more energy independence.

We must also build on our production, marketing, finance and tax incentives for energy development, especially in the areas of renewable energy.

By leveraging our enormous potential for both renewable and traditional energy resources, we can truly make North Dakota a powerhouse for America.

Today, six million cubic feet of gas are flared off wells in the oil patch daily as a byproduct of drilling. Capturing and marketing this gas will help our environment, as well as our economy.

In Northwest North Dakota, Murex Petroleum, Whiting, and EOG Resources are working to build new pipeline systems and processing plants to capture and market that gas – and with our proposed new pipeline authority, we’ll have the tool to help them get the job done.

At the same time, we’re producing more oil from major new zones, like the Bakkan formation, and leading companies are using advanced technology to develop them in more environmentally friendly ways.

For example, Marathon Oil has already started on a five-year, $1.5 billion program to drill 300 new wells under the direction of the petroleum engineer who formerly headed their North Sea operation.

These wells will use state-of-the-art horizontal drilling methods, resulting in more oil and a smaller environmental footprint. That’s good for the environment, and that’s more energy for our nation.

With us today, we have representatives from these exciting new projects. Waldo Ackerman, president of Murex Petroleum; Eric Dille of EOG; and Terry Kavacevich, general manager of Marathon Oil; will you all please stand, so that we can recognize your entrepreneurial spirit and can-do attitude.

As we develop our traditional resources in new ways, we are also making a major push into renewables – like biofuels and wind.

We have biofuels plants, both ethanol and biodiesel, going up in Richardton, Underwood, Hankinson, Spiritwood, and Velva. When these are up and running, we will produce as much ethanol every year as our state consumes in total gasoline – and we have more plants coming.

These plants are using innovative business models that not only build our renewable energy base, but also provide us with the opportunity to leverage our traditional energy and agriculture industries.

These new plants bring energy and agriculture together. They provide new markets for the crops our farmers grow, and the byproducts they produce will also create opportunities for livestock and dairy production.

For example, Great River Energy is partnering with the Newman Group and Cargill to develop the Spiritwood Energy Park near Jamestown. This complex will be a more than $400 million co-generation facility.

It includes a 100 million gallon ethanol plant, an expansion of the existing malting barley plant – making it the largest in North America – and a 40 megawatt power plant. The power plant will provide electricity to the grid and steam to power both the ethanol plant and the malting barley plant. Further, the ethanol plant will use waste water from the malting facility and produce cattle feed as a byproduct.

The Spiritwood Energy Park is about cogeneration; it’s about renewable energy; it’s about value added agriculture – it’s about the future.

In McLean County, Great River Energy, NDSU, and a coalition of ranching and dairy producers are working to build a 30,000 to 50,000 head cattle feeding operation in conjunction with the new Blue Flint Ethanol plant in Underwood. And the venture has the potential to grow to 200,000 head, between the feed lot and area cow-calf operators.

Blue Flint will provide the cattle feed as a byproduct of ethanol production, and the cattle waste can then be used to produce methane for heat or electricity, as well as fertilizer. This is a big step forward for renewable energy and for value-added agriculture.

We have with us today Great River Energy Chairman Henry Hanson and CEO Dave Saggau. Also, from the Newman Group, we have North Dakota entrepreneur Harold Newman. Please join me in welcoming and thanking them.

We have tremendous wind resources in North Dakota, and we’re working to capture that resource through large-scale wind farms. We’ve already developed major wind farms near Edgeley-Kulm, near Velva, at Wilton, and in Oliver County.

Today, we are working on more wind farm projects, and they’re getting larger. Acciona Wind Energy USA is developing a 180 megawatt wind farm in Dickey County, which will include wind towers in both North and South Dakota.

And now FPL Energy is preparing an application to site a wind farm in northeast North Dakota. The application will be for a large-scale wind farm of up to 160 megawatts with transmission, located in Cavalier County.

But to fully develop our wind resources potential, we need more transmission, which means partnering wind with new power plants.

Through Lignite Vision 21, we are developing new clean-coal power plant projects, coal gasification, and coal-to-liquids, which include carbon sequestration.

Using our Transmission Authority, we can build the transmission necessary, even if we have to build it ourselves, to develop both more large-scale wind farms and power plants.

As we develop this exciting mix of energy resources, our new Pipeline Authority, Biofuels PACE, incentives for energy development, and other programs will take us even further.

Our proposed $9 million state of the art research greenhouse facility will help us with breakthrough technologies, like optimized switch grass and cellulose for ethanol.

Our Centers of Excellence for Agbiotechnology and Oilseed Development will enable us to further develop and enhance biodiesel.

The State of North Dakota is partnering with industry, farmers, and our university system to develop and deploy new technologies, to build the infrastructure, and to create new opportunities.

Today, many states are adopting a goal to derive 25 percent of our nation’s energy from renewables by 2025. We can achieve that, but we must set our sights higher. We can produce far more energy from all sources. North Dakota can double the amount of energy we supply to the nation by 2025. We can lead the way forward in both energy and agriculture.

And just as in agriculture and energy, our universities are also playing a critical role in both creating more high-paying jobs and developing the workforce to serve our growing economy.

We’re forging ahead with a growing technology-based business sector. We’re working with companies like Microsoft, PacketDigital, Alien Technologies, and Eagle Creek Software – and building on their success. And through our Centers of Excellence program, we’re helping other companies develop and grow, too.

For example, NDSU’s Center for Advanced Electronic Design and Manufacturing will help companies like Phoenix International, PemStar, Appareo, Imation and Pedigree further expand our state’s technology-based business sector.

In the same way, we’re beginning to build a life sciences sector in North Dakota. Companies like PRACS Institute, Odyssey Research, Clinical Supplies Management, and Aldevron are creating the foundation.

UND’s Center for Life Sciences and Advanced Technologies will work with Alion, Avianax, Agragen, and BORDERS to create cutting-edge vaccines against emerging diseases, and make other medical advances. These exciting new ventures will add to this dynamic new business sector in our state.

Fargo Assembly is headquartered in Fargo, but the company has plants in Lisbon, Edgeley, Ellendale, Michigan, and Lehr. MTI, headquartered in Mohall, has 10 locations in rural communities around the state. These include Kenmare, Bottineau, Rugby, Stanley, Grafton, Langdon, Fessenden, Devils Lake, and Beulah.

And Verety, which is located in Fargo and Grand Forks, also has locations in Steele, Rugby, Wishek and Fessenden.

Dickinson State’s Center for Entrepreneurship and Rural Revitalization is working with Killdeer Mountain Manufacturing to build on this concept. They have locations not only in Killdeer, but in Dickinson, Hettinger, and Halliday, as well.

And we’re also building on our already dynamic advanced manufacturing sector, with companies like Goodrich, Cirrus, MW Industries, and Marvin Windows and Doors.

Let me tell you about Marvin Windows. The story of Marvin clearly illustrates that creating a good business environment, partnering with the private sector, and providing the right tools for growth, are driving and transforming our economy.

Marvin built its first North Dakota plant in Fargo. The company then expanded to Grafton, where it now employs 465 people. Further, Marvin also provided financial assistance to help employees purchase or build a home.

Marvin Windows will soon have five major manufacturing facilities in North Dakota. They are currently completing construction on two new 200,000 square foot facilities in the West Fargo Industrial Park. Altogether, Marvin Windows, along with related companies Rite Screen and Cardinal Glass, now employ more than 1,600 people in North Dakota.

With us today is Jake Marvin, company chairman and CEO. Jake, will you please stand and be recognized. Thank you for Marvin’s investment in North Dakota.

As we grow and expand our economic base, we need to look not just beyond the borders of our state, but beyond the shores of our nation for new markets.

To drive our efforts to open overseas markets, our North Dakota Trade Office, a private-sector, public-sector partnership is helping North Dakota businesses initiate and expand export sales.

Our trade office partners include commodity producers and manufacturers of ag equipment, medical equipment, aircraft parts, processed foods, and environmental systems.

Companies like Arrow-Tech, SolarBee, Superior Grains, MidAmerica Aviation, WCCO Belting, and Duratech are all developing new markets.

In dollars and cents, the 40 North Dakota businesses that participated in our trade missions over the past year and a half will see an additional $48 million in export sales.

Our 20 founding private-sector partners have seen a 35 percent increase in annual exports, compared to 10 percent for the nation.

These successes were made in more than a dozen countries in Asia and Europe, including China, Russia, Taiwan, Australia, and New Zealand – virtually all over the world.

The simple truth of the matter is this – North Dakota must stand ready to compete – with anyone, anytime, anywhere.

Innovation is at the heart of all we’re doing. And we must be innovative in our efforts to recruit, educate and train our workforce.

The work ethic of the people of North Dakota is legendary, but we need to ensure that our people have the training and skills to fill the jobs and careers of the future.

Recently, LM Glasfiber, a world-class manufacturer of fiberglass blades for wind towers, determined that it needed to grow its workforce from 330 to 700 by March 2007.

The State of North Dakota, through the Commerce Department and Job Service, partnered with the community of Grand Forks and the University of North Dakota to assist them.

As a result, LM Glasfiber today employs more than 700 people in Grand Forks, ahead of schedule, and there is potential to do much more.

But we must continue to build on our ability to recruit, educate and train our workforce. To do so, we have put forward programs like InnovateND, Operation Intern, Career Specialists, and our Talent Initiative.

The InnovateND program, with more than 25 teams already signed up, will provide technical assistance and mentorship to entrepreneurs across North Dakota.

Operation Intern will give more young people the chance to gain experience in the workplace, both in the private sector and the public sector, through meaningful internships.

The Career Specialist program will ensure that we work with all high school students to connect them with the educational, training, and career opportunities available in North Dakota.

And our Talent Initiative is a joint effort between the Commerce Department and Job Service to partner with companies to recruit and train workers.

These programs, together with more funding for higher education and Centers of Excellence, as well as a real focus on workforce training at the high school, technical school, and collegiate level, will help us match our workforce with a growing and diversified economy.

At the end of the day, it is our agenda for driving economic growth that allows us to make these important investments in our people. One cannot happen without the other.

In fact, our focus on driving the economy has provided us with the resources necessary to meet the needs of our citizens, and build a healthy reserve.

That continued focus will enable us to invest in education, strengthen law enforcement, and provide for those who need help, especially our seniors.

Clearly, education is the bedrock on which we build our future. It enables each one of us to achieve our individual dreams, and it enables us collectively to build the future of our state.

The Commission for Education Improvement has provided us with a blueprint for improving both equity and adequacy. Their work coupled with the increased funding we have proposed will ensure that all of our children receive a quality education.

Their mission has always been to help legislators do the best job possible in revising our school funding policies. Their work began nearly a year ago, and they have been able to do a comprehensive study of our system and test out many optional formulas. By holding their meetings around the state, they have been able to gather broad input from the people of North Dakota.

Also, they’ve had at the table some of the most expert minds in our state on the subject of education finance.

We have the opportunity and the means to make the most significant reform in K-12 education in more than a generation, and we look forward to working with you, the Legislature, to do it.

First, my thanks to Lt. Governor Jack Dalrymple and Superintendent Wayne Sanstead for the leadership they have provided. Thanks also for the many hours of hard work by four legislators known for their leadership in education: Sen. Tim Flakoll and Sen. Dave O'Connell, and Rep. RaeAnn Kelsch and Rep. Dave Monson.

Thanks also to our school administrators, who have worked so hard: Warren Larson of Williston, Paul Stremick and later Jack Maus of Grafton, Martin Shock of Elgin-New Leipzig and Carson, and Mark Lemer of West Fargo.

And thanks to our ex officio members: Jon Martinson from the North Dakota School Boards Association; Gloria Lokken, Joe Westby and Nancy Sand of the North

Dakota Education Association; and Doug Johnson of the North Dakota Council of Educational Leaders. All have done an outstanding job.

I’ve asked the commission members to join us here today. Would you please stand to be recognized and thanked.

As we work to reform and improve K-12 funding, we can also do more to reduce the local cost of education for our citizens.

We have put forward a plan for property tax relief that is sustainable and fair. It will ensure that every homeowner, business, farmer, and rancher receives property tax relief.

I believe we have a responsibility to return part of the surplus to our citizens. Working together, we can not only improve K-12 education funding, but we can also provide the people of North Dakota with meaningful tax relief.

That means Medicaid funding for low income individuals, persons with disabilities, and seniors to ensure they have access to quality healthcare.

That means eliminating the sales tax on home heating fuels, which is particularly important for people on fixed and low income.

And it means a strong commitment to quality of life for all North Dakotans, especially our seniors, who have done so much to build our state.

That means funding our Veterans Bonus Program, our National Guard Tuition Assistance program, and counseling services to help military members and their families through all phases of deployment.

Our fallen heroes deserve our utmost respect, and they also deserve to be laid to rest in a dignified manner. That means we must establish a buffer zone between protesters and the funeral ceremonies of one of our fallen heroes. They deserve no less.

Again, to our men and women in uniform, to our veterans and to their families, we say thank you. We owe you so much.

Finally, in a world where people feel increasingly unsafe, we must build on our position as the safest state in the country.

We’re doing that through a statewide plan to help ensure that North Dakotans continue to feel safe in their homes, businesses, and schools.

In the last session, we passed tough new laws to take violent and sexual offenders off the street. And in this session, working with you, the Legislature, and Attorney General Wayne Stenehjem, we will do more.

That includes new legislation requiring a 20-year mandatory minimum jail term and lifetime supervision for violent sexual criminals – including first-time offenders.

It includes background checks for correctional officers at the city, county and state levels, as well as for other personnel – and fingerprinting along with nationwide criminal history searches.

Our plan also includes new facilities at the state prison complex in Bismarck, and additional corrections and Highway Patrol officers.

Ultimately, the best way to fight crime is to prevent it before it happens. To do that, we will expand treatment programs like the Robinson Recovery Center and drug courts to help reclaim the lives of those gripped by addiction.

Finally, we will restructure and enhance our civil commitment program for violent and sexual offenders on the grounds of the State Hospital in Jamestown.

The Department of Corrections, under a new civil commitment division, will assume primary responsibility for security. Some of the medical professionals from the Department of Human Services will transfer to the new division to provide treatment services at the facility.

Safe communities are a hallmark of living and working in North Dakota. Let us commit to keeping North Dakota a safe place to live, to work, and to raise a family.

We’re driving an agenda for growth in North Dakota. We’re rising up – and we must press forward and continue to drive that progress.

These are big plans, but we can achieve them. Together, we can build a higher standard of living and a better quality of life for ourselves and for our children.