Three years ago, I stood in this building and put my hand on the Bible.  I took an oath to lead this state during a time of challenge:

• Our deficit was out of control.
• Our economy was out of steam.
• Too many of our citizens were out of work.
• And for many people, government seemed out of touch.

While we still have a long way to go, just think how far we’ve come.

We cut spending and solved the worst fiscal crisis in our history … without raising taxes.
We invested in education while passing a property tax freeze …
We protected SeniorCare for more than 90,000 seniors…
And together, we created more than 140,000 new jobs.

Today, our economy is growing, new businesses are opening, home values are up, incomes are up, exports are way up, the gas tax is going down, our budget is balanced, and our schools remain the envy of the nation. 

My fellow citizens, I can report to you tonight: Wisconsin is moving forward.

Moving forward in job creation …
…outpacing Illinois, Indiana, Michigan, Ohio, Missouri and Minnesota.

Moving forward in early learning …
…with four-year-old kindergarten for almost 21,000 students this year.

Moving forward on prescription drugs …
… with discounts for individuals and small businesses, and a website to help every citizen who needs safe, affordable prescription drugs from Canada.

We're moving forward on public safety ...with a crackdown on dangerous sex predators … and a national model program that has arrested 135 sex offenders in the last three months alone.

We’re moving forward on the environment…
…setting aside forever more than 85,000 acres of pristine land through the Stewardship program.

We’re moving forward on stem cell research, regulatory reform, modernizing our agricultural economy, investing in manufacturing – and restoring fiscal responsibility to state government.

We’ve made this progress by making smart choices and tough cuts.

We cut $670 million in state overhead.

We eliminated almost 4,000 positions from the state payroll.

We renegotiated contracts – like one that saved taxpayers $93 million.

We reduced outside contracting by 12 percent – the first reduction in a decade.

We’re using the state’s buying power to save taxpayers $150 million on everything from office paper to computers to prescription drugs.

We auctioned 1,000 cars, eliminated 1,500 cell phones and sold eight airplanes.  Believe me, state government doesn’t need its own airline.

Quite simply, I try to never forget that it’s the taxpayers of this state who pay the bills.  It’s your money.  Let’s work to spend every dollar as wisely as you would, and focus on the things that matter most.

Three years ago, I stood here and promised the people of Wisconsin I wouldn’t raise their taxes – and I kept my word.

I said no to higher sales taxes, no to higher income taxes, no to higher excise taxes…

And in fact we’ve cut taxes for veterans, for businesses, for manufacturers... repealed automatic increases in gas taxes, expanded middle class tax deductions for health care, for college

And next year, the tax on Social Security benefits will be history.

All together, I have signed into law tax cuts worth more than $660 million.  That’s right, more than half a billion dollars in tax cuts. 

Oh yes … one more thing.  We moved forward on property tax relief – with the toughest limits on property taxes in Wisconsin history. 

The plan the Republican legislature first sent me would have devastated education.  But I did it the right way – enacting a property tax freeze that protects our schools while bringing desperately needed relief to Wisconsin families.  As a result, the average bill had only a small increase.  And for the first time in years, many homeowners saw their property tax bill actually go down. 
 
In fact, the property tax burden for existing homes and businesses went down by $51 million.

By cutting spending, holding the line on taxes, establishing priorities like education, creating new jobs, and protecting our environment … Wisconsin is moving forward.

But even though we’ve made real progress for real people, we know there’s more to do …particularly for middle-class families who are getting squeezed.

Too many of our neighbors are struggling to pay their bills, their taxes, and do the best they can for their kids. 

A few weeks ago, I met Paul and Sue Miller at their home in Eau Claire, and I’ve asked them to join us tonight.  A police officer and a dietician, they are a great Wisconsin family, not very different from so many of you watching tonight.  They’re incredibly proud of their daughter Carolyn (Carol-lin), who’s now in college, and their son Sam, who’s seventeen. Next year, he’ll be off to college as well.
 
The Millers tell me they love living in Wisconsin and raising a family here.  But they wonder how they’re going to pay for two kids in college.  They have a knot in their stomach every year when that property tax bill comes.  They worry about the rising costs of long-term care … and like most people, the thing that really heats them up is opening the gas bill each month.

It’s folks like the Millers I try to keep in mind every day.  They don’t expect government to solve all their problems, but they do want to know that state government is on their side.

And so tonight, I offer an agenda to make Wisconsin more affordable for middle-class families … an Affordability Agenda for families like the Millers. 

An Affordability Agenda that says no family should have to go bankrupt if they get sick.
An Affordability Agenda that says you shouldn’t have to choose between paying your energy bill and saving for college.
An agenda that says every person who wants it and works for it should be able to afford a great education.
An agenda that says manufacturing jobs are not a thing of the past but the heart of our future.
An agenda of fiscal restraint and lower taxes so you keep more of what you earn. 
An agenda of high standards, high expectations, and determination that Wisconsin’s best days lie ahead.

Middle class families like Paul and Sue Miller are being squeezed, and the first thing they’re worried about is health care. 

Let’s be honest.  No state can solve the national health care crisis by itself.  And it’s a disgrace that our Congress and President let 46 million people face each day without health coverage.  The wealthiest nation on earth should be the healthiest.

But Washington’s failure can’t be ours.  We must do what we can to make health care more affordable for average Wisconsin families.  It’s why we’re working to lower prices on prescription drugs, create health care co-ops, and expand tax deductions for health insurance premiums.  It’s why many of you in this room have been calling for an action plan on affordable health care.

And it’s also why -- when the so-called Medicare prescription drug plan caused so much confusion and threatened to deny seniors their lifesaving drugs -- we stepped in so Wisconsin seniors can get the drugs they need … until Congress can fix the problem they created.

Almost every day, I talk to parents who live in fear that if they or one of their children is seriously injured, all their savings will be lost to cover the health care bills.

Small business owners tell me the same thing—if just one employee develops a serious illness, their health care costs could double.

Let’s be honest.  You can’t make a dent in health care costs until you address the exploding price of catastrophic care … because 50 percent of health care costs are incurred by 5 percent of the people.

And so, as part of my Affordability Agenda, tonight I propose a new endeavor called Healthy Wisconsin, to help lower health care costs and pass along the savings to middle class families.

The state will set up a large, catastrophic insurance pool with lower rates that employers can join.  By working together to lower the price of insuring the sickest among us, we can reduce health care costs for everyone.
 
New York has a similar program that has lowered premiums for some small businesses by as much as 30 percent.  That can be the difference between your employer keeping you covered or cutting you off.

Let’s make this happen.  Because in Wisconsin, health care should be a birthright – not a ticket to bankruptcy. 

Even as we expand our commitment to health coverage, we need to make sure that some companies aren’t reducing theirs.

Wal-Mart is one of the most profitable companies in the world, yet it has more than 1,200 employees and dependents on BadgerCare—far more than any other company in the state.  And Wisconsin’s taxpayers are picking up the tab.

I want to make this very clear to Wal-Mart and any other company that might be thinking of shifting its health care responsibility to taxpayers: BadgerCare is intended to help working families, not multi-billion dollar corporations. 

Tonight, I am calling on the Legislature to outlaw the practice of health care dumping.  Companies cannot be allowed to deliberately manipulate the system.  If they are dropping coverage for employees they know are eligible for state programs so they can increase profits, there should be serious consequences. 

It is unfair … it is unethical … and we should make it illegal.

Like a lot of Wisconsin families, one of the most difficult issues my family has had to face is long term care.

I know what a toll this takes, because I’ve been through it with my 89 year-old mother. Given the state of her Parkinson’s disease, she needs to be in a nursing home.  But there are thousands of other seniors who neither want nor need to be there.

All too often, the only kind of care Medicaid will pay for is the most expensive – going to a nursing home.

Measured in dollars or measured in dignity, it is government waste at its worst … and it must change.

A year ago, I set a broad goal for our state, and I reaffirm that goal tonight: we should reduce the use of nursing homes by 25 percent over the next 8 years.

We have launched a comprehensive effort to achieve this goal – and it’s working.  In the past year, we’ve helped hundreds of seniors move from nursing home care to community care – and in the next 18 months, we will help another 1,200 seniors get home.

Mrs. Betty Miller is a longtime resident of Adams County.  When her husband got sick a few years ago and had to move to a nursing home, Betty moved too.  After she broke her hip, the family sold their home.  Her husband later passed away, and even though her hip had healed, she had nowhere to go.  But because of my initiative, last month she moved out of the nursing home and into a furnished apartment.  Betty is sitting right up there.  Betty, thanks for coming, and welcome home.

Despite successes like Betty Miller, there are still more than 10,000 people around the state on waiting lists for community-based long-term care.

Years ago, Governor Thompson -- and many of you in this room -- started a great pilot program called Family Care, which gives people the ability to move off the waiting list and out of the nursing home.  By any standard, it has been a success.  Tonight, I ask you to join me in expanding Family Care statewide.

Over the next five years, we can eliminate waiting lists across Wisconsin … and give seniors the dignity and independence they deserve.

I’d like to move now from our oldest citizens to our youngest. 

Every year, more than 90,000 kids go without basic heath insurance.

You might think this problem is limited to our poorest families – but the rising price of health care is costing more and more middle class families their health coverage.

And so tonight, as part of my Affordability Agenda, I propose a bold, comprehensive reform: in Wisconsin, every child will have access to health insurance by next year.

This new effort -- BadgerCare Plus -- will merge 500,000 individuals currently enrolled in Medicaid, BadgerCare and Healthy Start into one, streamlined and comprehensive program. 

And while higher income families will be asked to pay a little more, unlike the current system, the reach of BadgerCare Plus would extend to middle class families too, giving every parent—regardless of their income—the opportunity to join a state plan with affordable, comprehensive coverage for their kids

Without good health, little else matters.  That’s why my Affordability Agenda starts with health care.  But anyone who knows me will tell you my first priority as Governor has been education.

It’s why I said no when Republicans in the Legislature tried to cut schools last year by hundreds of millions of dollars.
It’s why I’m fighting to give more families access to four year old kindergarten and smaller classes.
It’s why I’m fighting for competitive teacher salaries … so we can recruit and retain the best educators for our kids for our kids.
It’s why I’ve doubled financial aid for U.W. students.

It’s why I’ve asked the Legislature to increase the cap in the Milwaukee school choice program … protecting families already enrolled  … while providing basic accountability.  I support options for parents, but I can’t allow our tax dollars to pay for a principal’s Mercedes, or schools with two kids to take field trips to McDonald’s.

It’s also why I’m demanding high standards in our schools – and asking you to make a third year of math and science mandatory for high school graduation.  Because if you ask me, when a student gets a diploma in Wisconsin … it should really mean something.

Tonight as part of my Affordability Agenda, I am very excited to announce the Wisconsin Covenant.

The idea is simple, but the impact is far reaching.  All 8th graders in the state will be given the chance to join the Wisconsin Covenant.  If they pledge to stay in school, take challenging courses, stay out of trouble, apply for state and federal financial aid and maintain at least a B average in high school, we’ll do our part and guarantee their family a package of financial aid that lets them walk through the doors of one of our U.W. campuses.

It is an historic commitment to make college more affordable for hardworking Wisconsin families … while giving our high school students an incentive to succeed in the classroom.

It will be open to every family across the state who needs financial aid – whether a little or a lot.  The neediest families will receive grants to pay the costs of education.  Others at slightly higher incomes will get a mix of loan subsidies, grants, and work study.  But as long as the student holds up his or her end of the bargain, every family that qualifies for financial aid will get a package that fully covers their tuition.

We will challenge the business community and private foundations to help fund this initiative … just as they have done with a similar initiative in North Carolina.

I'd like to introduce Shakiya Fitzgerald, a student at Audubon Middle School in Milwaukee, who is here along with her family and her language arts teacher.  She's a good student, an athlete, and plans on going to college.  Now, like I was at that age, she's hoping to be able to get a basketball scholarship.  But Shakiya, with or without basketball, I want you to know that if you'll agree to do your part in school, we'll do our part and make sure that higher education is affordable for your family.

We also need to help those families who so often work the most and earn the least.  Last year, we gave 150,000 people on the minimum wage their first raise in eight years.

We’ve embarked on a broad effort called KidsFirst, to make sure that our kids are safe, educated, healthy and happy.  But I think we should also make sure that they don’t have to grow up in poverty.

And so tonight, as part of my Affordability Agenda, I propose a Living Wage Tax Credit. This isn’t a handout – it is a refundable tax credit which guarantees that every parent who works full time doesn’t have to raise their child in poverty.

We can do this, we can do it inexpensively, and we can do it together.  I ask you to join me in lifting 9,000 hardworking families and their 26,000 children out of poverty.

At the heart of my Affordability Agenda is a commitment to creating jobs and rewarding work.  Because when you get right down to it, there’s no social program better than a good-paying job.

And so, even though Washington obviously has no plan for manufacturing, we do have one in Wisconsin. 

With technology, training, trade promotion, and new investment, we are working to revolutionize and modernize Wisconsin manufacturing … and expand opportunities for middle class families. 

In Green Bay, our aggressive regulatory reform allowed Proctor and Gamble to invest $200 million in their first new paper-making machine in 35 years. 

In Janesville, with the help of our investment in training and the hard work of people like Mike Sheridan, GM is keeping its plant, protecting 3,800 jobs, and investing $175 million in Wisconsin’s future.

In Manitowoc, we worked with Mayor Kevin Crawford – who is here tonight -- to retrain workers after the Mirro company moved to Mexico.  We created three new businesses out of the old Mirro plant, including Orion, which is represented here tonight by CEO Neal Veerfurth and Louie Mitcheltree, the plant manager.  Together, we’ve helped the city back get on its feet, put hundreds of people back to work and cut unemployment virtually in half.

In Sturgeon Bay, we worked with Senator Alan Lasee and Representative Gary Bies to find $8 million to get our shipyards booming again … and put 600 more people to work at Bay Shipbuilding.

From GE HealthCare’s expanded plant in Milwaukee to Bemis’ new headquarters in Neenah to Johnson Sausages in Sheboygan … Wisconsin manufacturing is alive and well and we can make it even stronger.

First, we must continue to open new doors for Wisconsin around the globe.  We’ve had three straight years of export growth far above the national average – an increase of almost 40 percent since I took office – with manufacturing leading the way. 

Americans see a lot of products that say “Made in China.”  But from Beijing to Tokyo to Warsaw to Mexico City, I want to see the “Made in Wisconsin” label all over the world.

Second, we must help manufacturers address the rising cost of health care – and the Healthy Wisconsin initiative I announced tonight will do just that. 

Third, I’m funding an effort to strengthen more than 100 small manufacturers in our state that supply big Wisconsin companies like Harley Davidson, John Deere, and Oshkosh Truck. 

Fourth, and finally, we need to rededicate ourselves to training and retraining our workers, and making sure that our technical colleges remain the finest in the nation.

I believe we should make Wisconsin a place where every person can go as far as their talent and hard work will take them.

That’s why I’ve worked so hard with Republicans and Democrats to cut taxes and red tape, expand access to investment capital and help new businesses get started.  We’ve supported regional business partnerships like the NEW North initiative, which is helping launch a venture capital fund in Northeast Wisconsin.  It will be one of the first in that region, and they plan to invest $10 million to build the jobs and economy of the future.

Even as we invest in and modernize core industries like manufacturing, agriculture and tourism, we are also growing new ones … like biotechnology, information technology, and nanotechnology. 

And Wisconsin – the birthplace of stem cell research – is giving millions of families hope that one day diseases like Parkinsons, Alzheimers and Juvenile Diabetes may be conquered.  These breakthroughs in medical science can transform our economy and open doors to new industries we’ve only dreamed of.

In less than a decade, the market for stem cell products could reach $10 billion and create 100,000 jobs.  Tonight, I offer an ambitious goal for our state – to capture 10 percent of this market by 2015.

To that end, I’m directing the Department of Commerce to dedicate at least $5 million to find, fund, and recruit companies turning stem cell technology into high paying jobs.  I’m asking Forward Wisconsin to launch a new effort to brand our state as the stem cell leader.  And I’m asking you to pass legislation supporting the Biomedical Technology Alliance in Southeast Wisconsin.

We’re joined here tonight by Michelle Alswager from Madison, and her 9 year-old son Jesse.  He’s a great kid.  He does well in school, plays little league, he’s on the swim team at the Ridgewood pool, and according to his mother, every now and then, he even cleans his room.  Jesse’s mom has made it her mission to give him a normal life … even though Jesse has juvenile diabetes.

Not only is Michelle fighting for her own child, but she and her son have testified before Congress, and have become advocates for the stem cell research which could help millions of other families.

Michelle and Jesse, I want you to know …
… I want this Legislature to know…
… I want the researchers in our labs and across the nation to know…
… as long as I am Governor, Wisconsin will never allow politics to stand in the way of curing disease.

I know that families across Wisconsin are wondering how they are going to afford their heating bills this year.

I get angry just thinking about how, after Hurricane Katrina, as our fellow citizens clung to rooftops and searched the waters for lost relatives, the oil companies were running up their prices and reaping the largest corporate profits in history.

Some people have criticized me for taking on the oil companies – but I think we should be getting a refund from the $100 billion they racked up in profits last year.

And if Congress won’t do the right thing and make them pay, we will at least work to make energy bills more affordable for you.

That’s why we doubled our commitment to energy assistance to help people pay their bills.
…we encouraged the utilities to offer $12 million in relief to middle-class families …
…we ended automatic gas tax increases, and called for legislation sponsored by Senator Hansen and Representative Zepnick to outlaw price gouging at the pump…
…to reduce energy demand, we turned down the temperature in state buildings – including the Capitol. 

But we must do more.  Thousands of Wisconsin families are struggling to pay their December heating bill, but they aren’t eligible for federal assistance because their income is a little too high.

So tonight … I propose an emergency heating assistance package to provide $6 million to families who make $40,000 a year or less.  We’re in the heart of the heating season, and these families need help.  I’m asking you to pass this legislation immediately.

And that’s not all.  We must reduce our dependence on foreign oil and fossil fuels.

Senator Cowles and Representative Montgomery are working to pass the recommendations of my Task Force on Renewable Energy – including getting 10 percent of our energy from renewable sources by 2015. 

It’s an ambitious goal … but it’s the right goal and we should settle for nothing less. I urge you to pass the bill without watering it down and without delay.

Finally, I’m calling for the ethanol bill authored by Senator Harsdorf and Representatives Freese and Gronemus.  Ethanol is clean, it’s renewable, it’s less expensive, it helps Wisconsin farmers, and it reduces the demand for foreign oil.  Let’s pass this bill, because America ought to be more dependent on the Midwest, and not the Mideast.

Wisconsin is home to many renewable resources – but one of our most precious resources can never be replaced.  I’m talking about the Great Lakes.  That’s why last year I signed an agreement that protects these waters from being diverted to Arizona or New Mexico.  Now, it’s time to pass the legislation I called for in my Conserve Wisconsin agenda – ending ballast water discharges from cargo ships and stopping the spread of invasive species. 

From my days as a prosecutor to my time as Attorney General to my work as Governor, I’ve always demanded the highest standards of integrity. 

Last April, I unveiled sweeping election reforms to modernize the system and correct the problems of 2004… including better training for poll workers, merging the elections and ethics boards, and stopping felons from voting illegally.

Two weeks ago, I offered up significant and bipartisan ethics reforms – including a ban on all fundraising during the budget process and putting the brakes on former officials who want to turn around and lobby the government they helped run.  These reforms make common sense, they’ll make a difference, and tonight, I ask you to make them law.

Two years ago, Senators Ellis and Erpenbach offered a blueprint for comprehensive campaign finance reform.  It would end the phony issue ads, and includes strong public financing.  It is bipartisan, it is major reform, and it is time the Legislature passed it. 

In the past year, Jessica and I have seen the goodness of the people of Wisconsin firsthand.  We’ve seen how our citizens responded with generosity and helped one another after the tornadoes hit Dane, Richland, and Vernon counties.  And we saw how they mobilized to help those whose lives were upended by Hurricane Katrina.

Not long ago, I got a letter from Patrick Owen, an officer at the Fox Lake Correctional Institution who spent four weeks volunteering to help the Red Cross in Louisiana.  Patrick, could you stand please? 

He wrote to thank me for allowing him and other state employees to take time off and help in the relief effort.  But Patrick, I want to thank you and all of your colleagues who gave their time and talents to help the victims of Katrina.  You are a perfect example of the great contributions state employees make every day – and you make Wisconsin proud.

But even as we sit here tonight, let's not forget that there's another group of public servants overseas who are making incredible sacrifices for our country.

I've met these men and women at troop sendoffs, as they've said goodbye to their loved ones.  I've seen how communities rally to welcome them home.  And I've been with dozens of families as they've mourned the loss of a son or a daughter, a brother, a sister, a mother, or a father taken tragically and all too soon from their lives. 

Nearly 2,000 members of our Wisconsin National Guard are serving America far from the comfort and safety of their homes.  I’ve gotten to know many of them and their families, and I can tell you this: they represent Wisconsin's finest. 

These men and women are truly Wisconsin’s heroes.  We owe them more than our thanks and respect tonight.  We owe them our solemn commitment that while they are doing their jobs overseas, we’ll do our job here at home.

Let their patriotism be our inspiration.  Let their sense that we’re all in this together be our example.  And let their families’ dreams be our cause. 

Here in this chamber, let us rededicate ourselves to moving this state forward so that these brave men and women – and all the hardworking families in Wisconsin, can afford to get an education, buy a home, and enjoy all the great things that life in our state has to offer.

Let’s keep Wisconsin moving forward.

On Wisconsin.