Mr. Speaker, Lieutenant Governor Baxley, Senator Barron, Representative Newton, members of the Legislature, distinguished guests. I am honored to be in this chamber tonight -- addressing my fellow citizens who are using their lives, their energies and their talents to serve the people of this great state.
However, before I address the state of our state, I want to take a moment and recognize some true Alabama heroes. As you may know, our state is in the process of deploying almost 5,000 National Guard troops to various points around the world as our country continues its war on terrorism. These Alabama troops are husbands and wives, sons and daughters, neighbors and friends -- all willing to do their duty and defend the freedoms that we, as Americans, hold so dear. We keep each of these troops in our hearts and in our prayers, and we are so grateful for the sacrifices being made by the families they are leaving behind. Tonight members of my cabinet are wearing yellow ribbons in their honor and Adjutant General Mark Bowen is in attendance with members of his staff. I ask each of you to join me now in paying tribute to the bravery, courage and commitment of the men and women of the Alabama National Guard.
As we begin this important legislative session, I remain steadfast in my belief that the people of Alabama are strong in spirit, filled with hope and ready to conquer the obstacles that have held us back for decades. I sense among the members of this Legislature, whether they are Democrat or Republican, that same spirit, hope and desire for change is in each of us. To those of you in this chamber who have pledged to reach across party lines and work together for the good of our state I thank you, and the people of Alabama thank you.
Tonight I am charged with speaking to you on the state of our state. Although our state is full of promise, our government faces a fiscal crisis of historic proportions. The best estimates of the Finance Department show that the deficit in the 2004 budget will be at least $500 million. And this is without making any improvements to our schools, correction facilities, or any other state programs that are in dire need of more funding.
My fellow Alabamians for the past few years, state government has lived beyond its means. Here is what we have inherited:
An Education Trust Fund budget with a deficit of $175 million for this year.
In the General Fund one-time revenues of $222 million in the 2003 budget that was used to shore up on-going programs, but which will never be available again
Runaway growth in employee benefits which will consume $150 million of the Education Trust Fund budget in 2004.
A Medicaid budget which will require a minimum of $70 million to meet mandated benefit growth in 2004.
A tremendously under-funded Corrections budget which will need a minimum of $125 million additional dollars in 2004.
A doubling of our bonded indebtedness in the last four years.
Our government has lived like a family paying the power bill on their credit card every month, just postponing the inevitable. Well, ladies and gentlemen, the inevitable is here. The Alabama Constitution requires that we have a balanced budget; this will require cutting the General Fund Budget by approximately 20 percent, and education expenditures by approximately 6 percent.
If we continue the policies of the past, these budget shortfalls will dictate a number of drastic cuts in the upcoming fiscal year. Let me try to put a human face on these numbers:
3,200 teachers and support personnel will be laid off. That is in addition to the 2,000 who will already lose their jobs this spring.
Many extra-curricular activities, including high school athletics, will be discontinued.
Forty-six troopers will be let go despite the fact that our trooper force is already 25 percent understaffed.
Trooper assistance to stranded motorists will be eliminated and nine highway patrol posts will be closed.
734 employees in our judicial system will be laid off and jury trials suspended indefinitely.
Thousands of child support cases will be affected, resulting in the loss of millions of dollars in child support payments.
Seven of the 14 inpatient mental health facilities will be closed, while the program that provides medication to the indigent will have to be eliminated.
Our lack of matching funds will reduce our Mental Health budget by $38.6 million.
450,000 of our citizens will lose access to healthcare because of the lack of funding for our Medicaid programs and 800,000 meals for the elderly will be eliminated.
Thousands of our citizens will lose their eligibility for nursing home care, and 60 Senior Service Centers will be closed.
If we fail to change the way state government operates, these are the harsh realities our citizens will face. This is the state of our state. The people of Alabama did not create these problems, but they will be the ones who must suffer the consequences. As Governor, I cannot and I will not let that happen!
To avoid these Draconian cuts, we are going to change government in Alabama and we are going to change it so fundamentally that we will never face such a crisis again. We are going to demand that years of waste and inefficiencies come to an end, and establish a government that is accountable to the people it serves. We will restore the people''s trust in their state government. This is the mission of my administration.
Our first objective is to cut out waste and create efficiencies in government. Let me tell you how we are going to do that. In an effort to lead by example, the Governor''s office is now working with 30 percent less personnel than the previous administration. I have also instructed the head of every state agency to, wherever possible, reduce their personnel costs by 5 percent over the next year. This should save us $75 million annually.
We are also in the process of drastically reducing the number of state cars and are looking at going to smaller and less expensive state vehicles. We will cut the aviation staff by 60 percent.
We are also halting all out of state travel for any state employee, unless it is of vital interest to the well being of the state.
A few weeks ago, I issued an executive order banning all pass through pork from our budget. Ending this process of spending dollars in secret will save tens of millions of dollars and also help restore the public''s faith in the budget process.
I have directed Joe McInnes and the Department of Transportation to make their number one priority the resolution of the Reynolds lawsuit that has cost the state of Alabama over $250 million dollars. For that amount of money we could have paved all interstates in Alabama and I-20 twice. And not one dime of this money has gone to the plaintiffs, but rather to the lawyers. This suit continues to cost taxpayers almost half a million dollars a month in legal fees alone. This case must end and it must end now.
Every member of my cabinet is looking for ways to save additional taxpayer dollars, through cutting costs and duplication. For example, in the Mental Health Department, Commissioner Sawyer is looking into the consolidation and closure of several mental health facilities. This move alone will net $10 million dollars in state funds and $18 million in federal funds.
I''ve instructed my Revenue Commissioner, Dwight Carlisle, to add additional auditors to uncover any unpaid taxes from corporations who are not paying the taxes they owe. It''s time we clamp down on them. If there are loopholes, it is time we close them once and for all.
We are also working on plans to control the growth of medical costs for state employees and Medicaid. Other states and businesses have recognized that the growth in these costs will overwhelm a state government and have crafted solutions. We must now do the same.
These cuts in government spending are the first immediate steps in reforming state government and making it accountable to the people it serves. However, in order to find long--term solutions, we must make fundamental reforms in our government structure -- changes that will allow us financial flexibility, ensure efficiency and accountability and establish a firm foundation upon which this state can thrive.
The first reform that must take place is constitutional reform. Soon after taking office, I established the Alabama Citizens'' Constitution Commission. They have been working for over a month now to devise a plan for long-needed reform in several key provisions of the constitution.
I believe the most important change they are considering is the reduction of excessive earmarking in our state budget. Today in Alabama, we predetermine where approximately ninety percent of our revenues go---by far the highest in the United States. When compared to earmarking in other states, Alabama is simply out of sync with the rest of the country. The majority of states earmark about 20 percent of their budgets, and only three other states are over 50 percent.
This outlandish amount of earmarking handcuffs our state government and continues to prevent us from being competitive. We must have the ability to move money from one department to another, depending upon where need is the greatest. If not, our only ability to solve a crisis, would be to raise taxes. And, that makes no sense.
You could not manage a business under those restrictions or even your household budget. Why then do we believe we can manage a multi-billion dollar state budget with such archaic restrictions? Members of the Legislature, it will take courage on your part to resist the pressure from special interests to keep these earmarks in place, but for the good of Alabama, I challenge you to make this change and make it now.
And it is time we re-define the mission of our education system. A majority of taxpayer dollars goes toward the education of our children, yet we remain at the bottom of too many national rankings. I see our mission this way: To provide every child in Alabama with a world-class education that is second to none offered by any state. From this point on we must look at every dollar dedicated to education and determine if it will accomplish this goal.
We must ensure that tax dollars make it into the classroom and are not absorbed into a bloated bureaucracy. We must ask the tough questions of what is wrong with our system. If it is simply an issue of more money, then we will find the necessary funding. But, before we increase spending, we are going to cut out waste, eliminate duplication and guarantee our dollars are going into the classroom. To that end, we have established the Education Spending Commission to provide the people of Alabama with a clear picture of how all education dollars are being spent.
We must also return more control of education to the local school systems and the teachers and principals. School systems that have proven to be good managers of their resources should be given greater flexibility. At the same time, school systems that have wasted the public's money will be strictly controlled and dealt with severely. These changes will result in substantial cost-savings and increased accountability in our education system.
Tonight, I have delivered the difficult but honest report that is the state of our state. In speeches past, political rhetoric has clouded and often hidden the truth of our reality. But, you did not elect me to mislead or misinform you. You elected me to be honest and direct with you and to offer solutions to the very real problems we have faced for too long.
There are many today that say we must immediately raise taxes in light of the situation we have inherited. That may be forced upon us one day, because I have pledged that no essential state services will be discontinued to those who depend upon them. But, I will not entertain the idea of additional taxes until we reform the policies and practices that have created the problems we face today. Too many small businesses and citizens are burdened by our tax structure and higher taxes should be considered only as a last resort, not the first. As everyone in this chamber knows, the people of Alabama will not support any tax increases until we have restored their trust and returned credibility to state government.
While I am hesitant to propose higher taxes, I am dedicated to fairer taxes. In Alabama we start taxing income at $4,600. This is not just wrong -- it is immoral. This forces so many of our working poor and elderly who are living on a fixed income to bear a disproportionate burden. Quite often, this means the most vulnerable among us are having to decide between buying prescription drugs, paying the power bill or putting food on the table. No one can defend such a system. We are working to devise a tax reform policy that will be comprehensive and fair, but we will not allow haste to replace thoughtful deliberation.
For years we have tried to reform taxes at the expense of one group over another, and each time this effort has failed. The politics of division can never be the foundation for reform.
Despite the many challenges that face us, I am optimistic every day I come to work because we have assembled the most impressive Cabinet in the history of our state. These talented men and women are working day and night to solve the entrenched problems in Montgomery. The good news is there are answers and we are making progress. I know that these trials will not get the better of us---they will simply make us better.
I believe in the people of Alabamain their pride, their compassion, their strength and honor. With hard work and perseverance, we will overcome our problems and leave this government better than we found it. My fellow citizens, this is not a fight we will lose. We must build a foundation that will last for generations, and we will construct a government that is accountable to the people it serves and fair to every citizen, regardless of their position in society.
In my campaign, I promised every Alabamian that I would work for a new day in Alabama. Tonight I am reiterating that promise with my plan to guide us out of these difficult times and into a new era of Alabama history. But the only way to bring about change is to join together as Alabamians united in a common cause. During this legislative session and throughout the next four years we must work togetherit is what the people demand and what the people deserve.
My challenge to you is that a year from now when we gather for this address we will be able to report to the people of Alabama that their elected leaders have honestly confronted the challenges that face them; that they have determined the wise course of action and summoned the collective will to make the courageous choices that will begin a new chapter in our history a chapter that may prove to be our greatest.
May God Bless You and the Great State of Alabama.