BATON ROUGE, La., April 25 - Following is the prepared text of Gov. Kathleen Blanco's (D) 2005 state of the state address:

Mr. Speaker, Mr. President, members of the House and Senate, honored guests. Let me extend a special welcome to the five newest members of the Legislature and congratulations to Rep. Dorsey, the House's new Speaker Pro Tem.

Today we have much to celebrate in Louisiana ... but these are trying times for many families in our state.

Louisiana has sent thousands of her sons and daughters overseas. Forty-four have given their lives in the war zones of Afghanistan and Iraq.

These heroes proudly wear the uniform of every branch of service. They serve in the guard, reserves and regular forces. They risk lives every day to protect two young democracies.

In many ways, our soldiers' deployment has left emptiness back here in Louisiana. These men and women hold vital jobs in their civilian lives.

They work as deputies and firefighters, carpenters and lawyers, fishermen and accountants. They are mothers and fathers, sons and daughters.

They are missed. They are loved. They are in our prayers.

We honor the dead. We've asked God to heal the wounded and maimed. We've prayed for the safe return of those still abroad.

We also have prayed for two fallen colleagues.

For the first time in 37 years, this Legislature begins a session without the presence of Sen. John Hainkel, a man who served his city and state in both chambers.

Rep. Charles Hudson is another of our colleagues who left us too early. He will be missed.

We also note the passing of Sen. Ron Bean, a former colleague and a distinguished veteran.

Please join in a moment of silent prayer for John Hainkel, Doc Hudson, Ron Bean and each of the men and women who've died in Iraq and Afghanistan.

I am supporting a bill this session that will allow all of us to make a small sacrifice for the benefit our soldiers' families. This will create a check-off box on state tax returns to fund a program for the families.

Let's show our support for these heroes.

The state of our state is strong. Stronger than it's been in years.

God has blessed Louisiana in so many ways. The beauty and abundance of our natural resources are matched only by the hospitality, talent and enterprise of our people and the rich flavor of our culture.

The US Census Bureau tells us our workers are the fourth-most productive in the nation.

Yes, this is a magnificent state. One for which we must have high expectations and greater aspirations.

A year ago, still new to this job, I stood before you and invited you to join my crusade to create a more-prosperous and compassionate state for all of our constituents.

And, you did.

I said then that I wanted us to give our people a professional well-managed government. One that is more responsive and a better steward of the taxpayers' money.

And, we have.

I said then that we - as leaders of this government - must live within our means. That we should tighten our belts and restrain our spending to cope with tough fiscal times - just the way Louisiana families do.

And, we are.

I said then that we should cut out-of-step taxes to change our business climate.

And, we did - a billon dollars worth.

I said then that we should hold ourselves to the highest ethical standards.

And, we are.

I said then that we must build a stronger economy that provides quality jobs - the kind with good pay and good benefits - for our workers.

And, we are.

I said then that we need to create an efficient health-care system that delivers quality, affordable care to the people it serves.

And, we have begun.

I said then that we must treasure our children, strengthen their families, set them on right paths and, if they stray, to restore and rehabilitate them.

And, we do.

I say today ... we are succeeding.

We are succeeding because we are a good team.

But our work is only beginning.

To paraphrase the poet Robert Frost, we have miles to go before we sleep. We've realized considerable success in the past year. But it's only a start ... a good start.

We still have much challenging work ahead of us if we are to create the kind of Louisiana we all dream about. But, with God's help and His wisdom, I believe we can do it.

We are succeeding. So well that our citizens feel the change ... even the rest of the nation is talking about Louisiana in positive terms.

We are succeeding in changing the public perceptions of our state. Recent public opinion polls show that most of our citizens believe we are leading Louisiana in the right direction.

I think that we, as a people, had sort of given up and had accepted our bad politics as just a bad habit. But what I see is a renewed sense of hope.

Governing magazine recently increased Louisiana's grade to a solid B for the way we run our government and manage our taxpayers' money.

Only seven states ranked higher.

Southern Business and Development recognized Louisiana as number three on its list of Top 10 "Comeback Kids." The magazine predicts our "comeback will result in a consistent job-generation effort."

All this recognition gives me heart.

It should give you heart. It shows that the work we are doing to make this government more efficient and to control our spending is paying off.

Everything we do in the coming budget year, we do in the shadow of a 686 million dollar problem, most of which is a 400 million dollar medical bill. It's a bill we must pay, for the sake of our children, our elderly, our disabled.

By changing the Medicaid rules, the federal government is forcing us to find 400 million in new state dollars to prevent a one billion dollar hole they created in our health care budget.

Earlier this year, I took the first steps to meet the shortfall by making cuts now. I challenged the entire executive branch - including statewide elected officials - to live with less money.

We all did ... we cut nearly 50 million dollars to offset next year's problems.

I'm proud our economy is growing. But it's not growing nearly enough to offset those huge medical bills and escalating obligations to public schools, college scholarships and public safety.

Like you, I wish we had the resources to satisfy every legitimate need in our state. But we don't.
These times demand good stewardship of our taxpayers' money - that is our duty ... yours and mine.

With that in mind, I ordered state agencies in the executive branch to cut even more next fiscal year -- this time by three and a half percent. These cuts and other savings will reduce state spending by another 172 million dollars.

I ordered state agencies to absorb another 120 million dollars of increases due to inflation and personnel costs. That's a total of almost 300 million dollars in cuts and savings.

But, that is not all. I will eliminate at least 940 existing state jobs.

As you can see our budget has been cut considerably ... just not enough to pay the entire 400 million dollar medical bill and other mandated costs.

This budget is just 1.7 percent larger than last year's - that's less than the half the rate of inflation.

There are increases we cannot avoid - many mandated by the constitution, some required by conscience, a big one dictated by Washington.

Thankfully our growing economy has put more people to work and blessed us with a small increase in revenue.

But, think of Louisiana as a family.

We worked hard last year and earned a small raise, only to see our expenses - especially our medical bills - consume that raise and more.

Those expenses forced us to cut other parts of our family's budget.

As you all know, the administration in Washington wants to cut Medicaid insurance even more and force the states to pay higher and higher medical bills in coming years.

That means our family's medical bills won t go away. We can expect these tight financial times to continue for years.

I see that some of you want to put more strain on our family's budget by spending money we don't have or cutting income we depend on.

I am asking you not to make it worse. Our finances can NOT take the strain.

Despite these financial challenges, we are creating thousands of new, good-paying jobs for our people. We're attracting companies that once wrote Louisiana off and swore they would never come back.

Businesses that took advantage of state incentives last year are creating 27,000 new jobs ... 27,000 new jobs.

More are coming because ... Louisiana is open for business.

The list of corporations making major investments in Louisiana is long - and by now familiar.

• Union Tank Car, 100 million dollars, 850 jobs.
• General Motors, 250 million dollars, 250 jobs.
• Roy O. Martin Lumber, 223 million dollars, 215 jobs.
• Shintech, 1 billion dollars, 2,000 construction jobs.

Those are just the biggest of our headline successes in the last year.

Those incentives - incentives this legislature created -- are working to keep homegrown businesses here, to help Louisiana entrepreneurs develop new businesses and attract new companies and industries into our state.

Those incentives ensure that these new industries and businesses are bringing quality jobs to our workers - some of the most productive workers in the nation.

Quality jobs provide good pay and health benefits. Those benefits move workers - and their children - out of the public health care system.

We can't talk about economic development without talking about education.

In my 22 years in public service, I never heard the words Louisiana, education, and excellence in the same sentence.

Louisiana ...
Education ...
Excellence ...

Well, we're hearing them now.

We're hearing those words from some of the nation's top education experts.

Education Week has ranked Louisiana first in the nation for our efforts to improve teacher quality.

They also rated us second for our efforts to improve student achievement. And last year we were eighth in the nation in the number of new nationally board-certified teachers.

These highly qualified teachers are a precious gift to our students. Three years ago, Louisiana had five.

Today, we have 400 ... with 400 more in the pipeline.

Research tells us what all parents have known for a long time: quality teaching increases student achievement.

Our accountability program works.

Recent results show far more schools are improving and far fewer failing. We can take some of the credit for funding the programs and holding the line on maintaining their standards.

But, most of the credit goes to our teachers. We've asked a lot of them and they have delivered.

They are hardworking men and women like Dolores Cormier-Zenon who is here with us today.

Dolores is a second-generation teacher. After 13 years teaching elementary and middle-school students in Lafayette, this nationally board-certified teacher accepted a new challenge and became a distinguished educator.

Accepting that challenge means Dolores - one of our best and brightest educators -- now makes a two-hour commute to another school district where she teaches teachers.

Dolores is making that sacrifice because she wants to contribute on a larger scale. She likes to say, that as a classroom teacher, she could reach 25 students at a time ... now - by helping many teachers to be more effective - she's reaching thousands of students at a time.

"Think about the impact," she says.

Dolores, I agree with you, what could be more fulfilling?

Please join me in thanking Dolores - and the thousands of hardworking educators she represents ...

Our teachers are producing results for our children and we need to produce for them ... we need to maintain the momentum we have ... we need to keep dedicated professionals like Dolores and her colleagues across Louisiana.

We need to give our teachers a meaningful raise. We have entrusted them with our children ... our future. Please, join me in supporting our teachers. They have earned our gratitude.

I propose a raise of at least 1,000 dollars for our teachers, in addition to the 300 dollar average raise already in the minimum foundation formula.

I know - we all know - that this is not as much as we would like to provide our teachers ... but it's a good start.

Money is tight these days ... we are making cuts across the board in state government ... but I will fight for this raise.

I am committed to this raise. So committed that it leads me to do something no governor likes to do, ask for more revenue.

Let me remind you that we cut spending to deal with that 400 million dollar medical bill. Were it not for that hole in our budget I would not be asking for more revenue for teacher pay - we would have it.

But before I came to you asking for this revenue, I did the hard work of finding and making budget cuts. And now I ask you to do what's right for our teachers ... and our children.

I ask you to give teachers a raise by increasing the revenue we receive from tobacco, alcohol and gambling.

These activities are entirely voluntary for consumers.

This is right thing to do. Our teachers - and our children - deserve to win this fight.

I will fight for them - please join me.

I know some of you think we can fund a teacher raise from increased revenues that we hope to gain when the revenue estimating conference meets next month.

I wish it were that easy.

Don't spend that money yet. We face another drop in income but we don't know exactly how much.

Our successful film incentive program will cost us at least 70 million dollars. Whatever new revenue the conference certifies must go to cover these tax credits - it won't be available for teacher raises.

Our future education success rests on recruiting and retaining highly qualified teachers. We must provide a quality, stable learning environment for our children. I know that this pay raise will keep moving us toward those goals.

People all over Louisiana support what I am proposing. In fact, they expect us to maintain our momentum in education by supporting our teachers.

Please support my quest for higher teacher pay.

To give our kids a good start, I am also asking that you to invest another 20 million dollars in LA-4, our successful pre-K program for at-risk 4-year-olds.

Last year, you helped me maintain funding for LA-4. This year, I'm asking you to expand our investment and put almost every at-risk child in LA-4.

This is the only significant expansion I'm proposing this session.

We want children to enter school ready to learn and we want them to graduate ready to earn. That's why Louisiana is also leading the national effort to redesign our high schools.

High schools must offer a more-demanding education to produce students ready for success in college AND our modern economy.

This redesign will require all public high schools to create rigorous academic and career pathways to keep their students enrolled and learning.

We must decrease the number of students dropping out of high schools and increase the number dropping in to technical colleges, community colleges or universities.

Recently, I've talked with young men and women at schools across the state.

• Those I met at Sulphur High School are rigorously preparing for a university education.
• Those I met at the St. Paul Adult Learning Center in Baton Rouge are struggling to get back on track after dropping out of school.
• Those I met at Cuillier Career Center in Marrero stayed in school because they are able to take an alternate path to success.

They all know the importance of a good education. It is up to us to provide a variety of productive paths for every high school student

Last week, at Cullier, I saw a powerful example of how students are preparing for the workforce.

One of the students I met, Craig Delaune, is studying automotive technology in high school to help pay for college. He told me that if you don't have a job, you're going to be struggling.

He is so right.

The skills needed for entry-level jobs are rising and Louisiana employers report they have a difficult time finding qualified workers.

The importance of lifelong learning and continual skills upgrade is critical for our workers and our economy.

At Bossier Parish Community College I talked with high school graduates who are gaining the skills to take the jobs we are creating in this modern economy.

Each year, more than 14,000 students drop out of high school. Every child who leaves school ill prepared is sentenced to a life of poverty.

That is why I need your help to redesign our high schools.

Losing our students is not acceptable. Enough is enough.

While we're educating our kids for the jobs of tomorrow we have to be about the business of creating those jobs today.

Therefore I am proposing a package of focused economic development initiatives.

We must change our tax equalization program to retain existing businesses as they modernize and become more competitive.

We need more flexibility in our existing "Major Projects Authority" as we continue pursuing major industries like auto and aircraft makers.

Louisiana's tax structure must be more favorable to recruit and retain company headquarters.

I propose a program to spur venture capital investment in Louisiana. This bill is modeled on an Oklahoma program that has increased the number of venture capital firms from 1 to 15 in 13 years without costing that state a dime.

Combined with our billion-dollar business-tax phase out, this package helps us create a stronger business environment for Louisiana.

To create a more-ethical government, I am supporting two bills that will strengthen my hand as I promote Louisiana's improving image to the nation's CEOs.

Louisiana has a long and rich political tradition which is a source of great pride but comes with a great price.

At my request, LSU surveyed a thousand national business leaders and found that a third gave Louisiana low marks for corruption.

Another survey revealed that many Louisiana business leaders report that an image rooted in corruption holds us back.

My ethics reforms will help us to continue to overcome that reputation.

One bill would close a gap in our ethics laws and require legislators and legislative candidates to disclose their sources of income.

This transparency will give the public confidence in the integrity of our public officials.

I am required to make this disclosure. So are members of Congress. Most states have the same requirement.

I KNOW it's time we debate this important issue.

A second ethics bill will give Louisiana the absolute confidence we need in those who run our retirement systems.

This bill will raise the bar to make sure that officials running our retirement systems will not be wined and dined by people seeking to influence them.

Another way to help Louisiana's economy is to improve our road network.

I've asked our Congressional delegation to secure the federal dollars we need to complete I-49, both north and south.

We are already investing some of our precious money to begin the work on this vital part of Louisiana's economic future.

I have told our delegation that my administration will fully match any funds they can get for 1-49.

I am adding another 20 million dollars to the capital outlay bill in hopes that they will bring home 100 million dollars.

To free up more money for our state roads, I propose that we make collecting the existing gasoline tax more efficient. By collecting the tax at the refinery, we will have another 15 to 20 million dollars every year to invest in building and repairing our roads.

I've also asked our Washington delegation to work together to find the money to save our coast. I asked them to secure a portion of federal oil and gas revenues from the Outer Continental Shelf to protect and restore America's Wetland.

This is urgent. Time passes ... the coast erodes ... the Gulf edges closer.

But, I have high hopes for the future.

Based on my recent conversations with our Washington delegation, I know they are working hard and creatively to secure the federal revenues we need.

We've all worked on making the nation - and our leaders in Washington -- aware of our predicament.

We can reinforce our commitment to America's Wetland by approving a constitutional amendment that will dedicate any new federal Outer Continental Shelf money to coastal erosion efforts.

I've asked you to manage our taxpayers' money wisely, to continue strengthening our education system and to improve our business climate.

I am also asking you to help reform our ailing health care system.

Our health-care ills have grown over generations. We know we can't fix them in a year or two but, we are on the way.

Last March, I vowed to transform our health care system by putting patients first.

What I inherited a year ago was a runaway system that was hemorrhaging dollars and we had to stop the bleeding. It's not about what we put in to the system - it's about what our people get from the system.

Earlier this month I was in Alexandria. I heard and saw first hand how some people can thrive outside of institutions.

I met the Hendrix sisters, Minnie and Viola. They used to live in a developmental center. Now, a waiver program pays caregivers who help the sisters live full and independent lives and even allows them to have jobs.

We're in our own home now, Minnie proudly told me.

With careful planning, we can repeat that success for others like the Hendrix sisters. Their independence costs the state about half what we paid to keep them in an institution.

I will ask you to approve recommendations from the health-care reform panel to give patients and their families more choices in long-term care.

Communities across our state are trying to find better ways of delivering health care. Their efforts keep ending in deadlocks and deadends.

There is a way to break through and give our local citizens the keys to true reform.

Federal and state regulations tie preventive care funding to our hospitals. Reform of the current safety-net system cannot happen without financing flexibility from Washington.

Until we get this flexibility we cannot have an honest discussion about the best way for each community to delivery care.

That's why I am asking you to support a federal waiver giving local communities that vital flexibility.

The future of primary and preventive health care rests in decentralization and it starts with passage of this legislation. This is how we do something that's both new and puts the patient first.

We must also encourage our citizens to make healthier choices in their lives.

According to the Centers for Disease Control, tobacco use costs Louisiana's economy 2.8 billion dollars every year.

Making cigarettes more expensive is one way to reduce that cost. Well-documented studies show that higher prices discourage young people from smoking.

Childhood obesity is another serious problem.

A report in the current New England Journal of Medicine concludes that today's generation of children will have shorter and less healthy lives than their parents - for the first time in modern history -- unless we intervene.

Estimates show that one-third of Louisiana's children are overweight.

More than three-quarters of the snacks and drinks sold in school vending machines have poor nutritional value.

Another way to encourage healthy choices is to empty those machines of sugary soft-drinks and high-calorie snacks and replace them with healthy choices.

Surveys show healthy snacks generate just as much money for schools.

Ensuring good health and quality affordable health care is one of the best things we can do for our people.

I want to reform our health care system because it's the right thing to do for our people.

But it's also the right thing to do for our economy and for our children.

As I am fond of saying ... a sick child can't learn and a sick parent can't earn. That's why we are well on the way to creating a health care system that better serves all our people.

Improving health care, education and the economy are at the heart of ending the greatest problem Louisiana faces - poverty.

Poverty is everyone's problem. Whether you're black or white; rich, middle-class or poor, we are all touched by poverty.

Poverty is the root cause of the negative statistics that haunt us and limit our ability to succeed.

Everything I do as governor is aimed at ending this scourge that has afflicted our people for too long.

If you don't feel the humanitarian cost of poverty, think about the financial implications. Our health care costs ... our law enforcements costs ... our prison costs.

Poverty is just too expensive. We cannot afford it.

I have been across the state and heard from people in every walk of life who desire -- and demand - these reforms and improvements. They want us to create a more efficient government. They expect us to build a better more prosperous Louisiana.

A better, more prosperous Louisiana ... that is why we are all here in this chamber.

Our citizens sent us here to work together on a better future for their families.

There is a tremendous sense of hope and enthusiasm in Louisiana today. I've felt it, you've felt it.

Together we can build on this energy to create a new and better Louisiana.

God bless you all and may God bless the state of Louisiana.