ANNAPOLIS, Maryland - Feb. 3 - Following is the prepared text of Gov. Martin O'Malley's (D) 2011 state of the state address:

Mr. Speaker, Mr. President, Lieutenant Governor Brown; Treasurer Kopp, Comptroller Franchot; Attorney General Gansler; Attorney General Curran; Governor Hughes; Minority Whip Hoyer; Congressman Van Hollen; Congresswoman Edwards; Congressman Bartlett; colleagues in city and county government; men and women of the Maryland General Assembly; Members of the Cabinet; Katie O'Malley; my fellow Marylanders: Today, we gather in a promising, yet uncertain moment in our history. In times such as these, Marylanders don’t make excuses, we make progress. We expect the same of our government.

Since the earliest days of our State, we have come together knowing that there are some challenges so large that we can only tackle them together. And together, with a government that works, we are moving forward. Forward with the best job creation since the recession began. Forward with America’s best public schools and more affordable college. Forward with fewer homes lost to foreclosure and fewer lives lost to violence. Forward with a healthier Bay and rebounding blue crab population. Forward with an economy that’s getting better and more Marylanders employed this year than last.

The State of our State is stronger today than two years ago, stronger than it was even a year ago, but better isn't good enough. Not with so many moms and dads out of work, so many businesses just holding on. Not with neighbors lost to violence. Not with the children of so many more countries now out-performing our kids in the classroom. There is more we can do, and for the sake of our children’s future, there is more we must do. We live in a very different world than the one we inherited from our parents and our grandparents. Times are changing, and states must adapt to win. As President Obama said last week, “We know what it takes to compete for the jobs and industries of our time. We need to out-innovate, out-educate, and out-build the rest of the world.” To make this new economy ours, we must make the right choices and investments to create jobs by spurring innovation: innovation in the classroom; innovation in public safety; innovation in science, discovery, healing, manufacturing, green energy and trade; innovation in public health,… innovation in our own experiment in self-governance.

Progress is only possible with fiscal responsibility and a willingness to “think anew and act anew.” We must get more out of every dollar. We face the reality of a $1.4 billion gap between expenditures and our recession-battered revenues. With 87 cents of every general fund dollar we now spend allocated to public education, public health and public safety, there are no easy answers. The best option for our most important priorities is to defend them by level-funding them. By making tough choices and by cutting $5.6 billion in spending, you and I have been able to protect — and in some cases increase — investments in our future. Now we must cut nearly $1 billion more. In past years we’ve been supported by dollars from President Obama’s Recovery & Reinvestment Act. This year, without these funds, already tough choices will be even tougher.

Together, we’ve reduced the size of state government — already the 8th smallest government among the 50 states. Now, we must further streamline and consolidate: combining related law enforcement forces and functions,… merging the Higher Education Commission and Department of Education,… streamlining water functions within the Department of Natural Resources. We must also fix and save our State’s pension system, which has fallen out of balance — thereby threatening the long-term stability of our state finances. Prospectively speaking, annual contributions from both the State and employees will have to be moderately increased while expectations of some benefits will have to be moderately lowered. None of these choices will be popular. All will be tough. But this is what is required right now in order to move forward to better days.

Balancing budgets, cutting spending, and reducing the size of government are important means to a much larger end. If we are to make this new economy ours — if we’re going to win the future — then we must also have the courage and foresight to make strategic investments to improve our children’s education, to strengthen our workforce and infrastructure, and to create jobs through innovation. Innovation is key,… and the foundation of innovation is education. It’s one of the most important investments we make together. That’s why, for the past four years, every year, we’ve increased education funding. Last year, together as a State — and with the courageous help of our President and Congressional delegation — we chose to make the largest investment we’ve ever made in public education. And when this economy recovers, we’ll do even more for public education. In the meantime — in these lean times — we will make that same all-time high level of investment. Most school systems for the first time during this crisis will now have to make the same tough choices the rest of government and business have had to

To make this new economy ours, we must continue to make college more affordable for more families. Because of your tough choices, we are making some solid progress. Alone among the fifty states we chose to freeze in-state tuition four years in a row. Today, Kiplinger’s says the University of Maryland is a top 5 national value. ParentsAndColleges.com ranks Bowie State University #1. Access to college is important, but completing college is essential in this knowledge-based economy. That’s the goal of Complete College Maryland, which I hope you will support in this year’s budget. It’s a step — but only a step. To move forward, we must rethink the way we fund higher education so there is a greater incentive for completing college on time.

Innovation. Education. College completion. At the end of the day, it’s all about job creation and job retention. No family can make real progress without a job. In our State, where there is no such thing as a spare Marylander, the most important job we create is the next one. We are joined today by a determined woman named Cynthia from Prince George’s County. After 13 months of unemployment she landed a new job which pays more than the one she lost. And she did it with the help of our One Stop Centers. This is what it’s all about. To create more jobs, we must leverage the power of our diversity,… we must leverage the power of our geography,… And we must harness the potential of Maryland’s Innovation Economy: bio-tech, green-tech, clean-tech, cyber security, information technology, aerospace, global trade, and next generation manufacturing.

No state is better positioned than we are to transform global challenges into the jobs and opportunities of the new economy here in Maryland. The Chamber of Commerce, the Milken Institute and the Kauffman Index all rank us in the top two or three best states for innovation, science, and our ability to win in this new economy. We have America’s #1 ranked schools, one of the most highly skilled workforces, and leading institutions of discovery and higher learning. We sit at the national epicenter of science, security, health and healing. And key sectors of Maryland’s Innovation Economy are creating jobs faster than the rest of the nation. Our legacy is one of entrepreneurial Marylanders whose creativity and imagination have literally changed the world from the telegraph, railroads and conveyer belts,…to cures and vaccines,… from Old Bay to the Hubble Telescope.

Today, Marylanders are working to revolutionize the way we “feed, fuel, and heal” our planet. At companies like Life Technologies and Gliknik our fellow citizens are working at the cutting edge of life sciences. At Smiths Detection in Edgewood, Marylanders are defending our security from chemical and biological attacks. And at Sourcefire, our neighbors are innovating in adaptive cyber security. Last year, I asked for your help to create a new Hiring Tax Credit and Small Business Loan Guaranty Fund. You delivered and today more Marylanders have jobs as a result.This year, we can take action to help grow the next MedImmune or Human Genome Sciences. Through InvestMaryland, you and I have the opportunity to unlock $100 million in venture capital. Why does this matter? Because seed and early stage money have all but dried up in the national recession. Passing this legislation can be the difference between running ahead or running in place. Creating thousands of jobs in Maryland or seeing them go to other states. Creating the next world-changing company in Maryland; or watching it happen in Massachusetts. The lack of capital is one barrier to job creation. Bureaucratic red tape is another. This year we launched Maryland Made Easy to simplify and streamline the business licensing and permitting process in our State. There are things we can do to get government out of the way without compromising our environment.

Together, we’re bringing 5,700 jobs to the Port of Baltimore through an innovative public-private partnership. And we’re creating 800 jobs in Maryland by convincing GM to build their next-generation green, electric motor in Baltimore County. This year, we have the opportunity to do more to advance solar energy, more to advance plug-in electric cars, and more to harness off-shore wind. We set one of the most ambitious goals for renewable energy in America, but so far we’re not on pace to meet it. This isn’t going to happen simply because we set this big goal or because it’s a good idea. I need your support for the Maryland Offshore Wind Energy Act, not only to create more renewable energy in Maryland, not only to reduce greenhouse gas emissions from Maryland, but to jumpstart the creation of thousands of green manufacturing, assembly and servicing jobs on the shores and waters of Maryland.

There are some challenges so large we can only accomplish them together. Harnessing off-shore wind is one of them. Holding utilities accountable for reliable electric service is another. How long do you want to wait in the cold and dark for a deregulated market to solve these problems? Moms and dads deserve better than to sit for days in freezing homes because the power hasn’t been restored. Family-owned businesses should not be forced to lose productivity and income because big utilities have failed them. Today, we introduce legislation that will set reliability standards for electric customers — and I ask that you join me by making it law.

It all comes back to jobs. Building a more reliable power grid creates jobs. Rebuilding roads and renovating schools creates jobs. Building and restoring bridges creates jobs. Rebuilding water infrastructure and revitalizing community colleges creates jobs. Building science labs creates jobs. The Recovery & Reinvestment Act — signed courageously by President Obama and implemented openly and transparently without the waste, fraud and abuse that the naysayers predicted — has helped us create and save more than 15,000 jobs in the most recent quarter. And through our Capital Budget we can help create and retain 15,000 more. This includes jobs building and refurbishing schools, with the $250 million investment we’re once again proposing for school construction.

Together, in so many ways, we are also building a 21st Century cyber-infrastructure. Our Health Information Exchange and first-responder interoperable communications network, will protect public health and public safety. The statewide rural broadband network we’re building will effectively connect every county in Maryland to the information superhighway — thanks to President Obama and our congressional delegation. Through the Sustainable Communities Tax Credit, we’re helping create 700 jobs. By moving forward with the Red Line and the Purple Line, we’re striking a more sustainable balance between roads and transit. To connect the infrastructure of a stronger future, we are working together to grow smarter: protecting more open space, and advancing strategies like Transit Oriented Development.

We must realize that where we choose to sleep, eat, and live affects our environment and our Bay. Together, we’ve made great progress in recent years,… reducing farm run-off, reducing pollution from sewage treatment plants, and — most recently — reducing pollution from storm-water run-off. But there is one area of reducing pollution where so far we have totally failed, and in fact it has gotten much worse,… and that is pollution from the proliferation of new septic systems – systems which by their very design are intend to leak sewage into our Bay and water tables. You and I can turn around this damaging trend by banning the further installation of septic systems in major Maryland housing developments. This is common sense, this is urgently needed, this is timely, and for the health of the Bay we need to do what several rural counties have already had the good sense to do.

To make this new economy ours — and to protect our quality of life — we have not only set big goals; together, we’ve made tough choices to deliver results. With tough choices, together we’ve done more than ever before to empower women- and minority- owned businesses. And because of legislation you passed last session, we’re going to do more to empower businesses owned by veterans. With tough choices, we’ve expanded health care to 248,000 Marylanders, 118,000 of them children. And last year, our patients experienced more than 6,000 fewer preventable complications in our hospitals. To move forward, we’re creating new incentives for doctors and hospitals to enhance the quality of care.

With tough choices, we’ve driven home foreclosures down 76%. They are now 65% lower than the national rate. With tough choices, we won the fight to keep the Preakness in Pimlico where it belongs. And, by working with the racing community, we prevented a collapse of the industry and the abrupt loss of thousands of horse-related jobs. And now we must work together toward a long-term, sustainable solution. With tough choices, we’re turning around the health of the Chesapeake Bay. Last year, because of difficult decisions we made together with Virginia, the Blue Crab population rebounded to the highest level since 1997. And if we want to save our native oyster and see it come back, we must hold true to our plan for oyster aquaculture.

With tough choices we are also taking our streets and neighborhoods back from violent crime. But better is not good enough. Since 2007, we have reduced murders in our state by 23%. The spate of homicides early this year reminds us of the urgency of work yet done. Better isn’t good enough. Thirty-one kids were the victims of homicides in 2010. According to the State Police, this is the lowest number of juvenile victims on record. But how do we explain to the families and friends of those 31 kids that we consider this a statewide accomplishment? Two years ago, you took guns away from domestic abusers.This year, I need your help to further toughen the enforcement of our gun laws. And while nobody believes we should criminalize poverty, there are things we can do — must do — to bring Maryland in line with what every other state does and expects when it comes to preventing the willful neglect of a child.

Over the course of these past four years, virtually every Maryland family has been impacted in some way by the tremendous challenges we've faced together as a people. Today, as we look forward to the next four years and beyond, every Marylander has a role to play in our recovery,… whether it's enrolling in night school, hiring a Marylander off unemployment rolls, joining in the search for solutions by participating in our Maryland Forward forums, encouraging a neighbor to call our HOPE hotline for help in saving their home,… or if you work in a bank, doing that extra little bit to qualify a small business for a loan. As President Clinton once so rightly said, “There is nothing wrong with America that cannot be cured by what is right with America.” Just look around our State. Look at the elementary and middle school students in classrooms all over Baltimore City who are achieving at record levels. I’ve seen firsthand the progress being made at Oxon Hill High School in Prince George's County. Think of the lives being saved by discoveries in Montgomery County’s I-270 corridor, in Frederick, and at bio-parks in Baltimore,… or the advances in security being developed at Aberdeen and Fort Meade. The potential of Western Maryland tourism industry. Or the possibilities rolling off the assembly line in Baltimore County. Consider the determination of the farmers on the Eastern Shore and Southern Maryland planting cover crops that are saving our Bay.

Notwithstanding the limitations of this year’s budget, all that we need to build a better future is right here. Moving forward is not just about today's budget math, it's about tomorrow's better Maryland. There are costs and there are values. Some values are so very, very important that they are even worth dying for. Everything has a cost. We cannot kid ourselves into thinking that by failing to invest in our future, we're somehow saving resources. Everything has a cost. Inaction has a cost. Consumption has a cost. Failing to make decisions that are consistent with the best interests of the next generation,… this too has a cost. But I believe in the better future that our children deserve. And I believe in the goodness of a Maryland that is willing to make it so.