Ohio State of the State Address 2005

COLUMBUS, Ohio, Feb. 8 Following is the prepared text of Ohio Gov. Bob Taft's (R) 2005 state of the state address. Click here to access a Web cast and audio links to the address.

Speaker Husted, President Harris, Minority Leaders Prentiss and Redfern, members of the General Assembly and the Supreme Court, distinguished guests, and my fellow Ohioans.

I am honored to be here today with the new leaders of the Ohio General Assembly. Over the past eight weeks, President Harris, Speaker Husted and I have been meeting to build an agenda for Ohio's future. They are exceptionally able colleagues, and I am confident that together we can accomplish great things.

And it's an honor to be here with all our elected officials, especially our new Treasurer of State Jennette Bradley. Jennette's her own boss now, but before I appointed her, I made her promise to still return my phone calls. And we now have a new Lieutenant Governor, our outstanding Development Director, who is passionate about creating jobs and building our economy Mr. Bruce Johnson.

I am also honored to stand here with the men and women of my cabinet the very best in the nation, who have directed their agencies skillfully through difficult times. On behalf of all Ohioans, thank you for your service.

There is no way I could do the job of Governor without the love and support of Hope Taft, Ohio's amazing First Lady. Every day, Hope has new ideas to help children, families, and those whose loved ones are serving overseas, and she knows how to advance her ideas as many of you in the chamber well know. Please welcome First Lady Hope Taft.

Ladies and gentlemen, we face great economic challenges in Ohio. That's why a year ago I devoted the entirety of this occasion to our Jobs Agenda. We've made good progress, yet there is far more to be done.

But before I talk about our unfinished business, let me share why I'm so hopeful about Ohio and optimistic about our future.

I've traveled this great state for many years, and seen firsthand our tremendous strengths. And our foremost strength is our people.

Ohioans are inventive.

Like the people at Turning Technologies, a rapidly growing software developer that got its start in the Youngstown Business Incubator. This company's classroom response systems are now an important teaching tool in universities, schools and businesses around the world.

Ohioans are hardworking and productive.

Just ask Honda of America, which last summer celebrated its 25 th year in our state. Honda produces more cars, more motorcycles, and more engines in Ohio every year, all thanks to the skill, the talent, and the work ethic of the Ohioans they employ.

Ohioans are innovative.

TimberTech, a company in Wilmington, is using polymer composite materials to make decks and fences. Last year I helped them break ground on a new project that will allow them to hire more workers.

Ohioans are practical.

We're a "can-do" people. Give us a problem, we'll give you a solution. When our troops in Iraq needed new armor to protect their vehicles, the folks at the Lima tank plant went to work and came up with a solution almost over night.

Ohioans are caring and compassionate.

There are now 50,000 OhioReads tutors across our state. These volunteers donate more than 3 million hours each year to help our students learn to read. And they're making a difference. Last September I visited Springmill Elementary School in Mansfield where tutors are helping students improve their reading scores year after year.

Our people are our greatest strength, but not our only advantage. We have a diverse economy: entrepreneurs, manufacturers and consumer product giants, financial institutions large and small, and productive farms. Our farmers send their products across the globe, and they support thousands of jobs in other sectors of the economy. We are working with them to open up new markets overseas, build ethanol plants, and find other new uses for their products.

We all know Ohio's central location is key, and you in this chamber have helped us take advantage by investing in roads and bridges to make sure we have a world-class transportation system. We're opening new areas of the state for economic development by completing the widening of U.S. 35 and continuing our work on the U.S. 30 and State Route 33 corridors. And, we're eliminating bottlenecks on interstates to keep traffic moving in and around our cities.

What we don't talk about enough is Ohio's unique and remarkable quality of life. We are a state of cities, small towns and growing suburbs where life is affordable and destinations within reach. There is no better place to raise a family. Sports, world-class museums and music, boating and fishing on Lake Erie or the Ohio River, and our excellent parks are all at our doorstep. And through our Clean Ohio Fund we're cleaning up brownfields, protecting our waterways, saving greenspace, and building trails throughout the state.

I'm blessed to have a job where I see different parts of the state every week. The communities I visit and the people I meet never fail to inspire me. Especially the men and women of our armed forces people like Senator Steve Stivers and Representative John Boccieri.

In December, I joined friends and family of the Red Horse Squadron of the Air National Guard at a send-off ceremony before their deployment to Iraq. Members of this unit embody Ohio's character and know-how. They can build anything, anywhere.

In Ohio, they've provided invaluable help in flood and snow emergencies. The courage and patriotism of these Airmen, and the support they receive from their families, demonstrate why we are the land of the free and the home of the brave. They are the heroes of our time, and I look forward to welcoming them home.

Faye Eishen is here today with her children, Megan and Jacob. Her husband, Senior Master Sergeant Terry Eishen, is with the Red Horse Squadron on his way to Iraq. Faye, we honor all the brave men and women defending our liberties, and we thank you for representing their families here today.

As we think about Terry and so many other Ohioans who are serving in harm's way we should ask ourselves, what kind of Ohio will our heroes come home to? What prospects? What opportunities? Will their children be able to find a good job and support their families here in our state?

There are many bright spots in Ohio's economy, but not enough. Last year I put forward an agenda for prosperity. Time and again I asked you to rise to the challenge and pass laws to improve our business climate and create the conditions for new and better jobs.

And time and again you responded. We asked for a jobs bill and you passed one. We asked you to improve workers' compensation, and you did. You advanced our Third Frontier Project to create more high-paying jobs through research, product development and innovation.

And together, we passed a strong law to put an end to junk lawsuits.

As a result, Ohio is more competitive today than a year ago, but we're not yet where we need to be. Now is the time to finish the job to send a clear message that Ohio is open for business.

If we are to create tomorrow's jobs, we can't remain frozen in time in yesterday's tax system. Unless we change it, our progress will be slow, our people will suffer, and Ohio will not grow.

Last year I called for tax reform. It's our number-one piece of unfinished work. And my number-one priority.

Let me be clear, I pledge to work with you day and night in a spirit of cooperation to reform our tax structure. We must act now.

Ohio's personal income tax is one of the highest in the nation. Ohio families know it, small business owners know it, and companies deciding between Ohio and other states know it.

Our high income tax makes it harder to recruit and retain top talent.

It penalizes entrepreneurs the small business owners who are the engine of our economy.

More than 300,000 small businesses pay at personal income tax rates.

These entrepreneurs employ 2.5 million workers, and they create most of our new jobs.

Yet instead of rewarding them, we punish them.

Clearly, this high-rate income tax is hurting our ability to compete with other states.

We also have an oppressive tax on investment. When a company wants to invest in new machinery and equipment, what do we offer?

A high tax burden. Yet another reason to pick Pennsylvania or Kentucky or even Michigan.

New ideas and new products often require new machinery and new equipment this desire to innovate is not something we should tax, and it's hurting our ability to compete with other states.

But that's not all.

Ohio's corporate tax is a nightmare. And we've got to fix it.

Right now we have the worst of all worlds. Our rates are very high, causing "sticker shock" for companies looking to locate in Ohio.

But because of aggressive and creative accounting, our collections are low compared to other states.

Some larger companies that can afford high-priced lawyers and accountants don't pay a fair share, while smaller companies pick up most of the tax burden. That's just not right.

It's time to reform our tax system to reflect the economy of right now and tomorrow, not the economy of way back then, and yesterday.

Together we must move Ohio forward into a new era of promise and prosperity, not next year, or the one after that, but right now.

We'll all hear the chorus of complaints from the special interests who feel threatened by change. So we must have the courage to prevail. We must remain committed to the very end.

The comprehensive tax reform plan I propose today will unleash Ohio's economic potential.

To bring Ohio in line with the rest of the nation and help small companies grow and create more jobs, we'll slash personal income tax rates by 21 percent across the board.

Every single Ohioan will benefit.

And if you make less than $10,000 a year, you'll pay no state income tax at all.

We'll also phase out the tax on equipment and inventories, while protecting schools and local governments from losses for an extended time.

We'll replace our unfair corporate tax with a commercial activity tax with a very low rate and a very broad base. This tax will better reflect all of Ohio's economic activity.

But our goal is not just to create a modern tax system. Our goal is also to reduce the total tax burden on Ohio families and businesses.

The budget I will send to you later this week eliminates or reduces some taxes and raises others. But overall, we'll collect $800 million less over the next two years than we would receive if current tax rates remained in place.

That's $800 million that will stay in the pockets of Ohio's hard working families.

In addition to enacting tax reform to grow our economy, and lowering our tax burden, we must control state spending.

Our one-time federal monies will be gone by the end of this year. And unlike our friends in Washington, we cannot run a deficit.

We'll continue to tighten our belts, just as we have for the last four years.

Since 2000, we've reduced our state workforce by more than 3,000 employees. We've cut our budget by more than $1.4 billion. We've closed six state institutions. We've held the line on state employee compensation. And we've cut the state vehicle fleet by 12 percent.

Our new budget will be the tightest in 40 years. Spending will be frozen in some areas, and cut in others.

Medicaid continues to grow at an unsustainable rate. If left unchecked, Medicaid will increase by 13 and 9 percent in the next two years from $10.5 billion to $13 billion.

We're spending more on Medicaid this year than we did for the entire state budget in 1986. It is squeezing out all other areas of state government.

We will reduce Medicaid growth while protecting basic services for children and our most vulnerable citizens. Federal mandates limit our options and we'll have to make some difficult decisions. I will need your help, because if we fail, we will not slow the growth of state spending. And if we don't slow the growth of state spending, we cannot reduce the tax burden on Ohioans and help our economy grow. We must tame the Medicaid monster.

My friends, we're going to have to help ourselves. No one is going to save us. The federal government certainly isn't going to bail us out.

We must slow our spending, get the broken tax code off our backs, and release the powerful energies of this great state.

But there are two more things we need to do to create a better future for Ohioans: promote emerging sectors of our economy and educate all our children for success in a high skills world.

We must invest to create more good jobs through applied research, product development and innovation.

Our Third Frontier Project is already getting results. Our progress is being recognized nationally. The Milken Institute reported that Ohio leads the nation in the increase in venture capital invested in biomedical companies, citing Third Frontier as playing a "pivotal role."

We've helped attract federal funds for Cleveland's Center for Stem Cell and Regenerative Medicine, the Fuel Cell Prototyping Center in Canton and a center for alternative energy in Toledo. Private sector support is helping scientists find cures for disease at the Genome Research Institute in Cincinnati, develop new data management products in Dayton, and design jet engines in Columbus.

We're attracting investment from out of state. Alien Technologies, a California company, is building a new R & D center here because of the attractive business climate being created by the Third Frontier Project.

We're helping Ohio companies thrive. One grant recipient, Diagnostic Hybrids of Athens, made Inc Magazine's list of the 500 fastest-growing private companies in America.

New products are being created and we are seeking new uses for existing products. With Third Frontier support, Ohio State's research center in Wooster is helping Ohio companies use agricultural waste to generate power for fuel cells.

All this early progress is promising, but we cannot stand still. We need more growing companies like Diagnostic Hybrids. We need to help more companies create new products to compete in world markets. We need more high paying jobs.

So I ask for your support to go to the ballot in November to accelerate our progress under the Third Frontier Project.

There are other investments we must continue to make as well. Ohio's program to help local governments build roads, bridges and other public works has been one of the most successful bond initiatives in state history.

Let's join together to put it back on the ballot, get it passed in November, and renew it for another 10 years.

But tax reform and these critical investments can't do the job alone.

For Ohio to regain its competitive advantage, we must prepare each and every one of our young citizens for the challenges of the future.

Toward that goal, we have accomplished much:

We've boosted elementary reading proficiency by more than 24 percent and my budget will include new choices for students trapped in persistently failing schools.

Our academic content standards are recognized as among the best in the nation.

We have rigorous entry exams for new teachers, and the Educator Standards Board you created is defining what teachers should know and be able to do throughout their careers.

Since I've been governor, we've raised the per-student funding guarantee by one third, and our budget will include a new formula that ties some state aid to the types of investments we know improve student success, as proposed by our school funding task force.

School building projects are completed or underway in more than half the districts in the state, including those in all our urban centers. Thanks to your strong support, we are rebuilding our schools better and faster than any state in the country.

But to help every child succeed, we still have much to do, especially after the early years of schooling.

For every 10 students who start high school in Ohio, only seven will earn a diploma, only five will enroll in a post-secondary institution; and of those, fewer than three out of 10 will complete a Bachelor's degree within 10 years.

We've taken steps to raise standards and improve our high schools.

  • This year's class of sophomores is the first that must pass a new, tougher test to graduate.

  • We are partnering with the Gates Foundation and KnowledgeWorks to turn 20 large, traditional high schools into smaller, more effective learning communities.

  • More than 10,000 high school students are earning college credit through dual enrollment.

  • And we're helping Project Lead the Way expand the number of students enrolled in rigorous pre-engineering programs during high school.

These projects are promising, but they are just a beginning. We must make college more affordable, and make sure our students are prepared when they get there.

So we'll work with you to create a statewide education partnership, chaired by me, to engage educators, employers and legislators in building a continuous learning system for students, pre-school through college. Initially, I will give the partnership three tasks:

First, better align high school graduation requirements with college readiness standards.

Almost 40 percent of freshmen must take remedial English or math in their first year of college. That's unacceptable! A high school diploma should mean that a student is prepared to succeed in college.

Second, increase the number of high school students who take a rigorous core curriculum. We know that well-prepared students have higher college graduation rates.

Third, create incentives for colleges and universities to improve their graduation rates. Enrolling students is not enough. We must do more to help them graduate.

With college costs rising and the state budget under pressure, we must act to make sure no Ohioan is denied a college education because they cannot afford it. To increase enrollment by 30 percent in the next 10 years, we'll expand the Ohio College Access Network so that more young people and their families have access to college information and financing options.

We'll also broaden and increase funding for the state's needs-based college grant program, aligning it with federal Pell Grant standards to expand eligibility to an additional 11,000 students.

And today, we're launching a new program to provide more than $100 million in low-interest student loans to Ohio students.

Finally, I challenge our state colleges and universities to keep tuition increases to a minimum by becoming more productive and more collaborative. To that end, our budget will propose an annual tuition cap of 6 percent, to be exceeded only for the purpose of funding needs-based scholarships.

Last year, I pledged to create a non-profit corporation to promote and market our state, to make sure people in Ohio and all over the world hear our story and understand our advantages.

I'm pleased to report that we're far along on this project. The Ohio Business Development Coalition is up and running and partnering with foundations, businesses and local chambers.

And when we accomplish what I've set forth today, we'll have an even better story to tell.

A story of how we came together to reform our tax code to ease the burden on Ohio families and help Ohio prosper.

A story of how we're sustaining our investments in a knowledge economy to add better paying jobs for today and tomorrow.

A story of a state that is helping every student succeed.

We have defined our challenge. We must now meet it head on. And we won't let the special interests stand in our way.

Ohio became great because we've never been afraid of a challenge. Think of our famous inventors. Or those who sacrificed their lives and comfort to make the Underground Railroad a reality. The pioneers who cleared the land and started our farms. Or those who worked all their lives on the factory floor to put food on the table to make it possible for the next generation to do a little bit better.

And today, think about all the parents who are imparting the values and qualities their children need to succeed. Think about the challenges our children will face.

Desmond Gillespie, a high school junior from Cleveland, wrote to tell me he's concerned about unemployment in Ohio. He knows we're lagging behind much of the country.

Desmond wrote, "I am requesting that...you would help me by trying to set up a program to attract some new technology based jobs to the state."

Let's keep Desmond and all our kids in mind as we go about our unfinished business. Over the next several months we'll find reasons to disagree. Our path will not be easy. Yet our opportunity will never be so great.

Let us resolve to do great things to finish our job for those hardworking, productive, innovative, can-do, compassionate and brave Ohioans who send us to Columbus to make this state a better place to live, work and raise a family. May God bless you all and may God bless Ohio.
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