State of the State 2003

STATE OF THE STATE 2003
GOVERNOR M. MICHAEL ROUNDS
 
Thank you, very, very much.  Let's sit down—you're on my time.  Lieutenant Governor, Mr. Speaker, esteem members of our court, constitutional officers, members of the legislature, friends and family, and members of our state's citizenry from all over South Dakota, first of all let me just tell you how humbled I am and filled with a sense of privilege to be able to speak with you today.  I was reminded this morning that sometimes when we look at where we stand and work with other people that we can maybe just start to take ourselves just a little bit too seriously.  I am going to do my best not to.  Recognizing that as a senator I wasn't exactly allowed up here very often, I really feel privileged to be allowed up here in the humble house of the house.  So, thank you very, very much.  APPLAUSE 

 A few days ago, I talked about some basic principles of state government and what we must do to stay true to those principles.  You've heard them before.  We must protect those who cannot protect themselves—the very young and the very old.  We must protect society from those who would harm us, and we must provide a quality education for our children because they are our future.  In addition to that, we must always be vigilant to protect the rights and freedoms of the individuals who have elected us to govern.  And so as I begin this State of the State, let me remind you of the important role that we play in doing just exactly that—being true to the principles that they've elected us to do.

 Where are we today?  There are some people that think we're in pretty bad shape.  Economically, we've got a budget which most certainly could be better.  We're spending money in which we don't have ongoing revenues for in many cases.  But we're also fortunate because we're in a heck of a lot better shape than just about every other state in the union.  Why?  Because we are fiscally conservative, we make good decisions about the dollars that we have, and because our citizenry does not make undue or unjust demands upon its elected officials.  They recognize that when we have the money, we spend it appropriately.  And when we don't have the money, we should be sparing, and I mean sparing in terms of the losses of those dollars to programs that are necessary, and we're careful not to create new programs that somewhere along the line might very well put us deeper in debt.

 I guess if I wanted to, I could turn what I hope will be a shorter speech into a 2- or 3-hour speech, except I remembered—I understand that at one point last year, my friend, Representative Jerry Lang, beginning one of his speeches in front of one of our committees commented that as Henry VIII said to his wives, "I promise I shant keep you long".  I will do my best to follow that guideline today.

Aside from revenue problems, aside from the fact that we've got a drought situation which has not shown any sign of improvement over the last year, we're still in pretty good shape.  We've been able to take care of ongoing programs and those important things that the people of South Dakota want us to take care of by using reserves--and the reserves that you, as a body, helped put together—a budget reserve, a property tax reduction plan reserve, and dollars that have been set aside for the rainy day that we see right now.  And so in that respect we're in a lot better shape than the vast majority of all of the other states in these United States. 

But as we look toward the next year and recognize that we do have limitations in what we can do, let's remember the goals that I believe we should always keep in mind in terms of what we're going to do and how we're going to spend the dollars that we are entrusted with.  First and foremost, we will balance our state's budget.  Second of all, we will always work to improve the operations of state government.  We will create more economic development to provide excellent job opportunities for our young people who want to stay in South Dakota.  We will continue to fund quality education for our children while doing our best to focus on additional property tax relief whenever available.

We will implement a prescription drug program for our seniors until such time as Congress acts to responsibly implement a nationwide plan.  And we will develop a strong and mutually beneficial relationship with our Native American tribes.

 I should begin by going directly into how we intend to balance our budget, but if you don't mind, I've talked with leadership, and we've agreed that the budget report should come after the State of the State.  And, so, with your permission, I will lay out for you, in detail, our proposed budget that I invite you to work with me on, on Thursday.  And, so, in order to lay out that budget, I have to lay before you our plans with regard to the development of changes within our state's government, the programs that I believe are important to continue on, and the programs that I believe need to be implemented. 

I think sometimes that, when we start talking about the domestic issues that we face within our state, we forget about one very special group of people that today look not necessarily at the domestic issues that we face, but they look at the international issues that face all of us.  I remember in 1991 when I was a freshman senator and George Mickelson was governor and I remember the concern that we all expressed and the hope that we had that we wouldn't lose lives in a war in Iraq.  Today, we face those same risks.  We have our children, and some of our grandchildren, and perhaps friends, men and women, who are at risk.  Fifty-five Army Guard soldiers from Rapid City's 155th Engineer Detachment are currently serving in Kuwait.  They arrived in Kuwait in early July and they can serve there for up to a year.  Additionally, the 727th Transportation Company from Elk Point, Brookings, and Watertown, which has over 100 people in it, and the 665th Maintenance Company, which also has more than 100 members, from Mitchell and Rapid City were alerted in late December.  Since then, the 665th received orders to mobilize, and will provide security to Ellsworth Air Force Base near Rapid City and at Joe Foss Field in Sioux Falls.  The 727th got orders just last week to report for federal service on January 21st.  South Dakota's 109th Engineer Battalion of Sturgis received an alert notice last Monday and is now preparing for mobilization for Operation Noble Eagle/Enduring Freedom.  The 109th received orders on Sunday to report for federal service on this Thursday, January 16th.  The 109th is the third South Dakota Army National Guard called into federal service this month.  When mobilized, these units, these soldiers, will be ordered to active duty initially for not more than 1 year, but under federal law, the Secretary of the Army may direct for up to 2 years.  In addition to that, our South Dakota Air National Guard has literally been deployed since September 11th of 2001 supporting Noble Eagle/ Enduring Freedom.  Most recently, the South Dakota Air National Guard was, WAS America's Air Force in enforcing the No Fly Zone over Northern Iraq.  We should be proud of these men and women serving not only the people of South Dakota, but all the citizens of the United States.  APPLAUSE

Let me revert now just a little bit to the business at hand, recognizing now that we have international issues and national issues that impact not only our economy but the mood within our entire state.  I will be asking for reorganization within state government, but prior to doing that, I want you to know some things about what we're trying to do to make government as efficient as possible.  To make sure that happens, I've hired former Budget Director Rodger Leonard to be the State Comptroller within my office.  His goal is not to look for ways to eliminate people or jobs, but to make sure that state government is more effective to our citizens.  Sometimes that might mean more employees in an agency or office.  If we have three people working in an office and he determines that it's a bottleneck, and it's slowing other things going on, he may very well ask for more.  And, if that's the case, he's done his job.  In other cases, he may walk in and find a way to combine two offices into one and save expenses.  And, in that case, he's also done his job.  He has no quota.  He reports directly to me.  His only goal will be to always make state government as effective and as efficient as it can be for the taxpayers of South Dakota. 

Now in addition to that, I'm also adding one more office, or I'm attaching one more office within the South Dakota Department of Agriculture.  And, this will be an office whose sole responsibility will be to be a communications contact or go between, between the different departments of state government and the federal government to work on issues such as the Black Hills Forest issues, the Badlands issues, the grasslands issues, prairie dogs, wetlands issues, and so forth--not to be only a tool for state government, but to also work with local elected officials when they're frustrated by federal government rules and regulations.  Rather than having each department with their special expertise and multiple individuals within state government making contact with multiple different entities at the federal level, we'll combine them into one efficient operation with expertise for all—a person who not only knows the rules and the guidelines and how the federal government does business, but the individuals responsible for implementing those, so that those personal relationships that we value in South Dakota, we can find and nurture with employees of the federal government.

Now, when we talk about the federal government, we should recognize fully that we have three capable individuals serving us in Washington, D.C., today.  On a bipartisan basis, I fully expect to have a very good relationship with all three.  You know in South Dakota, we refer to each other on a first name basis.  We know each other personally.  I have had good communications with Senator Daschle, Senator Johnson, and Congressman Janklow.  I can assure you that I have the utmost confidence in our ability to work well with one another.  I look forward to working with them for the betterment of South Dakota, and I encourage all of you to develop and continue those relationships with these three individuals.  Once the elections are over, we're all South Dakotans.  We're working for the betterment of South Dakotans—whether we are Republican or Democrat—because that's the way, that's the belief that the people of South Dakota have, and they trust us to follow through with it.

Along with that, I can also tell you just from personal experience that in visiting with other governors, many of them have significant staffs in lobbying efforts in Washington.  When they asked me who my lobbyists would be in Washington, my first thought is that I've got three already.  And then at further thought, I thought yes, and that's true I do have three in Washington, and as a matter of fact one of them has a great deal of experience.  One of them brings over 16 years of experience in state issues and the frustrations the states sometime have in dealing with the federal government.  Wouldn't you like to be in the room the first time that a federal bureaucrat tries to run a quick one by this new freshman congressman from South Dakota?  APPLAUSE 

Along with working with members of the federal government and our representatives in Washington, I want to enhance our ability at the state level to work with people and local communities.  Therefore, after this legislative session ends, I am going to restart Capitol for a Day, a program that Governor Mickelson did.  We will take our senior staff and members of our cabinet and once a month we'll choose a community—large or small—and we'll move our offices there for a day.  One of the reasons why we stopped doing it earlier was because of communications.  These individuals that work here in Pierre on a daily basis have their work to get done.  And leaving Pierre and moving out into the communities around the state would, in some cases, put them a day behind in their regular paperwork.  But now with the advent of cell phones and e-mail, we should be able to carry on some of that work and stay in touch and still be able to reach out and visit with those individuals who once in awhile seem to just get lost—those individuals who look at Pierre as a place where you go but you don't necessarily reach back out to our local communities.  I want to change that.  This is our attempt to send that message.  In Pierre, we're going to go out, we're going to visit, we're going to learn, and we're going to try to explain what does happen on a day-to-day basis in Pierre.  At the same time, we'll try to visit with schools as well, and allow those individuals the opportunity, those children the opportunity, to see how their representatives in Pierre work, as well as those individuals who are appointed members of my staff work.  Our goal is to provide a relationship to begin that friendship-making program that people in South Dakota enjoy.

Now, in addition to that, as I stated just a little while ago, I intend to reorganize state government.  I intend to do this with an executive reorganization order that I will give to you within 5 days.  I will be abolishing one department, that is the Department of Commerce and Regulation, and I will be reorganizing several different departments and agencies.  Because we need to better coordinate homeland security right here within our state, I'm creating the Department of Public Safety.  It will include the agencies from the Department of Commerce and Regulation, such as the Highway Patrol, the Highway Safety Office, Commercial Inspections, Driver Licensing, and the State Fire Marshal's Office.  It will also include the Division of Emergency Management, the Emergency Medical Services Office, Accident Records, and State Radio from other departments.  Instead of being in five separate departments, all of these security, disaster, and public safety functions will be in one department.  This will give us faster and better coordination of state resources for terrorists issues, disaster response, and safety promotion.  Let me explain that one of the concerns we've had in looking back since 9-11 is the ever-increasing demand on the part of our homeland security administrators for participation and activity surrounding the protection of our people and also the protection of other state's from a possible attack from within our borders.  Rather than creating a new bureaucracy for homeland security, I believe it more appropriate to bring that office or that concept to within the structure of state government.  So in making this change, not only have we been able to eliminate a department, but we've also been able to avoid creating a new department within state government. 

The Banking and Securities and Insurance Divisions from the old Department of Commerce and Regulation, the Gaming Commission, and the Lottery will be transferred to the newly named Department of Revenue and Regulation.  The informational budgets from the other various boards and commissions from the old Department of Commerce will be attached to the departments that are more relevant to the business of those boards.  Human Rights will transfer from the old Department of Commerce and Regulation to the Department of Labor.

There will also be a new Department of Tourism and State Development.  It will combine Tourism and the Governor's Office of Economic Development, but also include state tribal relations, and the arts, history, and cultural preservation offices from the Department of Education and Cultural Affairs, which will be renamed the Department of Education.  All these departments and offices are involved in the promotion of South Dakota, and that promotion can lead to more jobs, better jobs, and economic growth.  Promotion is the key word.

Sometime ago, as a matter of fact it was 1991, we took the risk of a family vacation, my wife, Jean, and I, and four children.  The youngest at that time, John, was three, not quite four.  He's an eighth grader now.  We went out into Wyoming and up into Yellowstone, and on the way back almost as an after thought, we stopped by Mount Rushmore.  We went there to show these children this monument—this place that if you're from South Dakota you really need to go and see.  And so with that attitude, we pulled in after supper, pulled up to the old route up before they had made the changes.  We got out of the car after one long day of traveling, and we got out and the youngest, John, was more than happy to be out.  And while the other kids kinda knew what we were up to, and they immediately were focused on what was ahead of them, and this beautiful carving on the side of a mountain, John was a little different.  He was happy to be out of the car and he was pushing and shoving and very interested in the chipmunks on the way up.  As we got closer and into the observation area, the other kids paid more and more attention to this monument.  Not Johnny.  Johnny was still pushing and shoving and enjoying just like you would expect a 4-year-old to do.  In the middle of all this, all of a sudden, it caught his attention that everybody else had something else on their mind.  And, when he focused his attention up on the side of that mountain, he stopped in dead tracks and he just walked.  And then he turned around and he looked back at me.  He kind of frowned a little bit and he pointed and he said, "Who are those guys?"  It wasn't a monument.  It wasn't a piece of art.  It was four people.  These presidents—these presidents that grace the side of a mountain in South Dakota that create our Mount Rushmore to a young child were bigger than life but they were still people, and they represent the finest of our culture.  At the same time, just 17 miles away, is another face on the side of a mountain—that of Crazy Horse.  We took our kids there to look this last spring at the development of that monument, and I think we all felt that same sense not so much of a monument but of a person.

We, in South Dakota, should recognize and honor the leaders of both cultures.  In South Dakota we have an opportunity to share a rich heritage which should be celebrated with people from across our land.  It's time to focus.  It's time to bring out the diversity that we expect within our culture in South Dakota, and to share it with the rest of the people in these United States and around the world.  Think about what we have.  Think about the gems that we have buried in these beautiful Black Hills.  As part of tourism and tourism development, we will focus on what's special, not only to ourselves and our children, but on what we know should be an example of special cultures to the rest of the world.  Help me.  Join me in this.  We're going to begin tourism in a new light.  We're going to reemphasize an industry—a visitors industry—in which we need no further infrastructure, and which can help provide a boost, a jump-start to an economy within this state.  At the same time, and the reason why I'm asking that you join it with the Office of Economic Development, is between the two offices, there are resources that we should share.  There should not be a difference when we talk about economic development within this state and the visitors industry within this state.  All are important to our future development.  And so I ask you to join with me and to help me as we move through this year in promoting our state.  Let's start out with the tourist industry itself.  Right now, we have a major event in the middle of the summer.  That motor cycle rally is put on because people in the local area care about what's going on out there.  They've developed it—we've helped promote it.  But it's because they care in what's going on.  Let's go a step farther.  Let's build on either side of it.  Let's broaden the shoulders of tourism within our state.  Let's look for new ideas that local communities can put forward—both on a multi-state level and in our state.  The Lewis & Clark Expedition—we're going to celebrate 200 years—once in a 200-year opportunity—maybe once in 100 years.  Here's an opportunity not only to share a special part of our culture, but to also share a part of our history with a whole lot of people from all over the world that are going to be coming through.  Let's jump-start it, let's get on board, let's help promote it, let's explore and share this beautiful river that moves right through the middle of our state, through the heartland of our state, and let's begin the process immediately.  Let's go to work on it.  So I want to see a new round of enthusiasm when it comes to the development of our resources and the sharing of our resources with people from other states because, once again, it's an infrastructure which is already there.  We don't need to add to it.  All we need to be are the gracious hosts inviting other people here to share that part of our culture that we take for granted.

In addition to that, economic development should be shared with communities around the state.  I have no intentions of offering new programs to any community that doesn't want it.  I want local communities to come forward with their own plans—what's good for them.  You know in many cases the place where communities are found today is based upon where our railroad foremen decided they ought to be put.  They're based upon how many miles a train would go on either the amount of coal it carried or the amount of water it had or where they had to put up an elevator, so the farmers would gather around to send their commodities to market using the rail line.  Times have changed.  And now many of those small communities that were based upon being on a rail line are having a tough time surviving.  They have to reach down and gather from among their own people the ideas that they want to use to keep their communities going.  We'll help, but I challenge the communities that if they want to survive, if they want to grow and prosper, economic ideas are going to come from within.  They have to have a community united, and we will help.  My challenge to them is, bring me a proposal that I can't turn down and I will find the money to help you in your economic development endeavors.  Bring me an idea in which your community wants to grow, whether it be in the animal industries, feeding livestock, whether it be in production, whether it be in a small manufacturing plant or a large manufacturing plant.  Whatever it is that will work for you, whether it's in a new opportunity within the visitors industry, whether it be bringing people in in a service industry, when your communities step forward and ask for help, we will help.  But the ideas need to come from the local communities because they have to buy into the concept so that it's not a matter of the state coming back to them and telling them what's best for them and their community.

Along with that, it's time to recognize that there's money in marketing our ag products.  Now in order for us to market ag products, we may very well have to have ag production facilities within this state.  I understand that there are people who can create or those people who can process our animal products very efficiently today.  And that, in many cases, there is very little profit in the actual processing of those products that we grow in South Dakota whether it's poultry, whether it's beef, pork, and so forth.  But for us to market our products, we have to have contractual control over the processing or we have to have our own processing plants.  I look forward to working with you to develop either the contracts with processors or creating our own processing facilities so that we offer to the rest of America the finest ag products anyplace.  Let me give you an idea.  Let me give you an example.  We talked about it during the last year.  I called it as an example Dakota Prime Beef—an idea in which we offered anybody who wants to follow the guidelines and rules that we set forth—they can produce their product but they follow the rules that assure quality and a consistency and the best tasting beef anyplace in America.  And when they do that, they can use our marketing program to promote their product and we can do the same thing with other products as well.  I look forward with you in developing the rules and marketing plan, and, if necessary, the appropriate processing facilities to move this project forward.  I know that many of you have been excited in the past—this is not a Republican issue, this is not a Democrat issue—this is a good government issue for people in South Dakota.  APPLAUSE

In order to send that message and to explain the concept that we want people to buy into with us, I plan to use existing personnel and resources in further expanding our ag development programs.  The Ag Extension Service will play a major role in this plan.  They're out there.  They have technical expertise, they know the people in the communities, they can be jump-started to move directly into this program and I look forward to working with that organization in growing our state's ag economy.  Furthermore, I believe that the direction that we've moved in eastern South Dakota in promoting dairies is moving in the right direction.  We have new processing plants being built in South Dakota today—we're going to need to provide them with a product that should be expanded for domestic use and for uses around the world.  Quite honestly, there are cheese plants in South Dakota, there's demand, because the Third World has discovered pizza.  And as long as that happens and as long as the demand for cheese is there, we should be taking advantage of it.  We have been identified as a state which is perhaps one of the finest anyplace in North America for dairy production.  We have people working on it today, and I've directed Secretary Gabriel in the Department of Ag to continue to move forward swiftly in promoting the acquisition of dairies within South Dakota.  I want to be clear, I'm not identifying particular sized dairies, they have to be acceptable to the community in which they are being placed.  And, as we find communities that want new development and they want ag development, for those areas in which a dairy is suitable, they'll be welcomed, and we will help them.  If it means clustering a series of small dairies, so be it.  If a larger dairy can be created and do it environmentally correct, so be it.  We'll look, we'll consider, but we're going to take into account whether or not it is helping the people of South Dakota and whether or not it is environmentally friendly to our state in the long term.  But dairy, ladies and gentlemen, has a huge future within our state, and now is the time to take advantage of the opportunities presented to us.  Right now in South Dakota we're actually bringing in an evaporated or dehydrated type of milk.  We're bringing that into South Dakota because the production plants that are here don't have enough milk being produced locally.  We can change that.  We can change that by simply moving forward and embracing that industry and making sure that our industry, this industry, has the long-term benefits of the farmers and ranchers within the state and the state itself as the center of the development process.  In other words, what's good for South Dakota, should also be good for these dairies that are coming in.

When it comes to economic development, we should not forget about new industries as well.  Wind power—some states have already begun to develop.  In South Dakota we've done some, not enough.  I believe that long-term, wind power has huge opportunities within our state.  We need to jump-start it.  Therefore, I am going to propose to you changes within our existing tax structure to promote the settlement or the installation of wind power-generating systems within the state.  I propose that we reduce our property taxes in order to be competitive with other states in the Upper Midwest.  But in addition to that, and as an incentive for significant and immediate growth within this industry, I'm also proposing the reduction or, in some cases, the complete elimination of the sales tax and contractor's excise tax on these major projects based upon a set of criteria.  First of all, there has to be a benefit to the people of South Dakota.  The landowners who may very well be asked to put these on their land have to have not only an opportunity for a set fee, but also for a future percentage of profits or revenue that could be generated.  And, in addition to that, the power generated here must in some part be shared within the systems, or businesses, or distributors of our state, meaning that a large entity coming into our state cannot simply create it, and take it out, and take their profits with them, and receive the benefits of significant tax savings.  But if they're ready to work with us and allow our people to share with them in the profits—the long-term profits—that I'm convinced wind energy will provide as they make larger and larger units on that same footprint, then I think it's good for South Dakota, and I'm going to ask you to join with me in welcoming these organizations and in challenging them to come to our state instead of some other state.  APPLAUSE

In addition to that, over the last number of years, we've all been aware of what we call the REDI Fund.  When Governor Mickelson asked the legislature to provide an increase in sales tax, until such time as $40 million had been accumulated, he had and played a leadership role in economic development in South Dakota.  Governor Janklow continued that on.  In fact, with that $40 million that was put together in a 10-month period in 1987, we have now been successful in authorizing 328 loans from that original $40 million investment.  We have loaned out from the first $40 million over $138 million in economic development loans.  One hundred percent of all the REDI Fund borrowers offer benefit packages for their employees, and the average hourly overall wage for companies in the REDI Fund portfolio is $12.87 an hour.  This is a successful program, but we can do better.  We have literally $39 million available to be loaned out.  I want it out.  I want it on the street.  I want it in businesses.  And, in order to do that, the individuals that we've charged and asked many on a volunteer basis to look at the rules and guidelines that we use for delivering those, they tell me that we really need to change them because since 1987 our economy has changed.  We need to change the rules to invite different types of industries in.  We need to be able to leverage the commercial dollar which is out there on the street.  I invite you to help me over the course of this legislative session in reviewing the existing rules and in changing the rules to fit this new economy.  In doing so, I am asking for your suggestions and your input as to how to make the REDI Fund a fund for the next century.  In addition to that, our businesses in South Dakota should be an example of businesses to other businesses around the United States of being able to grow and prosper with the least amount of government interference possible.  And to that end, I am going to propose an ongoing program to review laws and rules under which our businesses and people are forced to live—especially the ones that impact job growth in South Dakota.  We need good laws, we need strong regulations, but we should never, ever forget that we should also protect the rights and freedoms of the people that have sent us here in the first place.  From time to time, we should rebalance, we should rebalance, the regulations and rights.  It's time to step in and to begin reviewing those rules and regulations.  The rules from the executive branch of government and the regulations and the statutes as put forth by the legislature—all should be reviewed.  We did it in the mid-1990s with schools.  We repealed over 500 rules, laws, and mandates.  Let's set an example, let's move forward, let's review and revise the law books, taking out unnecessary rules, laws, and regulations that affect our citizens and those businesses that provide good jobs and new job opportunities to our citizens and our children who want to come back to South Dakota.

And, along with that, we should be looking at new opportunities to keep our children within this state.  And to that point, I'm asking for your help in creating a new brand of scholarship program within South Dakota.  I want to entice our college graduates to stay here.  And I believe that we can do that by offering what I call a Dakota Core Scholarship Program.  I want for young people who agree to come to South Dakota and serve as public servants in areas that we have a tough time filling positions—teachers, engineers, perhaps nurses.  For those individuals, I would like to offer a tuition-free education at a public or private school within our state.  And if they stay here for a period of 5 years thereafter, we will forgive one-fifth of that amount each year over that 5-year period of time.  My goal is to have them stay in South Dakota.  I will not spend money that I don't have.  If we can't fund the money, I won't do the program.  I believe if we work together we'll find enough to start the program and to continue the program.

I think, in addition to that, we'll have to revisit somewhat the Physician Tuition Reimbursement Plan.  We have physicians in our state that are taking advantage of it now.  But there's room to grow and expand it.   We have a shortage in dentists within our state.  I would propose that part of the slots that we currently have available—we allow up to ten positions right now to take advantage of the tuition reimbursement plan.  I believe that we should take three of those and allow those for dentists to come back to our state.  The dental industry within our state through a foundation that their organizations have put together to cooperate with us to expand it and to help promote the education of dentists allowing for them to come back into the state.  But there's another, there's another benefit here.  Right now in South Dakota, we have a tough time getting dentists to all participate in our Medicaid program because we don't pay a real good rate for reimbursement for charges for dental care.  We have fewer and fewer dentists that are actually working on our Medicaid patients.  And, so as part of this requirement, is that if these young people come back to our state, they would be required to take Medicaid patients as well for a period of time.  I'm open to suggestions from you on how to make it better.  I'm open to working with our private schools and universities.  I'm open to working with the members of our Board of Regents.  The idea is not to have the argument over which college or university educates our children, but, rather, whether or not we can keep our children in South Dakota because they are our future here in this state, and we need them home, we need them home.  APPLAUSE

I had the opportunity to visit with members of the Sisseton-Wahpeton Tribe last summer north of Sisseton.  I expected to go in and to discuss taxes, and to discuss issues of economic concerns, and to talk about issues of disagreement.  What I was surprised and taken aback by was one of the first concerns that was offered to me.  And that was—do you remember when the legislature and the state decided not to do the tribal scholarships—I said yes, I do, because I was part of it.  We looked back at it; we made judgment decisions about where the money should go and where it shouldn't go.  They said could you reconsider that at some point, and I told them I thought that was fair and I would look forward to doing that.  Today I'm not prepared to make a major offer, but I would like to start.

When I became Governor, I learned about a very generous woman by the name of Minerva Harvey from New Jersey.  When she died, she left her estate of over $800,000 to the Department of Education and Cultural Affairs for the funding of Indian scholarships.  It has been placed in trust.  As many of you know, Senator Dick Hagen passed away recently.  He was a friend of mine, he was a friend of yours as well.  It was my privilege to serve with Dick.  He spanned two cultures.  He shared goodwill between two cultures.  Therefore, I'm establishing the Dick Hagen and Minerva Harvey Scholarship Program for Native American students.  We will have enough interest income to fund seven scholarships next year starting with the freshman students entering colleges or technical schools anyplace in South Dakota.  I think it's only appropriate, and I would ask you to allow me for permission to establish that plan.  APPLAUSE  The plan would allow for seven freshmen to begin with at $1,000 their first year, and then their sophomore year to receive $1,000 once again.  Their third year, their junior year, they would receive $1,500, and in their fourth year, as seniors, $2,500.  So at the end of 4 years, you would have a continuing program of $4,200, which this $800,000 offer within trust should be able to continue. 

In addition to that, I would ask for your thoughts and participation in working with myself and the Board of Regents on the issue of intellectual property.  I want to make sure that our rules are competitive so that our people see the opportunity to improve themselves and are encouraged to develop new ideas.  We can make a win, win, win situation.  Professors can get rewards for advancements that have commercial applications, students will be more motivated by being involved in cutting-edge ideas, and there is the possibility of high quality, good paying jobs being created.  To that end, I will work with any community that has a university attached to it, and incubator settings in which we develop new programs whether they be ag related, or technology created, or business related in which the local communities participate with our local institutions of higher education, we as state government should also participate, and I'll look forward to working with them to set up these incubator positions where individuals who work as professors within our universities can come and make an offer or an idea and find it put into a business setting.  I believe that it is one more avenue to further our economic development in South Dakota, I look forward to your input and ideals, and I invite any of you who would like to participate in making it a better program, to let us know, and we would be happy to work with you.

In addition to that, I want to also push the issue of business internships in South Dakota.  Right now, our young people coming through our schools are the target of people from out-of-state.  What happens is, they know the value of our kids, our young people.  Not only are they brought up well, not only are they provided a top-notch quality education, but they want to work.  That work ethic is something special that we have here, and people from out-of-state know it.  In fact, they seem to recognize it sometimes more than we do and they buy our young people away from us, but they've got an edge on us because right now they're going into our universities and they're offering internship programs before our children graduate.  Why can't we be doing that in South Dakota?  Why aren't our businesses being made aware of the opportunities to provide internships here?  Why is it that we haven't convinced them of the need for their own future to bring those bright young people that everybody else understands the value of and to bring them into their businesses and keep them in South Dakota because they're our future?  We're going to start an internship program here in conjunction with the Board of Regents, expand those programs that are already out there, and, in working with private businesses, we're going to keep our kids in South Dakota.  But, I need your input because a whole lot of people thinking about ways to do it are better than one person.  You know, I told people that when I started this job I was going to surround myself with people that were smarter than me.  I didn't realize how easy it would be to do it.  But, at the same time, I'm inviting you to also participate.  My door, while it is not necessarily an open door, is one that can be opened, and I will do my best to keep it open because I want your participation in these projects.

Also in the business sector I will be proposing a change in law so that domestic abuse victims who must quit a job in order to move away from their abuser can get unemployment benefits while they relocate and get another job. 

 In addition to that, I also should talk to you just a little bit about a major project for people in South Dakota.  That's the use of the Homestake Mine as a laboratory, an underground mine for pure and applied research.  I'm stepping in new, and I'm trying to gather as much information in coming up to speed as quickly as I possibly can.  Recognize that there are multiple players in this very important project.  I cannot express to you how strongly I feel about the importance of this project.  Not just for West River, but for all of South Dakota.  I do not have a plan laid out for you, but I can assure you I will do everything in my power to bring the parties involved together and if need be I will be back to the legislature asking for your permission in any changes within the law that are necessary or any assumptions of responsibility that might be necessary to make this project work.  I would ask for your assistance and your support on this extremely important project.  APPLAUSE

 Let me talk just a little bit about education within our state.  Recognizing that on Thursday we will have a budget address, and a significant part of my budget address then will involve the discussion of funding for K-12 education.  But, I want to share some of it with you today because I think it's important.  In K-12 education for South Dakota, I will propose spending to continue funding of quality education for our children and young adults.  My long range goal in future years is to also continue to do our best to provide additional property tax relief, but the priority this year will be increases for elementary and secondary education.  My budget proposal on Thursday will include three increases in state aid to local schools.  First, there is the normal inflationary increase of 1.5 percent.  That will be about $5.1 million.  Second, I will propose that we redistribute the leftover declining enrollment funds from this year according to what's called the Adjusted Daily Membership.  That will be about $2.7 million additional funding for education.  In addition to that, I had hoped, as many of you did, that we would have Education Enhancement Trust Fund dollars available for our K-12 education system this year.  Unfortunately, reinvestments are not returning appropriately at this time and I can't count on them.  And since I don't have the money, I can't spend it from those trust funds.  But rather than the loss going back and being felt by our local school districts and by our children, I would propose that we assume that responsibility for this year only, and I'm going to ask the legislature to approve, because I will forward to you an additional supplement in the general fund of $7.3 million that we had otherwise expected to come from the trust funds, and to distribute it to the schools on a per student basis.  With this combination of state aid, which amounts to $15.1 million, it will be one of the largest single increases ever in the state of South Dakota.  APPLAUSE

 In addition with regards to education, I will be restructuring the education department.  At the federal level, we have a new mandate, and that mandate is called No Child Left Behind.  We have two ways to go.  We can view it as a federal mandate and simply comply with it or we can embrace the intention in spirit of the law and that is truly that we believe that every child should be allowed to develop to their fullest capability regardless of their location in South Dakota whether they are in a large school or a small school, regardless of the need for special teaching, special aids, special assistance.  But the promotion by our society and our belief by our society that every child should be allowed to reach its maximum potential is the cornerstone of No Child Left Behind.  What it says is that, and this is President Bush's what we call the four basic education reform principles, stronger accountability for results, increased flexibility, and local control, expanded options for parents, and an emphasis on teaching methods that have been proven to work.  Now we can either put this in as a mandate or we can weave it through the structure of our department.  Ladies and gentlemen, we have some of the finest, most technically adept people in our Department of Education.  I would like to work with them in restructuring in order to deliver as efficiently and as effectively as possible this new program—woven through our other programs that are already in place today.

 And so I would ask for your indulgence and your patience because over the next 6 months to 9 months we intend to review completely our Department of Education.  I will be meeting with the employees of that department to visit with them and to let them know that this is in no way a reflection upon their capabilities because I know their capabilities, but they should certainly expect appropriate management directions.  And, when we step forward with major changes like this, we should also expect to do the extra work to provide them with the appropriate directives that they can work with.  And so we will make changes within the department and I will be happy to report back to you once those changes have been made.  Let me also say that the federal law that schools are asked to follow through with are based upon four questions.  Each school will be asked:  What should all students know and be able to do?  How do we know if students have learned what we want them to know?  How do we hold schools accountable for the achievement of those students?  How do we make sure all students are taught by highly qualified teachers?  Some people think that this particular plan requires too much and that it is going to be too hard to accomplish, that the bar is set just a little bit too high.  I don't think there's anything wrong with setting that bar high.  There's nothing wrong with setting the bar too high.  My question is, is whether or not we are up to meeting the challenges that we set for ourselves in giving our children the finest quality education whether they come from a large school or a small school.  In order to help with this, and the immediate focus, remember, of No Child Left Behind, is to make sure that all students can read and can do math well.  I think they have an appropriate focus.  To that affect, we have a program already in place that's called the Advanced Reading Enhancement Approach—it's scary for many of you that recognize that acronym, it's already there, and it's already in place, and it is very successful.  But we need to do the same thing in math.  And so within the next few months, I will announce a new Governor's Math Initiative.  Those schools identified as in need of improvement under the No Child Left Behind program will have sound instructional training to improve their math teaching and student scores.  In addition, I will support the expansion of the current reading enhancement program so that South Dakota's students will be proficient in those basic building blocks of both math and reading.  Now let me go a step farther because in many cases when we talk about large schools and small schools the issue becomes a discussion of money.  Not always is money the final answer.  Sometimes we have to change the way that we deliver education within our state.  My proposal to you this day, which allows for approximately $133 more per every child going to school in South Dakota, it's a jump-start.  It's a chance to take a breath.  It's a chance to give local school boards an opportunity to look or to take a second look at how their budget fits their needs.  But in the meantime, it is only an opportunity to take a breath.  We have to take a hard look at how we deliver education within our state.  Some people say that what I am talking about is consolidation.  What I'm talking about is cooperation.  I'm talking about whether or not we discuss with school districts, with parents and communities of all sizes how we want our system of education to look not this year but 5 years and 10 years down the road.

 And so while we offer this additional amount of money right now, let's recognize now is not the time to sit down, now is the time over the next year to review and explore better ways of delivering education and school districts of all sizes so that it not only fits the needs of our taxpayers but it also provides for an appropriate and topnotch education opportunity for our children.  I intend to be personally involved.  I intend to meet with school boards, with community groups, and with concerned citizens across this state.  Where necessary, I'll tell it like it is.  Where we see declining enrollments that don't appear to stop, and with school districts and with communities who believe that an infusion of state aid into their school is what will save their town, I suspect I will be accused of being brutally blunt.  The message is, is that the saving of a school is not necessarily the saving of a small town.  We will save small towns by building our economies.  Our schools are there to teach our children and to provide the best possible education necessary, and I firmly believe that when parents are reminded of that and are provided with direction and leadership, we will find new and better ways to educate our kids for the future that lies ahead of them.  And I believe that this future is very, very bright.  APPLAUSE

 One of the ways that we've tried to provide educational assistance in South Dakota, particularly to rural students, is by using technology.  In his budget message last December, Governor Janklow mentioned that the digital state survey gave South Dakota its number one ranking for education technology for the third year in a row.  That's a significant achievement.  I'm committed to maintaining the excellence in education technology.  You will see in our budget over $8 million for school technology.  This is a very cost-effective way of delivering technology to our schools.  We have a statewide network for e-mail and the Internet.  We also have a statewide video conferencing system for high schools and college courses and much more.  If schools try to do all of this individually, the cost would be such that very few of them could afford to do it.  I will not fall behind in technology—our children need it in order to compete with other children from around this country.  We've made it to the top in this area—I will not fall behind.  But in addition to that, I need help from you.  Because a major part of the funding for education and the last time that I checked and what you will find out on Thursday is that 53.5 percent of this year's general fund was produced by sales tax revenues.  36.9 percent of the total general fund expenses will go to K-12 education funding of South Dakota.  So the importance of preserving our sales tax base cannot be overstated.  For that reason, I commend you for the work that you have done in the past in streamlining our sales tax collection process so that eventually we can collect the appropriate sales taxes due to our children from Internet sales.  But I'm going to ask you to move it up.  And so this year I will ask you to rather than delaying the implementation of that, I will ask you to amend your previous existing plans so that for those companies who are prepared to voluntarily submit to this program, we could begin collecting those sales taxes sooner.  I need your help.

 In addition to that, I'm going to propose to you, and I look forward to working with you in trying to solve, at least on a short term basis until such time as the federal government and Congress offers a permanent solution to the lack of a prescription drug plan for our seniors, I would like to offer a state solution for those individuals who have no other place to go, I would like to offer to them a solution similar to what we have offered to our state employees.  It's two prong—first of all, for our state employees we have offered them the opportunity in working with a select group of  pharmacists who have chosen to work with us a plan in which when they bring in a prescription, that pharmacist will look at it and see if he can replace a name brand drug with a generic drug.  In doing so, we have saved over $500,000 on our state employees plan.  That's after we pay that pharmacist $10 for his work.  In some cases, it means going to a larger pill and cutting them in half in some cases.  But the pharmacist is working with us.  I'd like to expand that plan and allow those same pharmacists and other pharmacists who care to do so to work with their senior citizens on the same approach.  Then I'd like to go one step farther because part of the savings between the generic drugs and the name brand drugs, I'd like to take a small part of it and by membership, by membership for those seniors in the same type of a plan as what we have for our state employees.  Now the seniors will still have to pay for their drugs, but they're going to get it at a discounted rate that we receive for our state employees.  I believe the savings will be significant and it will give them the same opportunity for a savings on their drugs as a person who is under the age of 65 and is on an insurance company's discounted plan.  I need your help.  I'm looking forward to working with you in solving this problem until such time as our federal government offers its own solution.

 Along with that, let me briefly touch on an issue that I know there are differences of opinion on.  But I want to begin the discussion.  When it comes to the issues of the rules and laws that we have in place today within our state government and within out local units of government regarding the privacy of information that businesses and individuals are required to provide to our state.  We've got some pretty tough laws on the books.  In fact they are felony laws right now that say that if you disclose information that's there that you can be found guilty of a felony.  Now we've never enforced it, but the message was clear that there should be privacy for those businesses or organizations that are required to submit their proprietary information to the state.  And no bureaucrat and no elected official should release that information inappropriately.  I also understand that there is discourse because of that.  In many cases, people feel that that then stops an elected official or may give an elected official or an employee of government a reason not to share other appropriate information with them.  So I will look forward to working with you in reviewing those laws and I work forward with you in crafting appropriate laws as long as there is protection provided for individuals and businesses who are required to place proprietary information within our reach.

 In addition to that, I look forward to working with Attorney General Larry Long who has taken the lead in reviewing the open meeting laws that impact or that affect many of our local units of government.  Where we can be of assistance, we will.  We look forward to working with you, and if we can provide assistance in that review, we will, but we commend the Attorney General on his proposals.

 I want you to know that the community of Plankinton, leaders, civic leaders within the community of Plankinton, have asked me if I would work with them in finding some use for the Plankinton facility that we own.  I'd like to report that I have offered to them that if they would like the facility and if they can find an appropriate use for the facility, I will lease that to them for $1 per year.  They have indicated, as a community, a willingness to work together, they desire to improve their community, and the least that we can do is to help them improve their own community.  So I want you to know that I made that offer to them.

In addition to that, we have a problem with our prison population in that it is growing at a pretty rapid rate.  It is of such consequence that I will ask you to join me in an educational seminar within the next few days to review the overcrowded situation that we're experiencing.  I've asked the Department of Corrections to put together a plan and to explain it to try to answer questions for your review.  We do have federal dollars available in case construction is necessary.  Right now in our facilities in many cases we are triple bunking.  Even with the proposed changes that we have been able to come up with right now, we will not be able to eliminate completely the need to triple bunk on a voluntary basis.  But we're getting to the end of those voluntary opportunities and we may very well be in a position that none of us want to see ourselves in an inappropriate housing of prisoners in the medium and maximum security areas of our prisons.  I'll work with you.  There are proposals that may work.  I'd like your input.  I'm looking for your ideas and suggestions, but we'll start out with, and you will all receive an invitation, to an informational seminar.  I will open it up not only to legislators but to members of the media as well, and if room is available for other interested members of the public.  And then we can decide together what the appropriate avenues are for addressing the problem.

I also want you to know that, by executive order, I will be directing the Department of Corrections to maintain the active participation that we have had since 2001 in the Performance Based Standards Program sponsored by the Council of Juvenile Correctional Administrators.  My executive order will also direct the department to report annually to the legislature on this program.  APPLAUSE

In addition, I've offered, I've written to each of our tribal leaders in the state.  I've simply offered, I've invited them to my home for dinner, each tribe separately, the intent that if they will come, I'd love to meet each of them and bring the process of establishing a personal dialogue with the individual chairmen and the members of their councils.  I have no agenda.  I simply want to learn what their concerns are in areas that we can begin working together.  I will be happy to share that information with you, and in addition to that, I've asked that, if possible, at their convenience, that they consider coming and visiting with me during the legislative session so that they may also visit with you as well and I'm sure that you will welcome them and let them know that we do appreciate and we look forward to a meaningful dialogue with them and the members of their communities.

 Finally, let me just say how happy I am to be able to work with you.  I can't think of a job that I'd rather have.  I hope that you feel the same way about the positions and the jobs that you have.  You know, we all get elected here to do what's right.  I look across this room and I see so many friends and so many familiar faces and individuals who have expressed already their willingness to work with me in making South Dakota even better.  The people of South Dakota have placed their trust in all of us.

 On a day-to-day basis, I know that we will have our disagreements, that's healthy.  But let's keep it on the level of disagreeing about ideas and about issues and about different ways to make South Dakota an even better place to live.  I want to take this opportunity to thank you for your kindness and the generosity of your time today.  I look forward to visiting with many of you on an individual basis, and, in closing, let me just say one more time, I truly believe that working together, we will make South Dakota even better.  Thank you very, very much.  APPLAUSE