Governor Palin

Governor Palin's State of the State=20 Address

January 17, 2007

Good evening. It is an honor to stand before you tonight. Lt Governor = Parnell. Madame President Green. Speaker Harris. All our legislators, = thank you=20 for this opportunity.

Governor Sheffield, thank you for being here.

To our Commissioners and staff, I=92m privileged to serve with = you.

And to our guests in the gallery and to my family, I=92m glad = you=92re here.

But a most sincere, heartfelt thank you to all our service men and = women =96=20 and your families =96 those here tonight =96 those not with us - for = your sacrifices=20 day in and day out. I thank you.

Let us pause for a moment and remember those troops who are serving = our=20 country and the Veterans who=92ve past served. May God bless them and = their=20 families. Let us pause to remember and honor.

(Moment of silence.)

Thank you.

Tonight, I dedicate this to all Alaskans as I speak to our Alaskan = family!=20 This administration reflects new people with new ideas inspired to find = new ways=20 of governing and we=92re certainly filled with boundless new energy.

Less than a half-century old, Alaska is young, but we can exercise = maturity=20 and foresight to LEAD this great nation. With our rich energy supplies, = we can=20 contribute GLOBALLY in many arenas, if we do things right.

We can help make this world a better place, a safer place, and we can = inspire=20 greatness ONE WAY - by leading through example. First and foremost, we = must lead=20 with trust =96 founded upon a most ethical government.

It=92s my responsibility to establish the kind of foundation Alaskans = deserve,=20 because mutual trust, amongst administrators, lawmakers, the judiciary, = and the=20 public, is ultimately inherent to our success as a state.

Trust begins with the open door. And the door to my office is always = open. As=20 promised, I=92ll sponsor an ethics reform bill. The administration = should be=20 involved in the discussion because ethics must be addressed for the = legislative=20 and executive branches.

Let=92s combine the best concepts from all the introduced ethics = measures into=20 =93a=94 bill. I don=92t have =93pride in authorship.=94 I=92m confident = we=92ll work together,=20 seizing the opportunity, finally, for reform =96 we=92ll do this for the = people whom=20 we serve! One of our budget priorities includes funding an APOC = investigator to=20 enforce our changes.

Let=92s work together collectively to see real reform. Individually, = we can all=20 build a more trustworthy government. Through greater personal = responsibility,=20 everyone gains.

And so, my fellow Alaskans, in that spirit, I say to you tonight, the = state=20 of the state is strong. It is promising=85 with challenges ahead.

Many of the challenges are economic, so the foundation of our = administrative=20 decisions rest upon what I believe Alaskans want =96 it=92s what we OWE = future=20 generations =96 that=92s =93fiscal prudence=94 in the use of public = resources =96 saving=20 for our future; and not burdening Alaskans with new taxes to support any = =93over=20 growth=94 of government.

We can expect to bring in $3.9 BILLION dollars in revenue next year. = That=92s=20 $1.4 BILLION dollars more than was spent just a few years ago. And = that=92s in=20 addition to the billions in federal funds we receive. I guarantee most = Alaskans=20 feel with that level of income, we should be able to fund our priorities = to=20 serve fewer than 700,000 people, and save money.

Here=92s where we are: Without increased oil development, forecasts = show about=20 a $100 million dollar reduction each year in available revenue. In = addition,=20 it=92s dangerous to assume that our current level of federal funding = will=20 continue.

For sustainability, I have established an aggressive goal of reducing = general=20 fund spending by $150 million dollars. No question this is a challenge = that=20 takes tremendous effort by staff as well as the cooperation of the = Legislature.=20 We=92re taking a hard look at every state program.

On the savings side, by depositing our one-time surplus of $1.8 = billion=20 dollars into the Constitutional Budget Reserve, we=92ll build our = savings account=20 to nearly $4.3 billion dollars. It=92s a necessary step to ensure that = we can fund=20 essential services tomorrow; and avoid massive =93single year=94 cuts = down the road,=20 if and when, faced with tougher times. We=92re also, legally obligated = to do this.=20 We=92ll finally repay some of the past C-B-R withdrawals, as is = Constitutionally=20 required.

And we=92ve promised to protect the Permanent Fund by depositing $1.3 = billion=20 dollars into the Fund=92s corpus.

To help Alaska=92s families, and small businesses (the backbone of = our local=20 economies), I propose to repeal =93nuisance taxes=94 including the tire = tax =96 we=20 shouldn=92t make Alaskans pay a premium to keep families safe driving = Alaska=92s=20 roads. And we=92ll significantly reduce business license fees. Taxes = which send=20 the wrong message by financially discouraging our small businesses!

To sustain our future, we must look to ramp up responsible resource=20 development. As if we need another reminder about fluctuating oil = prices, this=20 summer was the primary example of what we need to prepare for=85 record = high=20 prices just months ago are now below what we need to balance our budget. = Additionally, I=92m keenly aware of sharply declining production from = North Slope=20 fields. The amount of oil currently flowing through the Pipeline is less = than=20 half of what it was at its peak. So, we must look to responsible = development=20 throughout the state - from the Slope all the way through and down to = Southeast=20 - every region participating! From further oil and gas development, to = fishing,=20 mining, timber and tourism, these developments remain the core of our = state. And=20 one thing we can do in our volatile market is provide stability in = regulations=20 for our developers.

We=92re excited about many great prospects, and naturally our focus = is on=20 energy supplies because we=92re blessed with them. We can lead this = nation, to=20 help this nation, with a zealous energy plan which contains renewable = energy=20 components and cost-effective alternatives, especially for rural Alaska. = We=92ll=20 support real energy conservation efforts, and we=92ll engage in safe = development,=20 and we=92ll show the way for the rest of the world - that we can be good = stewards=20 of God's green earth. We haven=92t always done that.

To prove we can responsibly develop, we=92ll beef up oversight on the = North=20 Slope because we=92ve seen some legal obligations ignored. Greater = oversight=20 ensures proper maintenance of the lines that carry our oil to market. I = won=92t=20 tolerate corrosion eating though pipelines while crippling our state = economy=20 with costly shutdowns. I=92ll establish a dedicated state team to ensure = rigorous=20 inspections and line integrity analyses. Our oil must, and will, flow = and=20 continue to help fund essential services.

In traveling across Alaska, I=92m always struck by this absurd = situation we=92re=20 in - where our state - so blessed with energy sources - has many = communities=20 facing threats to safety and well-being because of the high price and = limited=20 supply of energy.

Some communities face closure of their schools because they can=92t = buy fuel or=20 pay electric bills. This burden is nonsensical because we=92re sitting = on some of=20 the most plentiful reserves on the globe.

The State needs to coordinate its energy programs to find local = sources, to=20 help communities become self-sufficient.

So, D-N-R will inventory potential sources of energy, including = renewables=20 like tidal, wind, hydro, and geothermal.

Taken together, new initiatives can finally provide new energy.

New energy must come from proven reserves, too! And we will = aggressively=20 defend the state=92s obligations to responsibly develop ours.

A perfect example is Alaska=92s Pt. Thomson. Huge reserves up there. = =93Leases=94=20 held by producers are iron-clad contracts =96 they=92re promises to = develop the=20 public=92s resources for mutual benefit =96 or give back the leases. = There=92s a large=20 producer who=92s held the lease at Pt. Thomson for roughly 30 years with = no=20 development =96 three decades to develop or step aside. WAREHOUSING = Alaska=92s=20 resources is not an option anymore. We can=92t afford it!

The state should be trusted to keep its promises. The standard should = be no=20 different for industry. Ironically, we=92re trying to convince the rest = of the=20 nation to open ANWR, but we can=92t even get our own Pt. Thomson, which = is right=20 on the edge of ANWR, developed! We are ready for that gas to be tapped = so we can=20 fill a natural gas pipeline. I promise to vigorously defend Alaska=92s = rights, as=20 resource owners, to develop and receive appropriate value for our = resources.

Of course, the primary focus of our long-term energy plan can be = summed up in=20 three words -- NATURAL GAS PIPELINE! This gasline will fuel our homes, = our=20 economy, and careers for Alaskans - for generations. The gasline is = critical not=20 just for our future, but for the nation=92s future. It=92s also an = essential=20 component of our nation=92s energy policy. Truly, for energy = independence, the=20 nation will look to Alaska. We=92ve already begun working with the White = House. In=20 fact, I had a nice conversation with Vice President Cheney today. And we = are=20 also blessed to have a strong ally in former State Senator Drue Pearce, = who=92s=20 been tasked by the President to get the gasline built. The energy = industry is=20 also engaged and I look forward to working with Congress and our = legislators =96=20 our =93partners=94 to deliver our natural gas to market.

There=92s currently more than 30 trillion cubic feet, or =93T-C-F,=94 = of proven=20 reserves on the North Slope. However, if you talk to most geologists, = you=92ll=20 hear there=92s a good chance there=92s actually hundreds of =93T-C-F=94 = in the=20 ground.

It=92s in Alaska=92s and America=92s interest to get that gas to = market. We need a=20 project that ensures any viable explorer or producer can access a = gasline on=20 reasonable terms and we need a project that can be expanded when = there=92s more=20 gas found.

However, we must be realistic about the complexity of this. It = won=92t happen=20 with the snap of a governor=92s fingers. It can=92t happen overnight. = The process=20 involves many entities with differing considerations, and requires a lot = of=20 discussion with experts and stakeholders.

While bringing natural gas to market is costly and risky, there=92s = no question=20 =96 THIS IS A SOUND, ECONOMIC PROJECT.

Over the last year, Alaskans have learned a lot from the prior = attempt to=20 develop our gas, under the old =93Stranded Gas Development Act.=94 For = instance,=20 Alaska=92s gas is not stranded.

And we learned what the Oil Producers=92 terms are. We learned that = under the=20 old act, some producers will talk to us, and talk to us, and talk to us = until we=20 agree to their terms. The terms were unacceptable. They demanded that, = in a=20 sense, we give up some fundamental rights as a state, as part of these = United=20 States, because the deal removed our taxing, regulatory, and judicial=20 authorities for DECADES.

In fact, under those terms, my youngest daughter, Piper, would be = older than=20 I am right now before the state could amend those terms!

The deal was a =93no deal.=94 And our Legislature was handed a plan = that even=20 exceeded the administration=92s authority. Remember, in exchange for = unnecessary=20 concessions, the producers didn=92t have to commit to preparing = applications, much=20 less build a gasline.

We need progress on this project =97 and competition to result in the = best=20 project. We don=92t need endless discussions behind closed doors. It=92s = time we=20 leave the Stranded Gas Development Act in the past and move forward with = a new=20 vehicle. A vehicle that builds on the knowledge and experience gained = from a=20 valiant =97 but futile =97 effort previously in a non-competitive = process.

So let me tell you our plan. My gasline cabinet is developing a bill, = entitled the Alaska Gasline Inducement Act or =93Agia.=94

The centerpiece of this is to INDUCE construction of the gas = pipeline. A=20 gasline constructed on OUR terms, without selling Alaska=92s = sovereignty. This law=20 allows a transparent and competitive process. It jumpstarts progress = with=20 incentives, and strikes the right balance on a project for the state, = the=20 nation, project proponents, and producers. It will be good for all!

We=92ll introduce =93Agia=94 this legislative session. We=92re = scrutinizing its=20 legality, strategy, and efficacy with top experts right now. With = legislation=20 this important, it=92s more important to =93do it right than to do it = fast.=94

We=92re not limiting this review to our own hired experts. The day = after I took=20 office, Lt. Gov. Parnell and I began meeting with -- and we=92re = continuing to=20 meet with -- potential applicants to ask their opinions. We want to be = assured=20 that this bill provides the best chance to induce the best project, and = includes=20 the right =93must have=94 components for Alaska.

Since this issue is so important, let me delve into some of the = specifics of=20 the Act:

First, it offers inducements to those who will build the pipeline = itself.=20 This might be the three major oil producers, it might be an independent = pipeline=20 company, it might be a state or quasi-state entity, or it might be a = combination=20 of entities joining forces. The pipeline construction incentives will be = valuable, and will encourage companies to compete for the right to build = this=20 line. We=92re currently developing such incentives as a substantial = state capital=20 contribution so bidders know that we=92ll have skin in the game. We=92re = also=20 developing permit streamlining and a state-funded training program to = ensure a=20 qualified Alaskan workforce. We find this approach very exciting, and so = do many=20 potential applicants.

Second, to get a chance to compete for the inducement package, the = applicant=20 must agree to certain bedrock, "must-have" requirements of the state; = such as=20 gas for Alaskans; jobs for Alaskans; and project benchmarks. It requires = terms=20 that ensure competitive and long-term exploration and MORE development = on the=20 Slope. The pipeline must be able to expand in step with the development = of new=20 reserves so North Slope gas energizes us not just for our lifetimes, but = for the=20 lifetimes of our grandchildren.

Third, the Act provides inducements to those who hold the leases and = control=20 the gas. Regardless of who builds the line, we need a mechanism to = =93strongly=20 encourage=94 the leaseholders to commit their gas to the licensed = project. But=20 above all, one of the most appealing differences between this bill and = the=20 former is that =93Agia=94 will contain clear, competitive criteria by = which we can=20 judge which project best meets our long-term needs. That means Alaskans = will=20 know why the state is making the choices that it is.

This is an unprecedented approach. I recognize that but that's what=20 leadership, new ideas, and new ENERGY are all about.

We=92re proud that within our first month, "Agia" was devised and put = in the=20 hands of experts for evaluation. We will continue to work on the bill = until=20 we=92re satisfied that it represents a =93launching pad=94 for a = pipeline project that=20 not only passes legislative and public scrutiny, but will receive = excellent=20 proposals from applicants excited to build this gasline. It protects the = state=20 from untenable risk-taking; and ultimately, we=92re confident it will = result in a=20 project that powers our state, and the nation!

Alaskans are counting on us to succeed. With your patience and = support, WE=20 WILL SUCCEED.

Last year, the Legislature also embarked on a new oil and gas tax = structure,=20 called the Petroleum Profits Tax or P-P-T. It=92s anticipated this tax = will=20 provide almost =93one and a half billion dollars=94 in our budget. = However, with no=20 track record to go on, this is merely an estimate.

Like many legislators, and experts in the public, I would have = preferred to=20 stick with our proven method of taxing oil and gas based on its gross = value,=20 rather than the much more complicated system, basing taxes on an oil = company=92s=20 =93claimed=94 expenses and profits.

However, at this point, it is law, passed by the Legislature. So I = have asked=20 our Revenue Commissioner to assess and adopt necessary regulations to = ensure=20 P-P-T works as Alaskans were promised, and tighten up any loopholes. = We=92ll watch=20 carefully as the first tax returns come in, to make sure there aren=92t = any=20 surprises. If so, let=92s try again and get our production tax = right.

Getting fair value for our known resources is the only way we can be=20 self-sustaining and less reliant upon the federal government. It also = fulfills=20 the mandates in our State Constitution. But inherent in that = responsibility is=20 also the need to explore for more.

On the national scene, with changes in Congress, it appears our = chances to=20 open ANWR, diminish. However, I will continue to stand alongside our=20 Congressional delegation to prove to the rest of the nation that Alaska = must be=20 the foundation of a National Energy Plan.

Alaska can create a more secure United States by providing more = domestic=20 supplies of energy. With ANWR, with NPR-A, with a gasline, with = alternative=20 power projects. We must be ready.

So we=92ve dedicated time to the revenue side of the balance sheet, = now it=92s=20 important to reiterate spending commitments.

First, my philosophy: More government is not the answer. But we all = know=20 government=92s proper role is to help change the conditions to improve = lives and=20 economically stimulate communities. Government can=92t make you happy, = it can=92t=20 make you healthy, it can=92t make you a productive member of society. = Government=92s=20 role is to provide the tools.

One such tool is education. My commitment to education is = unwavering.

My budget includes fully funding the =93K through 12=94 foundation = formula. In=20 addition, I=92ve included more than $200 million in new dollars to cover = the=20 increased retirement costs for local school districts, so that more = local school=20 district dollars get into the classroom, where the money belongs.

Remember, we=92re facing a potential $10 billion dollar PERS / TRS = retirement=20 plan shortfall that affects local schools. Our $200 million dollar line = item for=20 school districts is part of the half BILLION dollar proposal to help the = districts, local governments and the state alleviate the pension plan = burden=20 while we work with the Legislature on a long-term solution.

I=92ve also committed to help provide local school districts with = more=20 predictability, for better planning by supporting =93early funding of = education.=94=20 So I=92ll introduce a separate education appropriation bill and ask the=20 Legislature to begin work on it immediately and ask that it=92s passed = within the=20 first 60 days of the session. Our local school districts deserve to know = what=20 they have to work with early enough for them to create efficiencies = through=20 planning. They shouldn=92t have to =93pink slip=94 teachers in the = spring, and make=20 =93last minute=94 rehire attempts in the fall.

But my vision for education is NOT only about funding =96 it=92s = about changing=20 the way we think about, and operate our schools. It=92s not the amount = of money we=20 pour into each child, but how we spend the money that counts.

We=92ll look at successful education programs statewide and Outside = that can be=20 replicated, and we=92ll look at new approaches! We=92ve got to do = something=20 different. Our high school graduation rate is 61%. That=92s = unacceptable! Our=20 vo-tech opportunities need to grow so that our kids stay in school and = then fill=20 the voids in our industries. And at the same time, we need to make sure = those=20 who want to go to college are ready.

We know that we need more mechanics, technicians, teachers, doctors, = and=20 nurses. We shouldn=92t have to import our workforce when it=92s growing = up before=20 us.

And so a centerpiece of my administration IS our commitment to a = =93world class=20 education=94 system. Let=92s take education and move beyond No Child = Left Behind to=20 ensure that =93no ALASKAN is left behind.=94

We=92ll work with our Congressional delegation to ADAPT federal = mandates to fit=20 Alaska. I=92m so thankful Sen. Lisa Murkowski is also committed to = changing=20 federal requirements so they make sense for the uniqueness here. = Flexibility is=20 needed, for rural schools, especially.

To meet our challenges, I=92ve asked our departments to bring = together the=20 private sector, the Department of Labor, postsecondary institutions, and = our=20 wonderful alternative education choices, including home schools, to = ensure that=20 students have the skills to meet Alaska=92s workforce needs. And, I will = continue=20 to ask families and individuals to take more responsibility.

You=92ll hopefully find this theme consistent throughout my = administration =96=20 cooperative efforts and personal accountability.

We must think =93outside of the box=94 to make true progress. You = know we had 80%=20 unemployment rates in our villages before we built the oil pipeline more = than=20 three decades ago =96 and we still have 80% unemployment in some areas.=20 Something=92s got to change! So, sub-cabinets will be established and = existing=20 cabinet goals will be amended. Let me give an example: we have a Fish = Cabinet=20 and basically what it=92s done is simply =93distribute grants.=94 = It=92ll now work with=20 labor and workforce development to create new ideas on everything from=20 employment opportunities to new seafood marketing initiatives.

I have included in my budget, $48 million dollars to support = communities,=20 which includes the need to balance the high cost of fuel. That=92s why = we also=20 fully funded Power Cost Equalization.

The state will also take care of the unexpected PERS / TRS increase = that=20 communities faced this year =96 to the tune of $77 million dollars. But = again, the=20 state cannot sustain this level of spending. We can do this because we = have a=20 surplus today.

Providing the funds should help communities focus on core = responsibilities,=20 including the safety of their residents. And the state will focus on = that as=20 well. We have got to improve all aspects of public safety with new = resolve.=20 Alaskans deserve to be able to trust those sworn to protect. At the core = of=20 that, we must recruit and retain the best.

We CAN now and must now work in trusting partnerships to ensure that = every=20 citizen feels safe and is treated fairly. We=92ll also restore the = balance needed=20 between protecting the public and the public=92s wildlife resources so = that we can=20 continue to enjoy access to hunting and fishing. The way to do that? = Undo the=20 recent merger of the State Troopers=92 brown shirts and blue shirts and = move in a=20 new direction through separation. Tonight, we=92re announcing the new = =93Alaska=20 Wildlife Trooper=94 - coming soon to a fishing stream near you.

With our goal of creating safer and HEALTHIER communities, it=92s = imperative=20 that we aggressively tackle substance abuse and violence throughout = Alaska and=20 find solutions to the rising costs of health care! By Administrative = Order, I=92ll=20 enact our =93Alaska Health Strategies Council=94 to effectively provide = access and=20 help lower the costs of health care. We must deal with our looming = health care=20 crisis from the young to our elderly.

And with respect to our elders, who built this state, and toiled = before us,=20 and FOR us, my budget keeps the state=92s promise and funds the = longevity bonus=20 for those who were enrolled in the program scheduled to phase out. = We=92ll also=20 propose legislation to continue SeniorCare for those who meet current=20 eligibility criteria.

A =93healthy Alaska=94 also requires that we keep up with the growing = demands on=20 the state=92s infrastructure. Our state is maturing, but our = transportation=20 infrastructure has not kept pace. The public feels the effects of that = every=20 day. Our capital budget funds projects based upon matching federal = funds. I look=20 forward to rebuilding the capital budget with legislators. I=92ve = identified more=20 than $180 million dollars that can be used to fund our critical capital = needs,=20 including reliable ferry service and solutions to traffic congestion. = Our=20 general fund investments will potentially leverage more than $700 = million=20 federal dollars.

We have a tremendous opportunity to shape the future of our state. = This=20 opportunity was handed to us with a lot of faith and hope, by = Alaskans=92 desire=20 to see change. The people asked for new leadership with new energy.

Our mission is =93Putting Alaskans first=94 by restoring trust, = controlling=20 spending, and communicating between the people=92s government and the = people! And=20 just as the public placed its trust in me, I place my trust in all of = you! I=20 promise that I will work just as hard as I know you will every day for = this=20 state.

Finally, let me conclude by sharing with you, some of my first = experiences=20 serving as Governor. Four days after taking office, I welcomed home some = of our=20 National Guard troops after serving a year in Iraq. Less than a week = later, we=20 saw the return of the then =93One-72nd=94 Stryker Brigade in = Fairbanks.

Let me brag a little bit about our 27,000 active duty Coast = Guardsmen,=20 Soldiers, Airmen, and Marines =96 including our own National Guard! = After brave=20 and successful missions in the War on Terror, our Alaska troops proved = to the=20 rest of the world what we Alaskans already know: our troops are the best = in the=20 world. We are so proud of their service and valor =96 making a = difference half way=20 around the world!

Each return is a moving experience. To see the father return home to = see his=20 baby for the first time, the mother reunited with her husband, her = children and=20 her parents. All those Alaskans returning home to our great state, to a = place we=20 cherish.

As I listened to our troops, I learned about the values that help = them keep=20 focused on their mission. I learned about courage, commitment, teamwork, = self-discipline, and an absolute dedication to protecting our = freedom.

Let=92s use those values to help guide us.

There is no question we=92ll face challenges every day. But we = promise to stay=20 focused on our mission: to build trust; to create opportunities so that = Alaskans=20 have a chance to work; to fund essential services without unsustainable=20 spending; and to help improve the success of our students, and make our = homes=20 and communities places of safety, prosperity and peace.

We=92ve been handed an incredible opportunity to set Alaska on course = to keep=20 the state of our state strong, for generations!

Thank you for this opportunity to address you tonight.

May God bless us and this great state.