allocation of the state sales tax from .5% to .7% over the next eight years. the introduced budget starts that process to show it can be done. by increasing that percentage to .55% over the biennium. let me put it in perspective. that amount, $110 million is 1/8 of 1% of an $85 billion budget. so i say to you, if we can't find the resolve to use 1/8 of 1% of the budget for additional transportation maintenance funding, then we are not serious about maintaining our infrastructure in virginia. we will also propose some other reforms to virginia department of transportation and reduce time lines for construction and

others to make the road projects go smoother. we will reform and promote new expansions in the port of virginia. a great asset to be a global leader in international shipping and a growing space port on the eastern shore. i think it is also time that we address head on, ladies and gentlemen, the hard realities of our woefully funded state retirement system. as of the june valuation, the funding status of the system was 70% for state employees and 66% for teachers. you read the report. they said the numbers will go to 63 and 61% respectively in 2013. that's unsustainable. i do not want to pass this problem on to another governor. you should not want to pass this on to another general assembly.

our responsibility is here. that is why i propose the largest employer contribution to the virginia retirement system in history. recommending $2.21 billion in total funding for state employees and teachers. now this more than doubles the amount that we put in the retirement system in the last budget. the state is now going to do its part. localities will have to fund their share of the teachers retirement. since teachers are local employees. and local governments have the duty to fund their share of the system. doing the right thing at the state level is not an unfunded mandate on our localities. the rates have been set and the bills are now due. in this new state cash infusion will not fix the problems with the retirement system.

to ensure a stable retirement system in the decades ahead, state employees who really do a phenomenal job for us every day, will be asked to accept some changes and adjustments to the vrs plan. in the days ahead, i will announce a number of very specific vrs reform proposals to ensure a long-term solvency of the system and i look forward to working with you to enact some of those this session. i also want to continue the success we found in bringing private sector management incentives to state government. you remember in 2010 working together, we enacted a 3% performance bonus for state employees, contingent upon them achieving the significant savings by theirge year. it worked. their great efforts saved taxpayers over $90 million after the bonus payment was made. that's good government. so, i'm asking you to do that

again this year. i proposed another 3% one time bonus for the state employees in december of 2012. contingent upon a specific amount of savings being achieved and employees individually meeting specific performance measures on the performance reviews. this will again reward good performance. last summer, we all collectively held our breaths as we watched the debt limit fight in washington. today, we face a volatile euro and international unrest. i would say to you that uncertainty for us is now the new certainty. while we cannot control what congress or what europe do, we must prepare as well as possible here in virginia for the future changes that are certain to come.

so that's what i try to do i in. the budget i proposed does not raise taxes, but forces state government to set priorities. live within its means and plan for the future. something i wish our federal government would also do. [ applause ] >> so i'm asking you this year to put $50 million from a newly created fund. this fund will help us handle impacts from necessary and future federal spending cuts and take prudent action to help our economy on defense in federal-related spending. i'm proposing we enhance our cash reserves by doubling the rainy day fund to $600 million by the end of 2014.

we will also eliminate the accelerated sales tax this session from 96% of all merchants by allocating by 2012. my goal is to get rid of that unfair policy before i leave office but not before. together, these budget strategies provide structural balance. they reduce unfunded liabilities and increase transportation and higher education. these ideas were well received last friday when i traveled to new york with your money committee leaders to meet with all three bond rating agencies. to continue building a commonwealth of opportunity, i'll also be asking your partnership in some other critically important areas of government. this budget provides $5 million for additional land conservation to continue our bipartisan

effort to conserve more open space to protect the environment. we have already been able to add 100,000 acres of land to the protected category. we are making progress in restoring the great jewel that is the chesapeake bay. straight bass production was at an all time record. some of you told me you caught a few. the blue crab population is at its second highest level since 1997 and even eagle populations are up in the bay watershed. we have been able to contribute over $85 million to improving water quality. this means more assistance to virginia farmers and a significant contribution to the water quality improvement fund. proving for public safety is one of the top duties of government at every level. if people aren't safe and secure

in their neighborhoods, businesses won't relocate there and our communities will not prosper. thanks to some of the smart policies that we all approved together over the years, and the selfless service of first responders and law enforcement officers like derek and mike, crime recidivism is actually down in virginia. you know we face challenges. repeat drug dealers are a major cause of crime. so this year, i'm proposing tough new laws to put away repeat drug dealers for longer periods of time. i put the money in the budget to make sure we can accomplish that. because if these dealers are behind bars, they can't sell drugs to our kids, they can't steal from their neighbors and they can't contribute to the tragic cycle of addiction that has stolen the lives of too many virginians. c when we

combine other effective policies. so this year in the budget, i provided localities with a mechanism for obtaining authorization of the courts at their expense. as long as they provide data to evaluate their success. for those that are released from prison w lstakes and want to be productive citizens. we'll provide them greater positive opportunities for an more effective prison-to-reentry policies. we are a remarkable nation of second chances. offenders that we incarcerate get out of prison. they will be back on the street. we don't want them to go back to prison. what we want is more good citizens and fewer victims. this year's budget maintains599 law enforcement. fully funds our sheriffs and

adds 40 new slots in our future state trooper schools. a more secure society is also a more prosperous society. now we're going to step up our efforts to make virginia the energy capital of the east coast. now that starts with pursuing an ofred, white and blue approach to energy. using all of our own natural rece virginia. more domestic energy production equals more job security. something we all should support. an important part of the energy solution is right her virginia. just 50 miles off the shores are oil and gas deposits that can be manner. we passed legislation in 2010 with strong bipartisan supportg. america needs the energy and virginians need the jobs.

[ applause ] >>gi the obama administration to end the delays and actto include the virginia in the intercontinental shelf plan. i want to thank senators warner and webb for leading that fight in our nation's capitol. we must continue to demand stop overreach and overregulation of our important job created coal and natural gas industries here in virginia. [ applause ]

>> and congress must also act to revitalize the nuclear industry, which capital is in lynchburg, virginia. by setting policies on the storage and disposal of fuel rods after 30 inaction. we will pursue solar sources as long as they are cost competitive. we had an exciting announcement in october. the nation's first facility for testing of large offshore electricity wind producing wind turbines will be developed offshore. that is why i included $500,000 in the fy 13 budget toe

development of the virginia wind energy area. we are also evaluating some very meritorious proposals for alternative fuels to reduce our alliance on foreign sources of revenues for our citizens. we must also continue to reform state government and make it effective or as mr. jefferson said, more wise and frugal. over the past decade, state spending has grown 23% faster than the rate of growth and population according to the report. we have room for improvement and managing our financing. i'm proposing we close a prison and cut ineffective programs and abolish unnecessary commissions and end memberships and outside

organizations and make our government work smarter. [ applause ] >> and this is the session, ladies and gentlemen, where we should honor our founders by putting into our state constitution a strong property rights amendment to protect the private property of every virginian. we will continue our recent work to traumatically improve funding for individuals with intellectual and disabilities as well. [ applause ] >> last year together, we invested $60 million in new funds to strengthen community

care capacity. i authorized 60 waiver slots, specifically for individuals ready to transition from institutions back to the community. i want to thank delegates kirk cox and chris jones for their leadership. in this budget, i'm recommending you put another $30 million in the mental health funding. we must transition more individuals from institutions to community-based care. it is the right thing to do for them and for their families. [ applause ] >> medicaid funding has increased 1,600% over the last 29 years. during the 2011 session, substantial ways to improve the quality, cost effectiveness and

integrity of the program were enacted. this will allow state government to better manage our medicaid expenses while ensuring virginians receive the high-quality health care that they need. you arrive here tonight, ladies and gentlemen, and i think particularly pitiful time in the life of virginia and the life of our nation. the world around us isncredible. gone are the old regimes in iraq and libya and egypt and india. facebook and twitter texts which replaced e-mails which replaced phone calls. iphones rule. products and procedures get obsolete quickly. even one-term governors, but not

too quickly. in the midst of all this uncertainty and structural change, i think virginians want government to provide stability by funding and providing its core services well. they want good jobs. they want safe successful scho. they want a modern transportation system. and just an equal opportunity to achieve the american dream. we are a nation that rightly guarantees equal access to opportunities. we don't guarantee out comes. that's why we're a free people. that's the kind of government that was enshrined in law here in virginia over two centuries ago. it has made thisted ates the most prosperous nation the world hasknown. in the mid 1840s and '50s,

during the irish potato many of fled to the united states. hoping for survival across the ocean. in the galleys of the ships that sailed from the ports in england and ireland in places like dublin and cork, the irish government posted bulletins with the heading, "advice to irish immigrants." the posters read, "in the united states, wealth is not idolized, but there is no degradationlabo" youth may follownyout being loo and he may rationally expect to raise himself in the world by his labor. over 100 years ago, this man, that same promise of america led

my grandfather to come to ellis island and massachusetts to pursue his dreams and opportunities. that, to me, typifies the america and virginia we all believe in. that's the america that we are blessed to call home. over the next 60 days, our job is to enact policies to ensure this remains a commonwealth of opportunity where any man or any woman of any race or any creed, from any beginning and any place, will always have the opportunity to raise themselves up in the world by their god-given talents and their labor. [ applause ] >> so working together, i know

we will do that. so thank you all for your work together this session and may s blessings on this great commonwealth of virginia. thank you. our coverage of the state of state addresses continues with delaware governor jack markell. some of the issues he covers during his remarks include economic development, government accountability and improving education. this comes to us courtesy of whyy tv in wilmington. from the state capitol in dover this is about 45 minutes.

>> thank you. governor, you're popular. governor, welcome to the joint session. we look forward to your address, sir. >> thank you. lieutenant governor den and president pro tem, speaker gilligan, members of the 146th general assembly, other elected officials, members of the judiciary, members of the cabinet, our employees, carla,

and the people of delaware, in my previous reports on the state of the state, i spoke to you of turbulent seas blizza blizzards. and these images captured the mo through the worst economic downturn since the great depression. and this e for delaware i hndtr depended for d like financial services, and automotive manufacturing. but it made landfall in every corner of our nation. and while delaware was not alone in facing this storm, the way we responded was unique. the politics of blame and division, the rhetoric of distrust and the partisan warfare witnessed elsewhere never found a home in our state. instead, we pulled together and

we prepared for the future. and leaning on speaker gilligan's 40 years of experience. the leadership of both parties in this general assembly worked with us, and we made tough decisions to balance our budgets while still making investments necessary to keep moving forward. we cut where it was possible, and we invested where it was important, to create jobs to improve schools and to build infrastructure. and at a moment when washington, d.c. stands for deadlock and dysfunction, delaware's strength resides in the capacity of its people, even in challenging

times, to work with mm to choose perseverance in place of pettiness and partisanship. as our economy recovers, albeit more slowly than any would like, we've got to resist the temptation to rest, satisfied with the status quo. as thomas friedman and michael mandelbonn write in their book, the best win in the turn, when there are big shifts in the marketplace, when others are overwhelmed and in disarray. they put distance between themselves and their competitors. and as tempting as it might seem, to take this moment to pause and catch our breath, this is not the time to stand still. this is the time for delaware to leap ahead. to lead.

now, the capacity to build on existing strengths and to adapt successfully to change is the quality that distincts companies that surged to the head of the pack from those that languish. dupont today is a science company. not the same chemical company it was 20 years ago, or the gunpowder company it was 200 years ago. w.l. gore and astrazeneca and ilc, and our financial services companies have all evolved to keep up with changing markets and technologies. consider amazon. which is soon to be one of our larger employers. it's become an all-purpose online retailer, by leverages the distribution capability that it originally developed to deliver books.

our employers are changing. capitalizing on their strengths and thinking about tomorrow. and to lead, to be the place where these companies grow, delaware must be ready to do the same. we must be ready to win in the turns. now, in delaware, our economy directly benefits from our leading employers. thanks to your financial support of the strategic fund, we have attracted and retained significant employers. pbf energy, sallie mae, baltimore air coil, miller metal, bloom energy, mount air farms and capital one. we've got to continue these efforts and remain nimble and opportunistic and aggressive when large employers present job opportunities. that's why i'll again recommend significant funding for the strategic fund next year.

but to do more than just keep pace, to keep distance from ourselves and our competitors, we've got to look beyond at direct benefits our larger employers provide. we must capitalize on their presence to build our competitive edge. we already have terrific small businesses. but we aspire to see more created and to see them grow quickly. and to accomplish that we must nurture the small businesses and the new companies that will thrive in the hospitable soil that our world-class work force create around them. now following up on the recent imagine delaware news form, we're finding new ways to support entrepreneurs. over the last months we have studied best practices at entrepreneurial support centers around the country in places as far away as silicon valley and as nearby as the science center in delaware.

the best tend to have a few things in common. flexible incubator spaces, wrap around services like free or discounted legal and accounting assistance. educational opportunities for potential entrepreneurs and investors. and outstanding opportunities for collaboration. and working with representatives lavell and brian short, and groups like first aid innovat n innovation, we'll apply what we have learned to further support emerging start-ups and growing companies in delaware. not every company that uses these resources will be successful. and it will take those that succeed time to achieve results. our goal though is not to capture a headline tomorrow, it's to facilitate the creation of jobs for a generation. now, while nurturing the businesses of the future, we

must focus on growing our small businesses today. small businesses need access to credit, and will utilize the federal small business credit initiative to help more credit worthy businesses get ndnd to create jobs. we're also pleased to be first state to announce aarrtnership businesses fully engage the powerful use of social media, to market their products and their services. and we've got to put ourselves in the shoes of those who create jobs. we've got to understand the industries in our state better than any other state. we've got to be more committed to the success of the businesses in our state than any other state and we have most of the ingredients that his bes are looking for. good schools and institutions of higher education. reasonable taxes. a high quality work force. a wonderful quality of life. and the