>>> MR.

PRESIDENT?

>> MADAM SERGEANT AT-ARMS?

>> PHILLIP B. SCOTT.

[APPLAUSE] [CHEERING AND APPLAUSE] .

>> IT IS NOW MY DISTINCT HONOR TO PRESENT TO YOU THE GOVERNOR OF THE STATE OF VERMONT, THE HONORABLE PHILLIP B. SCOTT.

[APPLAUSE] >> THANK YOU.

[APPLAUSE] >> THANK YOU.

[APPLAUSE] .

>> MR.

PRESIDENT, MEMBERS OF THE GENERAL ASSEMBLY, FELLOW VERMONTERS, 19 DAYS AGO, I STOOD IN THIS VERY SPOT TO LAY OUT MY VISION FOR VERMONT, ONE THAT HELPS US HARNISH OUR VALUES AND BEAUTY AND QUALITY OF LIFE TO PROPEL A STRONG, DYNAMIC ECONOMY AND ONE THAT BELIEVES WE CAN ACHIEVE GREAT THINGS THROUGH THE STRENGTH AND RESOURCEFULNESS OF OUR PEOPLE AND OUR RESPECT FOR EACH OTHER.

OVER THE WEEKEND, THOUSANDS OF VERMONTERS MARCHED INTO MONTPELIER.

AS I PROMISED -- [APPLAUSE] I WILL CONTINUE TO PROTECT THE RIGHTS OF VERMONTERS AND THE HUMAN RIGHTS OF ALL PEOPLE.

IN MY INAUGURAL ADDRESS, I OUTLINED A VISION WHERE WE BUILD THE BEST EDUCATION SYSTEM IN THE COUNTRY, MAKING ECONOMIC GROWTH THE FOCUS OF EACH STEP AND CREATE OPPORTUNITIES FOR ALL VERMONTERS.

I AM COMMITTED TO THIS VISION.

AND BELIEVE WE CAN ACHIEVE IT IF WE FIND COMMON GROUND, LISTEN TO THE PEOPLE, WE ARE HERE TO SERVE AND MAKE THE DIFFICULT DECISIONS NECESSARY TO SET A NEW COURSE.

AS I SAID ON THAT DAY, IF WE WORK TOGETHER, AND CONSIDER THE MOTTO OF VERMONT MOUNTAIN BATTALION, WE CAN ASCEND TO VICTORY, EVEN WHEN THE CLIMB FEELS TOO STEEP.

WHILE I AM OPTIMISTIC ABOUT OUR FUTURE, I WILL ALWAYS BE HONEST ABOUT THE SCOPE OF OUR CHALLENGES AND THE TOUGH TASK OF ADDRESSING THEM.

VERMONTERS DESERVE LEADERSHIP THAT WILL MAKE DIFFICULT CHOICES, KNOWING THEY WILL LEAD TO A BETTER FUTURE.

THE BIGGEST OBSTACLE WE FACE TO ECONOMIC SUSTAINABILITY IS A SHRINKING WORKFORCE.

FROM 2010 TO 2016, WE LOST AN AVERAGE OF 2,300 WORKERS.

THAT'S 16,000 FEWER PEOPLE AND JOBS, PAYING TAXES.

CONSIDER THIS, THAT NUMBER REPRESENTS THE ENTIRE POPULATION OF ESSEX COUNTY, GRAND ISLE COUNTY AND THE TOWN OF HARDWICK COMBINED.

WITH STAGNANT POPULATION GROWTH, THESE NUMBERS ARE A SMALL PORTION OF OUR POPULATION.

THAT AGE GROUP WENT FROM 29% TO 23% OF OUR POPULATION.

34 STATES EXPECT TO SEE THEIR WORKING-AGE POPULATION GROW OVER THE NEXT 25 YEARS.

VERMONT CURRENTLY ISN'T ONE OF THEM.

BY 2040, THE WORKING-AGE IS EXPECTED TO GROW BY 15%.

BY VERMONT'S WILL DROP BY MORE THAN 10%.

A SHRINKAL WORKFORCE CREATES A DOWNWARD SPIRAL.

WE HAVE LESS REVENUE.

AND THE STATE BECOMES LESS AND LESS AFFORDABLE.

THAT MAKES IT HARDER AND HARDER TO REBUILD AND WE'RE ALREADY SEEING THESE AFFECTS.

WE MUST ACT NOW AND BEGIN OUR ASCENT.

[APPLAUSE] WE HAVE AVOIDED THE REALITY OF THIS CRISIS FOR FAR TOO LONG.

I'M COMMITTED TO DOING WHATEVER IT TAKES TO PUT US ON A NEW PATH TO A MORE PROSPEROUS FUTURE.

I REMINDED OF THE YEAR I PARTICIPATED IN "RACE TO THE TOP OF VERMONT."

I WONDERED IF I COULD DO IT.

BUT I LEARNED A LONG TIME AGO, AFTER YOU LOOK AT THAT PEAK, YOU TURN YOUR FOCUS TO THE STRETCH RIGHT IN FRONT OF YOU AND THAT'S WHAT I DID.

PEDALING A FEW FEET AT A TIME UNTIL I MADE IT TO THE TOP.

THE CLIMBING THE MOUNTAIN IN FRONT OF US MAY FEEL DAUNTING.

I URGE YOU NOT TO FEEL OVERWHELMED, BUT TO JOIN ME IN WORKING STRETCH BY STRETCH.

IF WE HAVE THE DISCIPLINE AND COMMITMENT TO FOLLOW THROUGH, GREAT THINGS ARE AT THE TOP.

ON MY FIRST DAY IN THE OFFICE, I DIRECTED MY ENTIRE ADMINISTRATION TO LOOK AT EVERY POLICY, PROCESS AND PRACTICE AND ASK, DOES IT STRENGTHEN THE ECONOMY?

DOES IT HELP VERMONTERS KEEP MORE OF WHAT THEY EARN?

DOES IT PROTECT THE MOST VULNERABLE?

WE HAVE LOOKED ACROSS ALL OF STATE GOVERNMENT WITH THOSE QUESTIONS IN MIND.

AND I HAVE SET LIMITS THAT REFLECT THE CHANGES WORKING FAMILIES SEE IN THEIR OWN FINANCES.

ACHIEVING A BALANCED BUDGET IN THIS CURRENT ENVIRONMENT WILL NOT BE EASY.

WE FACE A SIGNIFICANT BUDGET GAP.

BECAUSE YEAR AFTER YEAR, SOFT REVENUES FAIL TO MATCH SPENDING PRESSURES.

IT WILL REQUIRE SOME HARD CHOICES TO OVERCOME THESE CHALLENG CHALLENGES.

BUT IT'S AN OPPORTUNITY TO RETHINK HOW WE APPROACH OUR BUDGET.

THE FRAMEWORK I'VE ESTABLISHED IN THIS BUDGET IS NECESSARY TO PUT US ON A PATH TO A MORE SUSTAINABLE PATH AND MEET THE EXPECTATIONS OF THE VERMONTERS WHO ELECTED US.

TODAY, I PRESENT A BALANCED BUDGET THAT DOES NOT INCREASE TAXES OR FEES, DOES NOT MAKE PROGRAM IMPACTS AND MATCHES BASE SPENDING WITH BASE REVENUE.

NOT ONE-TIME FUNDS, TO AVOID FUTURE SHORTFALLS.

SPENDING IN THE GENERAL FUND FOR THE NEXT FISCAL YEAR WILL BE BELOW BASE SPENDING FOR THE CURRENT ONE.

[APPLAUSE] I DELIVER THIS BALANCED BUDGET WHILE DOING EDUCATION, TRAINING AND HOUSING FOR ALL VERMONTERS.

MY BUDGET MAKES IMPORTANT INVESTMENTS AND HELPING OPIATE ADDICTION.

I WANT TO FUND OUR PENSION OBLIGATIONS AT THEIR FULL, RECOMMENDED ANNUAL LEVELS AND I WILL SET ASIDE RESERVE ACCOUNTS TO ASSURE WE CAN RESPOND TO CHANGES FROM WASHINGTON.

AND, MY BUDGET TAKES MORE STEPS TO ADDRESS IN OF EFFICIENCIES A FUNDING.

THIS YEAR, I WILL NOT PROPOSE A TAX OR FEE BILL.

BUT INSTEAD, OFFER MODEST TAX RELIEF TO HELP WORKING FAMILIES AND CREATE JOBS.

FRANKLY, I WOULD HAVE LIKED TO GO FURTHER WITH INCOME TAX CUTS FOR VERMONTERS.

HOLDING THE LINE ON TAX INCREASES IS A FAIR APPROACH.

FINALLY, MY BUDGET CREATES A FRAMEWORK FOR AN EFFECTED AND PRODUCTIVE STATE GOVERNMENT FOR DECADES TO COME.

I STARTED LAYING THIS FOUNDATION ON DAY ONE.

MY GOVERNMENT MODERNIZE AND E EFFICIENCY TEAM AND PIVOT PROGRAM ARE MAKING IT MORE EFFICIENT AND PRODUCING BETTER OUTCOMES.

BECAUSE OF THESE EARLY EFFORTS, TODAY, WE HAVE IN HAND, A LIST OF PROGRAMS THROUGHOUT STATE GOVERNMENT, A ROUGH INVENTORY OF WHAT WE DO.

BELIEVE IT OR NOT, THIS IS NOT SOMETHING WE HAD BEFORE.

THIS IS A FIRST STEP TOWARDS GIVING ALL OF US, THE LEGISLATURE INCLUDING, THE TOOLS WE NEED TO BUILD A BUDGET BASED ON SOLID DATA, TIED DIRECTLY TO ACTUAL OUTCOMES.

BY NEXT YEAR, WE WILL FINALLY HAVE WHAT WE NEED FOR TRUE, RESULTS-BASED ACCOUNTABILITY.

IN MY INAUGURAL ADDRESS, I SHARED A VISION FOR A MORE INNOVATIVE AND UNIFIED EDUCATION SYSTEM THAT SETS HIGHER STANDARDS AND TURNS VERMONT INTO AN EDUCATION DESTINATION FOR FAMILIES.

I BELIEVE WE CAN REACH THESE GOALS WITHOUT SPENDING MORE, BUT ONLY IF WE ARE FINALLY WILLING TO ACT BOLDLY.

IT WILL TAKE COURAGE AND COMPROMISE.

BUT WE CAN MAKE TRANSFORMATIVE CHANGES TO OUR EDUCATION SYSTEM THIS YEAR.

FIRST, WE NEED TO HAVE AN HONEST DISCUSSION, LISTEN TO EACH OTHER AND WORK TO FIND COMMON GROUND.

BECAUSE OUR CURRENT SYSTEM IS NOT WORKING TO THE BEST OF ITS CAPACITY FOR OUR KIDS, PARENTS, TEACHERS, ADMINISTRATORS, OR, TAXPAYERS.

OUR TEACHERS AND SUPPORT STAFF WORK HARD AND ARE DEDICATED TO HELPING OUR CHILDREN LEARN.

THEY HAVE NURTURED A SYSTEM BASED ON TEACHING OUR CHILDREN WELL AND OUR SCHOOL BOARDS HAVE WORKED TO MAINTAIN QUALITY, WHILE SLOWING THE INCREASE IN COSTS.

BUT THEY ARE CONFINED BY A RIGID, ANTIQUATED AND INEFFICIENT STRUCTURE THAT ISN'T EVOLVING AS QUICKLY.

TEACHERS FACE CHALLENGES TODAY THAT MY GENERATION NEVER DREAMED OF.

OPIATES HAVE IMPACTED OUR SCHOOLS THE SAME WAY THEY'VE IMPACTED OUR COMMUNITIES.

STUDENTS ARE ENTERING SCHOOL WITH UNIQUE NEEDS AND GROWING BEHAVIORAL CHALLENGES.

WITH THESE CHANGES, AND SO MANY MORE, IT'S CLEAR WE NEED A NEW APPROACH.

TODAY'S KIDS REQUIRE A DIFFERENT LEARNING MODEL, ONE THAT IS MORE NIMBLE.

WE MUST ALSO BE HONEST ABOUT HOW WE DISTRIBUTE FUNDING.

OUR SCHOOLS HAVE FEWER KIDS THAN THEY DID 20 YEARS.

WE SPEND $19,000 ON EACH K-12 STUDENT.

THIS STRUCTURAL IN EFFICIENCY LEAVES TOO LITTLE OF OUR $1.6 BILLION EDUCATION COMMITMENT FOR INVESTMENTS IN EARLY CARE, HIGHER EDUCATION AND TRADES TRAINING.

AND, WE CAN NO LONGER ASK PROPERTY TAXPAYERS TO PAY MORE EVERY YEAR FOR EDUCATION WITHOUT OFFERING BETTER EFFICIENCY AND BETTER OUTCOMES.

IF WE ARE WILLING TO RETHINK HOW WE DO THINGS AND IF WE HAVE THE COURAGE TO ALIGN OVERHEAD COSTS WITH THE SIZE OF OUR STUDENT POPULATION, WHEREVER WE CAN, WE CAN CREATE THE BEST EDUCATION SYSTEM IN THE NATION.

GIVE OUR KIDS THE BRIGHTEST, POSSIBLE FUTURE AND ATTRACT MORE FAMILIES TO VERMONT FOR A STRONGER ECONOMY.

TO START US ON THIS NEW PATH, I'M PROPOSING A REALIGNMENT OF PRIORITIES AND SPENDING THAT ALLOWS US TO UNIFY THE SYSTEM FROM EARLY CARE TO HIGHER EDUCATION AND TRADES TRAINING.

HERE'S THE BOTTOM LINE, FOR THE FUTURE OF OUR KIDS, FOR OUR TEACHERS, AND FOR OUR ECONOMIC WELL-BEING, WE NEED TO ACT.

[APPLAUSE] NUMEROUS REPORTS SHOW VERMONT IS AMONGST THE LEAST AFFORDABLE STATES FOR CHILDCARE.

THIS IS NOT JUST AN EDUCATION ISSUE.

IT'S A WORKFORCE ISSUE THAT UNDERMINES THE SECURITY OF FAMILIES AND SLOWS OUR GROWTH.

FOR EXAMPLE, A WOMEN FROM PEACHAM WORKED FULL-TIME IN THE DAIRY INDUSTRY WHEN SHE AND HER HUSBAND HAD THEIR FIRST CHILD.

SHE HAD PLANNED TO GO BACK TO WORK, HOPING FOR THE SECURITY OF TWO INCOMES.

BUT WHEN THEY FOUND CHILDCARE WOULD EAT UP HER ENTIRE PAYCHECK, IT MADE MORE SENSE FOR HER TO STAY HOME.

THIS DEMONSTRATES WHY INVESTING IN HIGH-QUALITY CARE AND EARLY LEARNING SERVES AS AN ECONOMIC DRIVER AND THE BUSINESSES THAT EMPLOY THEM.

IT ALSO DRAMATICALLY REDUCES FUTURE COST IN HEALTHCARE, SPECIAL EDUCATION AND CORRECTIONS.

I'M PROPOSING WE INCREASE INVESTMENT IN EARLY CARE AND PRE-K BY $9.6 MILLION.

[APPLAUSE] MY BUDGET DIRECTS $7.5 MILLION OF THIS TO THE CHILDCARE FINANCIAL ASSISTANCE PROGRAM.

I'M PROPOSING INVESTMENT IN COMPETITIVE GRANTS, SUPPORTING EARLY CARE IN PRE-K.

WE'LL INVEST $1 MILLION IN FULL-DAY PRE-K PROGRAMS FOR HIGH-POVERTY KIDS.

AND PROPOSE A $600,000 GRANT FOR THE DEVELOP OF A MODEL THAT HELPS CHILD CARE SHARE SERVICES.

$500,000 FOR A PILOT PROGRAM AT THE MUNICIPAL LEVEL.

THIS WILL SPUR IDEAS LIKE UNIQUE SCHOLARSHIP OPPORTUNITIES OR GRANTS THAT EXPAND THE NUMBER OF SPOTS AVAILABLE AND TO HELP MAKE QUALITY CHILDCARE CENTERS MORE AFFORDABLE.

WITH ADDITIONAL INVESTMENTS IN INNOVATION, MODERNIZATION AND LEARNING IN OUR K-12 SYSTEM, I HOPE TO INSPIRE FRESH THINKING IN OUR CLASSROOMS.

FUND TECHNOLOGY AND CONNECT EVERY SCHOOL IN VERMONT WITH HIGH-SPEED INTERNET ACCESS.

TO PROMOTE MORE INTEREST IN SCIENCE, TECHNOLOGY, ENGINEERING AND MATH, AS WELL AS TRADITIONAL TRADES, I PROPOSE GRANTS TO SUPPORT CODING CAMPS AND BOOST CAREER TECHNICAL EDUCATION PROGRAMS.

[APPLAUSE] THIS IS AN AREA I PERSONALLY AM VERY PASSIONATE ABOUT.

WHEN I FIRST ENTERED COLLEGE, IT WAS TO BE A TECH EDTEACHER, BEING ABLE TO BUILD SOMETHING FROM NOTHING ALWAYS INSPIRED ME.

SO IT IS ESPECIALLY MEANINGFUL TO ME TO PROPOSE MORE OPTIONS FOR TECHNICAL EXPERIENCE.

WITH THESE PROGRAMS, WE CAN TRAIN A NEW GENERATION OF SKILLED CONTRACTORS, ENGINEERS AND SCIENTISTS.

ANOTHER AREA WHERE VERMONT CONSISTENTLY RANKS IS SUPPORT OF STATE COLLEGES AND UNIVERSITIES.

WE HAVE 40,000 STUDENTS IN OUR HIGHER EDUCATION SYSTEM.

THAT'S 40,000 SOON TO BE PROFESSIONALS WHO CHOOSE TO BE IN VERMONT, WHETHER THEY GREW UP HERE OR ARE DRAWN FROM OUT-OF-STATE.

WE NEED MORE OF THEM TO STAY AFTER GRADUATION, SO LET'S PARTNER WITH THE COLLEGES AND UNIVERSITIES.

$4 MILLION TO VERMONT STATE COLLEGES.

[APPLAUSE] IN RETURN, I'M ASKING THEM TO USE THIS ADDITIONAL FUNDING TO SUPPORT MY STRATEGIC GOALS.

THEY WILL WORK WITH EMPLOYERS TO ALIGN DEGREE PROGRAMS WITH MARKET DEMANDS, TO KEEP TUITION INCREASES TOWARD MARKETPLACE VALUE.

I'M ALSO PROPOSING AN ANNUAL INCREASE OF $1 MILLION IN BASE APPROPRIATIONS FOR BOTH THE UNIVERSITY OF VERMONT AND VSAC.

[APPLAUSE] I BELIEVE THIS INVESTMENT WILL GET MORE LOW AND MIDDLE-INCOME VERMONTERS THE OPPORTUNITIES THEY NEED.

FINALLY, I PROPOSE AN ADDITIONAL $500,000 TO FUND SCHOLARSHIPS FOR VERMONT NATIONAL GUARD MEMBERS TO ATTEND VERMONT COLLEGES AND UNIVERSITIES.

THIS IS ONE SMALL WAY WE CAN SHOW OUR GRATITUDE TO THE MEN AND WOMEN WHO DEFEND OUR FREEDOMS.

[APPLAUSE] IF WE ARE GOING TO HAVE THE MOST VALUABLE, EARLY CARE THROUGH HIGHER EDUCATION SYSTEM, WE MUST MANAGE EDUCATION SPENDING IN A UNIFIED WAY.

THIS IS A FIRST STEP TO BETTER-ALIGNING PROGRAMS, ELIMINATING INEFFICIENCIES AND MEASURING RESULTS.

WITH THIS GOAL IN MIND, MY BUDGET MOVES SPENDING FOR HIGHER EDUCATION, RETIRED TEACHERS, HEALTHCARE, AND LIABILITY FOR TEACHERS RETIREMENT FOR THE EDUCATION FUND.

IN FUTURE FISCAL YEARS, WE WILL TRANSFER EARLY CARE AND PRE-K FUNDING TO THE EDUCATION FUND, AS WELL.

TO COVER THESE COSTS, I'M PROPOSING TO INCREASE THE GENERAL FUND TRANSFER TO THE EDUCATION FUND BY NEARLY $86 MILLION AMONG STATUTORILY RECOMMENDED LEVELS.

[APPLAUSE] IN ADDITION, I'M PROPOSING TWO SAVINGS MEASURES THAT WILL OFFSET THE INVESTMENTS.

THESE WILL KEEP PROPERTY TAXES LEVEL FOR THE FIRST TIME IN YEARS.

FIRST -- [APPLAUSE] FIRST, I'M PROPOSING PARITY IN WHAT TEACHERS AND STATE EMPLOYEES CONTRIBUTE TOWARD THE COST OF THEIR HEALTHCARE.

THEY PAY 20% OF THEIR HEALTHCARE PREMIUMS AND MOST PRIVATE SECTOR WORKERS PAY EVEN MORE.

TEACHERS PAY ABOUT 15%.

BY ESTABLISHING PARITY AMONGST THESE PUBLIC EMPLOYEES, ASKING EVERYONE TO PAY 20%, WE CAN GENERATE $50 MILLION IN SAVINGS PER YEAR.

WITH MOST TEACHER'S CONTRACTS EXPIRING ON JUNE 30, I WILL SEEK LEGISLATION INCLUDE THIS CHANGE.

I'M ASKING SCHOOL DISTRICTS TO LEVEL FUND AT FISCAL 17 LEVELS.

VERMONTERS NEED IMMEDIATE RELIEF.

[APPLAUSE] I WANT TO BE VERY CLEAR.

I'M NOT ASKING SCHOOL DISTRICT SADISTRICTS ANYTHING MORE THAN WHAT I'VE ASKED FROM STATE GOVERNMENT.

WE WILL BE TIGHTENING OUR BELTS IN MONTPELIER.

WE ARE COMMITTED TO WORKING WITH YOU TO SEE THIS CHANGE THROUGH.

BUT WE MUST SEE IT THROUGH.

A DEEP APPRECIATION FOR THE WORK SCHOOL BOARDS HAVE DONE.

IT IS ADMIRABLE.

I ALSO KNOW HOW DIFFICULT IT WILL BE TO ADJUST TO LEVEL FUNDING IN ADVANCE TO "TOWN MEETING DAY."

I'M PROPOSING TO SET MAY 23 AS A SPECIAL STATE-WIDE ELECTION ON LOCAL SCHOOL BUDGETS.

THIS GIVES LOCAL SCHOOL BOARDS THREE ADDITIONAL MONTHS TO DEVELOP LEVEL-FUNDED BUDGETS.

AND FINALLY, I'M ASKING THE LEGISLATURE TO MOVE QUICKLY ON THESE ACTIONS TO GIVE SCHOOL BOARDS TIME TO MAKE THESE ADJUSTMENTS.

BELIEVE ME WHEN I SAY, I KNOW THESE ARE INCREDIBLY STRONG MEASURES.

BUT OVER THE LAST 20 YEARS, STUDENT COUNTS ARE CONTINUEIOUSLY DROPPED AND COSTS HAVE ROSE FASTER AND PROPERTY TAXES IS A CONTRIBUTOR TO OUR CRISIS OF AFFORDABILITY.

WE MUST ALIGN OUR SYSTEM WITH THE NUMBER OF STUDENTS WE ARE SERVING.

IF WE DON'T, WE WILL HAVE TO SETTLE FOR HIGHER TAXES AND FEWER EDUCATIONAL OPTIONS.

AND I REFUSE TO SETTLE FOR EITHER.

[APPLAUSE] THIS CHALLENGE IS REAL AND THE NEED TO ACT IS URGENT.

I TALKED WITH A WOMAN WHO WORKS IN AN AREA HOSPITAL, A FULL-TIME WORKING, WHO, IN HER 50S, WAS MOVING BACK IN HER PARENTS, WHO WERE 70 AND COULDN'T RETIRE.

I'M ASKING YOU TO REMEMBER, VERMONTERS NEED THIS.

PLEASE, PLEASE DON'T INSTINCTIVELY LOCK UP WITH RESISTANCE TO CHANGE.

I PROMISED TO MAKE DIFFICULT CHALLENGE AND PUT VERMONT ON A MORE SUSTAINABLE PATH AND THIS IS ONE OF THEM.

I -- [APPLAUSE] BY TAKING THESE STEPS, WE CAN KEEP PROPERTY TAX RATES LEVEL AND WE'LL MAKE IT POSSIBLE FOR MORE COMPREHENSIVE APPROACH ON THE ENTIRE CARE THROUGH COLLEGE SPECTRUM.

IF YOU HAVE THE COURAGE TO JOIN ME IN SUPPORT OF THESE MEASURES, WE WILL INSURE OUR CHILDREN ARE GETTING HIGH-QUALITY EARLY CARE.

OUR PRE-K-THROUGH 12 STUDENTS GET A BETTER EDUCATION AND COLLEGE AND NON-COLLEGE BOUND STUDENTS WILL HAVE THE OPPORTUNITY TO BE TRAINED FOR TODAY'S MARKETPLACE.

TOGETHER -- [APPLAUSE] TOGETHER, WE WILL BEGIN THE DIFFICULT WORK OF MAKING OUR EDUCATION SYSTEM THE MOST EFFICIENT, PRODUCTIVE AND VALUABLE ECONOMIC DEVELOPMENT TOOL WE HAVE.

WE WILL REBUILD OUR WORKFORCE, ATTRACT FAMILIES SEEKING REAL-CLASS EDUCATION AND RETAIN THE BEST AND THE BRIGHTEST FROM OUR SCHOOLS.

WE CAN DO THIS IF WE LOOK PAST NEXT YEAR, TO A FUTURE THAT PROVID PROVIDES EVERY VERMONT CHILD THE OPPORTUNITY FOR SUCCESS IN THE MOST EFFICIENT AND INNOVATIVE SYSTEM IN THE NATION.

[APPLAUSE] STRUCTURAL REFORM AND STRATEGIC INVESTMENT IN EDUCATION HAS LONG-TERM BENEFITS TO OTHER SYSTEMS LIKE HEALTHCARE AND HUMAN SERVICES AND THE REFORMS I'M PROPOSED TO THE EDUCATION FUND ALSO ALLOW US TO BALANCE THE BUDGET WITHOUT MAKING CUTS TO SERVICES.

HUMAN SERVICES IS ONE OF THE BIGGEST COST DRIVERS.

WE ARE FACING SIGNIFICANT CASELOADS.

WE SHOULD BE ENCOURAGED DURING FISCAL YEAR 17.

EVEN WITH THIS PROGRAM, CASELOAD PRESSURES COMBINE TO CONTRIBUTE $15 MILLION TO THE OVERALL BUDGET GAP.

RESTRAIN ON HUMAN SERVICES SPENDING IS NECESSARY, I'M PROUD TO RECOMMEND A SERIES OF REDUCTIONS THAT WILL NOT AFFECT VULNERABLE VERMONTERS AND WILL HELP COMBAT OPIATE ADDICTION.

I PROMISE THE SOLUTION TO THAT EXCHANGE AND EVEN WITH THE UNCERTAINLY IN WASHINGTON, WE CONTINUE TO EVALUATE BETTER OPTIONS FOR THE FUTURE.

WE WILL BE THOROUGH BECAUSE VERMONTERS CANNOT AFFORD US TO HEAD DOWN THE WRONG PATH ONCE AGAIN.

[APPLAUSE] BUT THERE ARE CHANGES WE CAN MAKE TODAY THAT WILL SAVE MONEY AND GIVE VERMONTERS A BETTER EXPERIENCE.

TO START, WE WILL REMOVE THE STATE AS A MIDDLEMAN BETWEEN HEALTH INSURANCE COMPANIES AND THOSE WHO DO NOT QUALITY FOR SUBSIDIES, LIKE MEDICAID.

BY ELIMINATING THIS FRUSTRATING AND COSTLY PROCESS, WE CAN SAVE $2.8 MILLION.

ON THE DELIVERY SIDE, VERMONT HAS INCREDIBLE HOSPITALS, DOCTORS, NURSES AND OTHER HEALTH PROFESSIONALS.

MY WIFE, DIANA, HAPPENS TO BE ONE OF THEM.

SO, I HEAR ABOUT THE VICTORIES AND THE SETBACKS THEY SEE, EVERY DAY.

I WANT TO THANK OF ALL THEM FOR THEIR CONTINUED PARTNERSHIP AS WE MOVE TO A NEW MODEL FOR CARE.

[APPLAUSE] OVER THE LAST FEW YEARS, WE HAVE SEEN A DECREASE IN THE NUMBER OF UNINSURED IN THE AMOUNT OF NON-REIMBURSED CARE.

TO REFLECT THIS PROGRESS, I'M PROPOSING WE REDUCE THE DISPROPORTIONATE SHARE PAYMENT HOSPITALS BY 10%.

WE'VE EXAMINED AMINEED AND ADJUSTS POSITIONS ACROSS THE AGENCY OF HUMAN SERVICES.

FINDING AN ADDITIONAL $2.1 MILLION IN SAVINGS.

WE'VE ALSO FOUND COMMON SENSE ADJUSTMENTS TO OUR CORRECTIONS SYSTEM.

THE CORRECTIONAL FACILITY IN WINDSOR HAS THE HIGHEST PER CAPITA COST OF ANY FACILITY ACROSS THE STATE.

WE HAVE A PLAN TO CLOSE IT AND TRANSFER EACH INMATE.

THIS MOVE WILL SAVE $3.5 MILLI MILLION.

AND, AS WE HAVE IN THE PAST, WE'LL WORK TO MOVE FRONTLINE EMPLOYEES INTO EXISTING VACANCIES.

IN ADDITION, WE WILL EXPAND THE STATE'S ELECTRONIC MONITORING AND HOME DETENTION PROGRAM USING EXISTING RESOURCES.

IMPLEMENTING 24-7 ELECTRONIC MONITORING, WE'LL REDUCE THE OUT-OF-STATE CASELOAD.

COUPLED WITH OTHER CORRECTION CHANGES, WE'LL SAVE APPRO APPROXIMATELY $1.7 MILLION.

OUR OPIATE EPIDEMIC IS ONE OF THE MOST SERIOUS AND COSTLY CHALLENG CHALLENGES WE FACE.

MY ADMINISTRATION WILL ADDRESS THIS THROUGH EDUCATION, PREVENTION, ENFORCEMENT AND TREATMENT.

THIS INCLUDES $1 MILLION TO THE MEDICALLY-ASSISTANT TREATMENT HUB IN ST.

ALBANS.

[APPLAUSE] THIS WILL ALSO FUND OUR NEW DIRECTOR OF DRUG PREVENTION POLICY.

MY ADMINISTRATION WILL ALSO WORK TO INCREASE THE NUMBER OF MEDICAL PROFESSIONALS SPECIALIZING IN ADDICTION TREATMENT.

A CRITICAL STEP TO WINNING THIS BATTLE.

AS PART OF OUR INVESTMENT IN HIGHER EDUCATION, VERMONT STATE COLLEGES WILL CONVENE A SUMMIT IN THE NEXT 60 DAYS WITH SUBSTANCE ABUSE TREATMENT PROFESSIONALS AND OUR HIGHER ED INSTITUTIONS.

THEY WILL -- [APPLAUSE] THEY WILL IDENTIFY WAYS TO INCREASE THE NUMBER OF TREATMENT COUNSELORS WITH COURSE WORK STARTING NEXT FALL.

AS WE WORK TO END ADDICTION, WE CANNOT FORGET THE MOST UNDESERVING VICTIMS OF THIS CRISIS, CHILDREN OF ADDICTED PARENTS.

A NEW REPORT THIS MONTH FOUND THE NUMBER OF YOUNG CHILDREN ENTERING CUSTODY WITH THE DEPARTMENT OF CHILDREN AND FAMILIES ROSE 41% IN TWO YEARS.

WE NOW HAVE AN ENTIRE GENERATION OF YOUNG VERMONTERS SUFFERING THE AFFECTS OF THEIR PARENT'S DRUG USE.

JUST LAST WEEK, MY TEAM MET WITH A LOVING MOTHER WHOSE FAMILY ADOPTED ONE OF THESE CHILDREN.

HER SON, NOW IN 5TH GRADE, HAS BEEN LOST IN AN EDUCATION SYSTEM WHO IS NOT PREPARED TO MEET THE NEEDS OF KIDS LIKE HIM.

HE OWE IT TO HIM.

WE OWE IT TO ALL OF THEM TO MAKE THIS RIGHT.

WE NEED TO LEARN MORE AND FIND BETTER WAYS TO SUPPORT THESE KIDS AND THEIR FAMILIES.

AS A START, I'VE INVESTED NEARLY $8 $800, 000 TOWARD THE GUARDIAN AD LITEM AND OTHER SERVICES -- [APPLAUSE] AND OTHER SERVICES SO WE CAN HAVE MORE TRUSTED PROFESSIONALS ADVOCATING FOR THE BEST INTEREST OF THESE CHILDREN.

I KNOW MANY DEDICATED LEGAL ADVOCAT ADVOCAAD V VUADVOCATES, COUNSELORS, TEACHERS HAVE BEEN FIGHTING FOR THESE KIDS FOR YEARS.

IT'S TIME TO BRING THESE STORIES, CHALLENGES AND NEEDS FORWARD TO GIVE THESE KIDS THE OPPORTUNITIES THEY DESERVE.

I'LL CHARGE THE DIRECTOR OF DRUG PREVENTION POLICY, THE OPIATE COORDINATION COUNCIL, THE AGENCY OF EDUCATION AND AGENCY OF HUMAN SERVICES WITH FINDING SOLUTIONS FOR THESE KIDS.

WE CANNOT LET THIS GO UNADDRESSED ON OUR WATCH.

WE MUST -- [APPLAUSE] WE MUST NOT AND WE WILL NOT FAIL THESE CHILDREN.

[APPLAUSE] [APPLAUSE] TO BETTER-SUPPORT OUR COMMI COMMITMENTS TO SOCIAL ENVIRONMENT, I SIGNED AN EXECUTIVE ORDER TO CREATE THE AGENCY OF ECONOMIC OPPORTUNITY, WHICH WILL ALIGN THE AGENCY OF COMMERCE AND COMMUNITY DEVELOPMENT WITH THE DEPARTMENT OF LABOR.

NOW -- [APPLAUSE] NOW, IT'S ONLY BEEN A WEEK AND I'M ALREADY HEARING SOME RESISTANCE TO THIS IDEA.

I UNDERSTAND THIS IS NOT HOW WE'VE ALWAYS DONE THINGS.

BUT FOR THE LIFE OF ME, I CANNOT SEE HOW WE CAN STAND BY THE STATUS QUO, KNOWING THE WORKFORCE CHALLENGES WE FACE.

FOR YEARS, WE HAVE ALL HEARD FROM EMPLOYERS WHO CANNOT FILL POSITIONS.

THEY ARE PLEADING FOR MORE QUALIFIED WORKERS.

AT THE SAME TIME, WE ALL KNOW VERMONTERS WHO CANNOT FIND JOBS.

OR WORK TWO OR THREE JOBS TO MAKE ENDS MEET.

THE WAY WE'VE BEEN DOING THINGS HASN'T ADDRESSED THIS DISCONNECT.

IN THIS NEW AGENCY, WE WILL LITERALLY PUT THOSE IN STATE GOVERNMENT, WHO HELP VERMONTERS FIND JOBS, SHOULDER TO SHOULDER WITH THOSE HELPING BUSINESSES TO CREATE JOB.

I URGE YOU TO CONSIDER THIS AND MAKE IT FOR THE PEOPLE WE SERVE.

[APPLAUSE] THIS NEW STRUCTURE IS A VEHICLE FOR CHANGE.

TO FUEL IT, WE NEED DIRECT INVESTMENT IN ECONOMIC DEVELOPMENT ACTIVITIES THAT WILL PRODUCE RESULTS.

AT THE CORE OF MY PROPOSAL IS A $35 MILLION HOUSING BOND IN PARTNERSHIP WITH THE VERMONT HOUSING AND CONSERVATION BOARD.

THEY WILL LEAD AN EFFORT TO EXPAND HOUSING ACROSS A FULL SPECTRUM FROM HOMELESS POPULATIONS TO HOME OWNERSHIP FOR MIDDLE-INCOME FAMILIES.

THE ADDITIONAL $1 MILLION WE'RE INVESTING IN VSAC WILL BE APPLIED TO GRANT PROGRAMS FOR ADULTS SEEKING NON-DEGREE EDUCATION AND TRAINING AND INCREASE TRADES TRAINING BY $200,000.

[APPLAUSE] CO-WORKING HAVE HAD SUCCESS SUPPORTING ENTREPRENEURS.

WE'LL INCREASE THE DOWNTOWN AND VILLAGE CENTER TAX CREDITS BY $200,000.

WE'LL INVEST $400,000 TO NEARLY DOUBLE THE NUMBER OF SMALL BUSINESS DEVELOPMENT COUNSELORS, GIVEING ACCESS TO SERVICES TO HELP THEM GROW.

[APPLAUSE] TO ATTRACT MORE BUSINESSES AND WORKERS TO OUR STATE, WE'RE PUTTING $750,000 IN ECONOMIC DEVELOPMENT MARKETING.

WE EXPECT TO LEVERAGE AN ADDITIONAL $750,000 IN PRIVATE MARKETING PARTNERSHIPS, BRINGING IT TO $1.5 MILLION.

THESE ARE JUST A FEW EXAMPLES OF WHAT WE CAN DO TO SUPPORT OUR WORKFORCE AND BUSINESSES.

WITH THESE EFFORTS LED BY ONE UNIFIED AGENCY OF ECONOMIC OPPORTUNITY, WE'LL HAVE A COORDINATED APPROACH FOR BETTER OUTCOME OUTCOMES.

[APPLAUSE] IF THERE'S ONE THING VERMONTERS AGREE ON, IT'S THE LOVE OF OUR LANDSCAPE.

WHETHER YOU HUNT, FISH, SKI OR HIKE, OUR LANDSCAPE CONTRIBUTES TO OUR HIGH-QUALITY OF LIFE AND $2.5 BILLION IS SPEND BY TOURISTS AND VACATION HOMEOWNERS.

TO FURTHER-PROTECT THIS WORKING LANDSCAPE, MY BUDGET MAKES INVESTMENTS TOWARD AGRICULTURE AND NATURAL RESOURCES AND PARTNER ORGANIZATIONS.

PROTECTING OUR LAKES, STREAMS AND LANDSCAPE IS VITAL TO OUR ECONOMIC SECURITY.

I'M COMMITTED TO CLEANING UP OUR WATERWAYS.

CAPITOL AND TRANSPORTATION BUDGETS CONTRIBUTE $20 MILLION.

I WILL COMMIT ANOTHER $10 MILLION FROM EXISTING REVENUE FOR THE FULL $50 MILLION IN FUNDING.

[APPLAUSE] LAST WEEK, TREASURER PEARCE RELEASED RECOMMENDATIONS.

I WANT TO THANK HER FOR THE HARD WORK AND COLLABORATION.

LET'S ALL CONTINUE TO WORK TOGETHER IN THE COMING MONTHS TO FIND SOLUTIONS THAT ADDRESS OUR SHARED GOAL OF WATER CLEAN-UP, WITHOUT RAISING TAXES AND FEES.

[APPLAUSE] I'M ALSO COMMITTED TO WORKING TOWARDS ENERGY EFFICIENCY AND RENEWABLE ENERGY GOALS.

I BELIEVE WE CAN REACH OUR GOAL OF 90% RENEWABLES.

BUT FOR AS LONG AS I'VE GOVERNOR, WE'LL MAKE PROGRESS WITHOUT DESTRDESTROYING OUR RIDGELINE.

[APPLAUSE] TO FURTHER-PROMOTE ENERGY EFFICIENCY AND DECREASE OUR RELIANCE ON FUEL SOURCES, I'M PROPOSING A TAX HOLIDAY ON HYBRIDS, ELECTRIC VEHICLES AND ENERGY-EFFICIENT PRODUCTS.

VERMONTERS WILL SEE A 6% SAVINGS, ENCOURAGING MORE TO INVEST IN ENERGY EFFICIENCY.

WE CAN CONTINUE TO WORK TOGETHER ON APPROACHES LIKE THIS, WHICH SUPPORT BOTH OUR ENVIRONMENT AND OUR ECONOMY.

IN EARLY SEPTEMBER, 2011, JUST DAYS AFTER TROPICAL STORM IRENE FOODED OUR RIVERS, I REMEMBER ARRIVING IN BRANDON TO FIND THE BRANDON HOUSE OF PIZZA IN THE MIDDLE OF ROUTE 7.

WHEN THE NEARBY RIVER FLOODED, IT RIPPED THE SHOP FROM ITS FOUNDATION, MOVING IT TO THE MIDDLE OF THE TOWN'S ONLY MAJOR ROADWAY.

I MET WITH A TOWN OFFICIAL WHO WAS WORKING ON WAYS TO DISMANTLE THE BUILDING TO GET IT OUT OF THE WAY.

THAT'S HOW YOU TYPICALLY HANDLE THIS SITUATION.

BUT TIME WAS NOT ON OUR SIDE.

SO, WE NEEDED A NEW IDEA TO GET TRAFFIC FLOWING.

I SUGGESTED WE GET A CRANE AND MOVE THE ENTIRE BUILDING.

IT TOOK SOME WORK, PEOPLE WILLING TO ROLL UP THEIR SLEEVES, THINK DIFFERENTLY AND GO THE EXTRA MILE.

BUT WITH ONE PHONE CALL, A COMPANY IN CHITTENDEN COUNTY FOUND US A CRANE.

THE CONTRACTOR COULD HAVE EASILY SAID HE DIDN'T HAVE ONE AND MOVED ON.

BUT HE THOUGHT OUTSIDE THE BOX AND TRACKED DOWN A CRANE IN NEW YORK AND THAT CRANE WAS IN BRANDON THE VERY NEXT DAY.

WE WORKED TOGETHER, MOVED THE MULTI-STORY BUILDING AND GOT TRAFFIC MOVES ALONG ROUTE 7 ONCE AGAIN.

THIS STORY, AND SO MANY LIKE THEM, SHOW THE RESOURCEFULNESS OF VERMONTERS, DISSPITE THE MANY CHALLENGES WE FACE.

I KNOW WE, TOO, CAN WORK TOGETHER TO THINK DIFFERENTLY ABOUT HOW TO ADDRESS OUR ECONOMY, WORKFORCE, EDUCATION SYSTEM AND SOCIAL AND ENVIRONMENTAL ISSUES.

WE CAN CHANGE THE STAT OE QUO, WORK WITH WILLING PARTNERS AND RECOGNIZE THAT CHIPPING AWAY, PIECE BY PIECE, DOES NOT SOLVE THE PROBLEM.

FOR OUR ECONOMIC SECURITY, WE NEED TO CLEAR THE WAY TO GET OUR ECONOMY MOVING AND GROWING AGAIN.

WE HAVE AN OPPORTUNITY TO ACHIEVE GREAT THINGS, BUT ONLY FOR UNAFRAID OF CHANGE AND WILLING TO MAKE DIFFICULT CHOICES.

WE MUST BE BOLD BECAUSE THAT'S THE RIGHT THING TO DO FOR OUR VERMONTERS.

[APPLAUSE] AND I SINCERELY LOOK FORWARD TO WORKING WITH YOU ON THESE EFFORTS AND TO A VERY PRODUCTIVE [APPLAUSE]