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Joint | February 4, 2015 | Chamber | 20150204_joint_stateofthestate

Full MP3 Audio File

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To the great people, to the great state of North Carolina. You know it was just two years ago right before I walked through these beautiful gold doors, that my Chief of Staff Thomas Stiff handed me the phone, and it wasn't good news. I just received a phone call informing me that Highway Patrol Trooper Michael Potts was fighting for his life. You see, during a routine traffic stop, on highway 70, Trooper Potts was shot four times. He was shot in the hands, shot in the shoulder, and he was shot point-blank directly into his face. He was left for dead by the assailant. He was left for dead on the side of the road. After the State-of-the-State speech, I immediately traveled to Duke University Medical Center to visit Trooper Potts, to check on his condition, to see his family, and to see the literally hundreds of fellow troopers who had gathered outside the hospital, out in the hallway and some at his bedside praying for him. The terror that evening was only the first day of suffering Trooper Potts and his family would endure. I might add Trooper Potts saved a lot of lives by pulling this person over. Since the shooting, there have been surgeries, grueling rehabilitation therapy, and also personal reassessment. Some advised Trooper Potts to turn in his badge and to pursue a safer line of work. But Trooper Potts, he had a passion to be a trooper, and to work for people and the state of North Carolina, and he wasn't going to walk away from his job. Instead, he and his family worked together to overcome his obstacles, heal his wounds, and today he is reassigned to the North Carolina Highway Patrol Training Academy. Ladies and gentlemen, join me in welcoming, North Carolina Highway Patrol Trooper Michael Potts. And his wife Laura. Michael. Trooper Potts, I got a little emotional there, because I consider you a friend. You've become a friend. And your family's incredible. We've eaten dinner together at the mansion, and we've thrown baseball together at a ball game. In fact, several months ago we played 'catch', on the capital grounds together. Most people don't know this, but before Michael became a trooper he was a major league baseball pitcher for the Milwaukee Brewers. And he played in the major leagues. And so, to be able to throw a ball with a guy that I saw hanging on to his life, and be able to throw a ball with him a year and a half later outside the capital building was an incredible thrill for me. And believe me, he's got a good arm too. Trooper Potts still carries bullet fragments in his skull, as he's with us today. But instead of being defined by his injuries, and he's made a point to tell me this, he's made a point to tell me this, instead of being defined by his injuries, he's conquered them. And he's come back even stronger. And ladies and gentlemen, like Trooper Potts, I'm proud to report that the state of North Carolina has come back even stronger today as I speak right here. North Carolina is strong, and its going to even stronger. It's people are resilient, and our future is bright. Because of many people in this room and because of the resilience of people in North Carolina, our unemployment rate, which was the fifth highest in the nation two years ago has dropped substantially. It's the second sharpest drop in the United States in America. Right here in North Carolina. Our economy is improving, cranes are returning to many skylines, and real estate . . .

Is finally getting back on its feet. And yes, the ‘Made in North Carolina’ brand is returning in our factories throughout North Carolina. Manufacturing is coming back. Along the way our administration like many of you took swift action in response to other serious crisis that hit us during this past two years, from an Ebola scare to the Dan river spill to this year’s very serious?? of a flu virus which is hitting my wife at this time. We’ve also had to respond to extreme weather events throughout North Carolina. Heavy rains and flooding in western North Carolina, a series of ice-storms covering the whole state, hurricane Arthur hit the outer banks bringing flooding and knocking out the power to thousands of people. Nine tornadoes devastated parts of eastern North Carolina. In fact while visiting many areas damaged by theses horrific storms during the past two years, I was moved by incredible things. Neighbor helping neighbor and the incredible?? to response teams and city counties and our state workers came together. No turf, courage, a sense of helping anything we could do to help people get back on their feet. I saw the best of North Carolina. I saw the best of state emergency operation workers in a great team. And at one tornado damaged area I was especially touched by the spirit of Winfall Mayor Fred Yates. This man looked at his neighborhoods in his town and saw homes totally destroyed. And I was in a walk through this neighborhood, I could see first-hand with him the physical and psychological damage that the citizens were just a blank stare going what has happened but the Mayor, Mayor Yates continued to move forward and inspire his citizens and go inside their homes and say, “We’re going to come back. We’re going to rebuild.” And this is the type of a leadership that inspires me. And Mayor Yates told me as I left this one neighborhood and says, “We’re going to come back and we’re going to rebuild.” And they’ve done just that. Ladies and gentlemen, please welcome a true leader in a crisis, Winfall Mayor Fred Yates. Mayor that day I’ve never got a bear hug like you gave me. And I’ll tell I saw you give bear hugs now as a governor you gave bear hugs to your friends and neighbors and that really rejuvenated them and I’ll just your leadership was inspirational to all of us. Thank you very much. It’s the same spirit of resilience that helped North Carolina recover from our economic crisis. When I took the oath of office in January 2013, North Carolina taxes were among the highest in the south-east but working together, working together in these two chambers, we passed a short tax reform that put more money in peoples’ pay check. It was the first major overhaul of our tax system in nearly eighty years. That is quite an accomplishment. And two years ago because of our badly outdated unemployment insurance system, our businesses owe the Federal government 2.5 billion dollars, 2.5 billion dollars but drawing upon the resilience, we reformed our unemployment system and we not only aligned our benefits with neighboring states, we also devised a plan together to pay off our debt this year before three years ahead of schedule. Thank you. Now in North Carolina not only do we have a balanced budget which we’re required to do but when we have a debt we’ve learned to cut up the credit card and we pay it off. And that’s a lesson those in Washington also need to learn and we’re a good role model. I want to give special thanks to a former member of the House for

Representatives right here. And that's Assistant Secretary of Employment, Dale Falwell. And also, our new Secretary of Commerce, John Scavarla, for being the driving force behind this effort. Today in North Carolina, instead of having unemployment offices, we have career centers. Because as Dale often reminds me, and he often reminded many of you on this floor over the past several decades, we want people off unemployment and into jobs. And they're doing just that, we're proud of that work. Dale, welcome back to the House chambers. Appreciate your work, man. I'm pleased to report, because so many of us in this room rolled up our sleeves with the goal of getting people back to work, that as of today, the private sector has now created nearly 200,000 new jobs in North Carolina. We went from being the fifth highest in unemployment to the 23rd lowest in unemployment, and now we're even beating South Carolina. You know, but that's not good enough. He's, we accomplished a lot, but it's not good enough. Cuz you know and I know that there are a lot of people still hurting out there. There are a lot of communities that are still suffering. There are a lot of small businesses that are barely hanging on. And so there's a lot of work to do. So while we celebrate what we've accomplished, we need to move forward and help those people who wanna rebound, from still economy that is suffering throughout the United States. Therefore, my administration focus will be on five areas that have the greatest impact on the people of North Carolina. The first area is this: we wanna ensure everyone who wants a job can find a job in a vibrant North Carolina economy. Second. Second, we wanna ensure that every child and adult obtains the skills and knowledge needed to become a productive citizen. Third, we will continue to connect North Carolina's small towns with our state's commerce centers and vice versa, through physical and digital highways. And fourth, improving the quality of life, we gotta make sure we have public safety and good health care for North Carolina families. And fifth, we're gonna continue to look for efficiencies in our budget and improving government services. In other words, we're gonna focus on jobs, on education, on connectivity through infrastructure, on health care and public safety, as well as government efficiency. That's where my work is gonna be focused on and I ask you to join me in that effort. Now let's talk about jobs. As you know, the fight for jobs is global. It is played at the highest level and believe me, the competition is at our heels. In California last year, while visiting high-tech companies and venture capital firms, promoting North Carolina, I just happened to run into Governor John Kasich of Ohio, and I know he wasn't there to visit the wine country, and neither was I. Just a few weeks ago, on an economic development trip in Europe, I know for a fact, because I got a little intel from the taxi cab drivers, that other governors preceded me the day before, and other governors followed me the day after, in trying to bring businesses to their states and to America. The governors I'm competing against are good friends, and often neighbors. And like North Carolina, they have cut taxes, invested in education, and have built new roads. What they have that we don't have, that I don't have as governor, is a clear and concise job creation toolbox. Therefore, working with the leadership of the House and the Senate, we will submit, for your approvals, a series of tools which will help us continue to beat the competition. Beat the competition for jobs coming to North Carolina. That's our goal. We need these tools passed.

We need these tools passed in the matter of weeks, not months because right now we're attempting to recruit new jobs in North Carolina. Our plan, NCCompetes, will promote long term sustainable job growth and capital investment. It will encourage mid and large scale manufacturing because manufacturing is a part of North Carolina's DNA. It will leverage our university research advantage to attract venture capital and new generation of entrepreneurs as well as help retain North Carolina's home-grown talent. And this plan is based upon a series of guiding principles. Principles designed to grow North Carolina, while also protecting our taxpayers. NCCompetes recognizes the importance of economic strength in all of our regions but emphasizes support to areas that still have high unemployment. NCCompetes will require strong financial safeguards to provide a positive return to state revenues in the long run. In addition to NCCompetes we need to pass the historic preservation tax credit. [Speaker Change] Being a formal mayor, I understand this more than anybody. We have got to continue to revitalize the main streets from Wilkesboro to Greensboro to Swansboro. Secretary Susan Kluttz, a person with unlimited passion. Former mayor Salisbury reminds us that the vitality of our state is best reflected by the vibrancy of our town centers. And believe me, it's a big deal when you have a blighted building in the middle of your town center that's showing a side of disrepair opposed to a side of economic vitality. This is a big deal and last week I saw it first-hand, visiting Concord, where we went to the hotel Concord where I was joined by Senator Fletcher Hartsell and representative Linda Johnson, along with two hundred citizens who joined us. And it reminded of success of existing products and the potential of new projects coming along to Concord. We need to get this bill passed. Now is not the time to pull the plug on a strategy that has created new jobs and new invested and revived small towns throughout North Carolina. Two years ago, when I stood before you, I said North Carolina had to get off the sidelines into the energy business. Senator, and ladies and gentlemen I'm pleased to report that North Carolina is off the bench and in the game and we have a new quarterback, Secretary Don Vandabart, the head of ?? now. And to keep energy prices low, particularly in eastern North Carolina, we're supporting the construction of a five billion dollar natural gas pipeline that will run from West Virginia throughout eastern North Carolina. This will have a huge impact on eastern North Carolina by lowering the gas prices and giving more access to customers and help me and help John Skvarla, my secretary of commerce recruit more jobs to eastern North Carolina. Energy is a vital part of that effort. And this year, through Don's leadership, we will begin to assess North Carolina's energy potential. Energy potential both on land and on shore. We are right now working with our congressional delegation to ensure, if there are resources offshore, that North Carolina gets energy revenue that will help pay for teachers, help pay for roads, help pay for beach renourishment, and help pay for the dredging of our ports which is desperately needed. That's our goal right now, to bring new revenue and new jobs to our state and to help with our country's energy independence. Now I'm encouraging these investments, we must not forget that small businesses are the largest job creating sector of our economy. And we also must remember that agriculture is North Carolina's biggest industry, contributing more than seventy eight billion dollars a year to our economy. We must continue to look for new ways to help our farmers who are facing increased competition from around the world.

…here at home. One area that continues to be a challenge to all growers is the shortage of food processing facilities in North Carolina. Our farmers right now have to send many of their products to other states which substantially increase their costs. Working with our very able and excellent agricultural commissioner to access the need and develop a strategy for attracting more food processing plants in the state we are going to put together a task force of farmers, business leaders, and venture capitalists. This group will convene and recommend a strategy and disband by March of 2016. One key to our economy which affects agriculture and other industries is also our state ports. We have made some great progress with refrigeration in Wilmington, but we have got some other challenges right now at a very important state port and that is at Morehead City. As I address you tonight, we have a very urgent problem at the port of Morehead City. The Beaufort Channel, inlet channel has an authorized depth of forty-five feet, but without explanation during the past several months shifting sands have reduced the depth to thirty-four feet, forcing many ships to enter the port half-empty, in some cases having to split their loads between Morehead City and another port. This has just happened. We have been working closely with our congressional delegation and the Army Corp of Engineers- literally been on the phone during the past several weeks trying to come up with a solution. It is crucial to thousands of jobs in that area and I am pleased to announce that some of our efforts have recently paid off. The Army Corp of Engineers just added 4.1 million dollars to this year’s dredging budget bringing the total to 8.9 million in federal dollars dedicated to this emergency. In addition, my administration stands ready to commit state dollars as needed in this emergency to keep this crucial commercial artery open for business. I especially want to thank Transportation Secretary Tony Tata and our entire delegation for their incredible work; your phone calls to both the Army Corp of Engineers, the contacts that you have in the Pentagon. I also want to thank not only our congressional delegation, but also Senator Richard Burr who has been working with me on this problem around the clock. Please give them a round of applause and we all need to work together; human nature is tough to deal with, but we have got to deal with it. Now, let’s talk about a priority of all of ours and that is education. A key part of any jobs plan and quality of life plan is a quality education so students can compete in a global economy. Connecting the students to the greater world is the mission of Garinger High School history teacher James Ford. Ford, once an Illinois teacher came to North Carolina, chose North Carolina to continue his career and fulfill his teaching potential. He has proved himself- not only has he recently become North Carolina’s Teacher of the Year, but several weeks ago Charlotte Magazine named him Person of the Year, not teacher of the year- but person of the year. He beat out business and civic leaders. That is the respect that teachers need in North Carolina. Ladies and Gentleman please welcome my teacher advisory committee leader, Mr. James Ford. This guy is absolutely incredible- you have got to hear him speak. He spoke to the members of the Board of Governors about two weeks ago and I had the mistake of following him. I also happened to see him at Rite-Aid in Charlotte when I was picking up my cold medicine I ran in to him and I said, “you got Person of the Year in Charlotte, I was mayor there for fourteen years- I am now Governor-I have never been nominated”. I am so proud of you. He has been a great member of the teacher advisory group which made many recommendations that this legislature passed. The best ideas come from the people that are actually doing the work and James Ford is the best. I have got some good news…

Because of teachers like James Ford our most recent graduation rate is the highest in North Carolina history as we speak today. Now with continued investment in pre-K and continued reforms such as NC Works which was an excellent program and job training in our community college, we hope to see even a better rate of employment and graduation. We want more people filling the skills gap in North Carolina. Still we have to build an education system that rewards teachers like James Ford for their results driven leadership and he is a leader. There are a lot of leaders just like him in every school throughout North Carolina. We all knew who they are. When you think back to your high school years, you knew who the best teachers were. The parents knew, the students knew, the principals knew, the superintendents knew. Everyone knew who the good teachers were. But I need to let you know that our goal is to make North Carolina a teaching destination, not a layover for our state's best and brightest. I know for a fact that teaching is extremely hard. I know it firsthand because as a 20 year old student at [unclear 00:01:24] college trying to earn my own teaching degree and North Carolina teaching certification, I had to student teach at [unclear 00:01:33] High School in Spencer. I was the young 20 year old and I said I'm going to tear this up. I'm going to do great. So Wayne Crowder, my mentor, my teacher, guide, said, "You're up tomorrow." So the whole evening before I got a lesson plan ready for an hour, an hour of teaching. I worked the whole night with this teaching material. Well, I started the class and after ten minutes I ran out of material. The next 50 minutes was the longest 50 minutes of my life as Wayne Crowder, the teacher advisor, was taking notes and the students were just staring at me going, "What is wrong with this guy?" In other words, teaching is hard. It is hard work. We need to do everything we can to support our teachers. So this is what I'm recommending and I know many of you will follow this lead. First of all, we need to fulfill our promise and I'd like to thank this leadership for making this promise last year. Your leadership has been very much appreciated. We must fulfill our promise to raise teacher based pay to $35,000 a year for any entry level teacher regardless of where they live and work in North Carolina. We're going to fulfill that promise. Thank you very much. We have another goal that we're setting and it's a team effort. We also must give our teachers, because they're giving us feedback and so are students. You've heard it, I've heard it, and they're right. We need to give them the gift of time and allow them to start teaching again by testing less and letting them teach more. Don't you agree with them? Now this is going to be a team effort and it's already been a team effort. My administration is finalizing a plan and working with a great group. First of all, I want to thank state superintendent June Atkinson. You've been a great teammate and I really appreciate it. Lieutenant Governor, Dan Forrest, who is right at the forefront of education initiatives. State school board chair, Bill Kobe who has just committed limitless hours for education. But more than anyone we're getting the ideas on how to limit testing from our school superintendents, principals, and teachers. They're the ones who are making the proposals to us. We want to distinguish which tests improve a students performance and which tests simply waste the time of those teachers and students. I'm guaranteeing this and June, you will join me I know because we've just recently had another meeting on this, we want to eliminate un-

testing by next year. That's our goal. And we've got some good ideas. We also are continuing our efforts to bring WiFi to all of our classrooms and long distance learning to both our children and adults, and to help our schools hire the teachers they need now. To help our schools hire the teachers that they need now, we are moving to expedite teacher certification, recognizing an individual's experience and subject expertise. For example, my excellent Education Advisor Eric Guckian- Eric, please stand up, I wanna see you. Eric, he's upstairs. Thank you, Eric. He's come up with some great ideas. Let me tell you about how hard it is to get a teaching certification in North Carolina. Eric Guckian, my education advisor, taught for two years in the south of Bronx in New York for Teachers for America, and he has a masters degree in Education from Harvard. Now we're not going to hold that against you, but that's pretty impressive. And yet, when he came to North Carolina he was required to take 18 months of courses to earn his North Carolina teaching certification. And this is why schools are going, "I need talent now, more than ever." This bureaucratic process of certification must change. We want and should be encouraging accomplished people who want to join the teaching profession. The bureaucracy should never, never stand between their talents and our children's needs. And we're going to begin that now. You know cost must also not become an obstacle for students at our community colleges and universities. We must look at our community colleges and universities to balance balance sheets, to make sure that we're making investments in the programs and learnings that will prepare our students for a job and for the global economy. And we have to close North Carolina skills gaps. I was in Fayetteville today, and I still had several employers tell me, "I've got job openings but I cannot find the qualified people to fill these jobs." We have to do better to beat our competition. And I'm proud to report that our community colleges and our universities are turning in the right direction to do just that. And we need to continue to encourage them to do just that. And now we in North Carolina are fortunate to also have the benefits of the best research universities in the world. It's one of our strongest economic recruitment tools. And I'm proud to say that we are now leveraging the advantage provided by our public and our private universities through innovation to jobs initiatives, which we just presented to the Board of Governors several weeks ago. It is designed to convert more of our research dollars into products and services that are patented and introduced in the marketplace to grow jobs right here in North Carolina. We cannot have these reports and studies up on a shelf. We've got to convert them into jobs, and I'm working together with the chancellors to do just that. Increasing the commercialization of university research, and connecting it to our greater economy will create more high paying jobs. As governor, my goal is to have North Carolina become the third vertex of the National Innovation Triangle. From the Silicon Valley, to Boston, and the third part of that triangle is right here in North Carolina. And that's going to be a recruitment tool. And what better state than North Carolina with our incredible research universities can join that competitive partnership and create jobs? That is our goal, working with our universities. I'm proud to say that this top priority, and the person who is leading this team effort with our universities is a person who is not only a personal friend but he's a great leader here in state government. And that is my Chief of Staff, Thomas Stith. Thomas, please stand up. I appreciate your leadership on this effort. I stole him from the Kenan Institute. God bless you, buddy.

Now let's talk about our third focus and that's transportation and infrastructure. I've always told you in the past, Eisenhower is a hero of mine, and he left us a legacy that we're still using today throughout our country. Connecting the east with the west and rural with urban, and we want to do the same thing right here in North Carolina. During the past decade or so as I've driven down the highways of North Carolina, I've always noticed the lanes go from two lanes to four lanes, back to two lanes, back to eight lanes, and then back to two lanes again, have you noticed the same thing? And everywhere the road happened to be wider, it was always named after a politician or a DOT board member. And where the congestion choke points occurred, where it was two lanes, I noticed there was no politician's name at the choke points. Well that's not the way we're doing things anymore because of your leadership. We've taken the politics out of road building by putting in place a transportation formula that focuses on relieving congestion at those choke points wherever they may occur, improving safety and growing and connecting the economy in all parts of our state. Connecting the economic centers with towns throughout North Carolina and even across the borders in Tennessee, Virginia, and South Carolina. That is our goal, to connect each other, and those changes have allowed us to become more efficient with taxpayer dollars. In fact, we have more than doubled the number of transportation projects that we've built. Under the leadership of Secretary Tony Tata , this new approach is creating thousands of new jobs during the next ten years. Our twenty-five year transportation vision connects small towns to economic centers and vice versa. These connections will make it easier for people to travel to jobs, to travel to their schools, hospitals, and our parks. Our twenty-five year plan also recognizes that even with our new formula, we can only build one out of five projects right now on our plan. And counties and cities and many of you are telling me we've got to speed this up more, we've got to improve this connectivity. Therefore I will request from you a transportation bond of $1.2 billion that'll allow for the quicker construction of projects in the twenty-five year vision plan. Projects funded through a revenue bond would be the next projects in line scored under the mobility formula, with environmental documents in place so we can begin these projects immediately. Here are a few examples of what we can achieve with the mobility formula, this proposed bond as part of our twenty-five year transportation. For our coastal counties, we'll make it easier for the military to move troops and equipment during deployments, while helping transport goods to our ports. It will relieve congestion also during the busy tourist season, and help improve emergency evacuation routes. For the east, a few examples, we'll connect eastern North Carolina to the Hampton Roads region of Virginia. Here this? The governor of North Carolina saying we're going to connect to the Virginia. I learned this as mayor of Charlotte because I noticed Rock Hill, South Carolina liked to connect to North Carolina. The economic regions don't recognize political boundaries. And one of the greatest opportunities for parts of the East, Elizabeth City and other areas, is to connect to parts of Virginia. I recognize economic boundaries as much as I recognize political boundaries, and that's the way our transportation system is now designed. In the central part of the state we'll focus on relieving interstate congestion. An incredible bottlenecks, and that we need to ease the flow and improve the flow of freight along these bottlenecks in the Piedmont portion of our state. In the west, we need to connect the mountains all the way to the coast. From Asheville to Wilmington and unchoke those points, you know some of them, Tim, ones in your area, around Shelby. A choke point which hurts the commerce and job creation all the way from Asheville to Wilmington. This is our goal is connectivity. Connectivity across the state, east, west, north, and south. Additionally I will support your efforts to protect and stabilize, I will support any efforts to protect and stabilize our existing.

existing transportation revenue streams, while also looking at funding reform and alternatives for our future transportation and infrastructure needs. Let me tell you another infrastructure issue that we need to turn our attention to, and that is the inefficiency of state buildings, not just here in Raleigh but across North Carolina. One of my first clues of maintenance issues and inefficiency occurred when Ann and I were walking to get sworn in at the old state capitol building on January the 5th. In walking between the Episcopal church and the beautiful 1841 state capitol building, I walked by these fountains that were in front of the state capitol, and they were full of dirty water and trash and they weren’t working. Well two weeks later as Governor, I walked by them again and they were still full of dirty trash and water. Two weeks after that, I walked by them again, the same condition, and so I finally said “What is going on here? This looks terrible. It’s a terrible signal for North Carolina,” and I was told “I don’t know. It’s been that way for five and a half years. That’s just the way it is, Governor.” No it isn’t. We can no longer afford this culture of neglect and apathy. We’re going to fix things in our state. We’re going to fix our infrastructure, including the fountains in front of the 1841 building, and those fountains were repaired shortly after that conversation. Turns out all they needed was a little maintenance, and now, by the way, if you go by the beautiful capitol building, on any day you’ll see people reading a book and kids around the water enjoying the beauty of North Carolina and this natural flowing water in an historic building and on some beautiful grounds. Well like those fountains, the analogy of fountains two years ago, many of our state buildings are suffering from a lack of maintenance, and frankly efficiency. Too many of our buildings are obsolete, with broken HVAC units and inadequate insulation which costs taxpayers a fortune to operate. It’s a major part of our budget – my budget as Governor. At Dorothea Dix, for example, North Carolina taxpayers spend approximately 8.5 million dollars a year to keep that complex operating. Just operating cost – HVAC cost and the grounds. 8.5 million dollars a year. It’s fantastic that our capital city here in Raleigh and working with city leaders is now gaining land for a destination park. I’m so proud of Raleigh and us for coming together and making a fair deal, and by the way, with this deal the maintenance cost of the Dix complex will finally get off the state books. That’s good news, and we’re going to have a beautiful new destination park. Even better news is that we’ll get 52 million dollars which we’ll direct towards supporting mental health and the wellbeing of our citizens. That’s good news for North Carolina and good news for Raleigh, but we have structures all over the state that are a blight to North Carolina’s main streets. Here we’re trying to restructure private and rebuild private buildings for the historic tax credit; well some of the buildings that we’re having problems with are our own buildings. They have asbestos installation issues, they have broken elevators, they have leaky roofs, they’re inefficient, they have high utility bills, and the utilization of some of these buildings is 30 or 40%, and yet we’re paying as though it’s 100% capacity in these buildings in North Carolina. The shape they’re in is an embarrassment, and we have many buildings that taxpayers are paying for that are essentially being used for storage – very expensive storage literally only a block or two from here. We can do better and use that money more efficiently. Bill Daughtridge, my Secretary of the Office of Administration, is doing an outstanding job identifying… a former member of this House is identifying all these properties and making a long term plan on how can we be more efficient and which buildings should be revitalized, which buildings should be torn down, and which buildings in which we should build brand new buildings which are workable and efficient facilities that will be points of pride, not only here in Raleigh but throughout towns in North Carolina. Last sessions, I want to thank you that funds were

appropriated to gut the Albemarle building. Have any of you been in the Albemarle building? It’s an embarrassment, inside and frankly out. It’s replete with soiled carpets and broken tables, stained ceiling tiles, and frankly it’s half empty, and we’re paying to deal with that whole building while agencies are moving out, leasing space in other areas throughout Raleigh. That’s not efficient and it’s a waste of tax dollars, so I want to thank you for allowing us to gut that and incorporate that into our project which we call Project Phoenix, and we want to do that with other buildings in Raleigh and throughout the state, so let’s do… By the way, I’m impressed with what you’ve done with this building inside the legislative chambers. It needed help. Now let’s do what we did here to other buildings throughout the state of North Carolina. Our towns and the city of Raleigh deserve it, and this will help boost employee morale, improve safety, increase productivity, and in the long run and the short term will save taxpayer dollars. For the two bonds, both the transportation bonds, and for Project Phoenix, this is an excellent time right now. Interest rates are historically low and we have the financial capacity to invest and maintain our fiscal infrastructure. Another area of great interest to all of us, and that is DMV. Two years ago I asked Secretary Tata – well I tasked Secretary Tata – to make the DMV more customer-friendly. Back then, people waited in lines for hours, only to learn often that they were in the wrong line to begin with. Going to DMV took so long that folks had to take time off to go get their driver’s license. Well our DOD team immediately went to work transforming the DMV into an example of excellent customer service, and we’re still looking at improving that throughout the state. We’re now opening some offices on Saturday and extending hours throughout the week. Today nine million residents are within a 30 minute drive of a DMV office with extended hours. In other words, working people can now use state services that they need and not have to take time away from work. We will soon be installing self-service kiosks for renewal and/or replacement of driver’s license or IDs. Do you hear that? We’re coming into the 21st century. License plate agencies across the state now accept debit and credit cards, and later this year… later this year, DMV offices will accept debit and credit cards. You won’t have to bring the cash or your checks. How’s that for progress in the 21st century? More importantly – more importantly than anything, the DMV now has a culture that treats people like customers, and that’s the way we should be treating any citizen using any of our state’s services. Treat them as a customer, and that’s been one of our goals, and we continue to roll out the customer service operations that all my secretaries have been asked to follow. Now the fourth focus is probably the most complex and most difficult and the most in need, and that’s our focus on healthcare. Our customer-first philosophy must also translate to healthcare, and we want to translate into a patients-first philosophy for healthcare as well. We hear from patients – Dr. Aldona Wos travels the state and hears from patients that healthcare is too hard to navigate in North Carolina. Imagine a hardworking, low income mother juggling kids, running the household and trying to keep her family healthy. What if that mom could rely on one visit to coordinate the care she needs? Whether it’s a treatment for an earache for a child or an orthopedist to set a broken ankle or a plan to keep her high blood pressure under control, our reform plan under our Healthy North Carolina initiative was developed in partnership – in partnership – with doctors, patients and healthcare providers across the state, and our incredible Secretary of Health and Human Services went out to get their

Ideas. Not all the good ideas come here in Raleigh. The best ideas we get from listening to the people of North Carolina, especially the people who are delivering the services. And that's exactly what Dr. Voss has done. She is also a medical doctor, so she understand what the doctors and the hospitals and others are saying. She gets it. She went throughout North Carolina communities, large and small, talking to the people on the front lines of our health care system. This is physician-led reform. Physician-led reform. As part of her plan also, health care providers, including a physicians, will share in the responsibility for reducing costs by avoiding unnecessary services. And working to keep people healthy and out of the emergency room which is very costly. Dr. Voss, I want to thank you for your leadership. You are the true definition of a public servants. Y'all give Dr. Voss and Secretary Voss a round of applause. Thank you and God bless you. Our health in North Carolina plan puts patients first and controls costs for taxpayers, and incentivizes health care providers to coordinate care. North Carolina's health care community has a long history of solving problems. Let's empower them now to keep our people healthy, and continue to make North Carolina, let me repeat this, continue to make North Carolina an excellent place for doctors to practice medicine. In rural and urban areas alike, and produce new discoveries for treatment. Now last session, we came close to passing Medicaid reform. But progress stalled on the one-yard line. Let's not take another pass this year, let's run it up the middle and win a victory for families across North Carolina. No interceptions. As we continue to review health care options for the uninsured, we are exploring North Carolina-based options that will help those who can't help themselves while also encouraging those who can. If we bring a proposal and come up with a proposal and determine that the proposal is best for North Carolina to cover the uninsured, it must protect North Carolina taxpayers. And any plan must require personal and financial responsibility for those who would be covered. I will only recommend a North Carolina plan, not a Washington plan, so that we can put patients first. That's my goal. Now, another issue of critical importance to the health and safety, especially of our young people is underage drinking and addiction. That's why we have launched a powerful campaign called, let's talk it out. To start the conversation to stop underage drinking. I hope you have seen the ads. Have you seen the ads? They hit you at the heart. They hit you at the heart about the tragedy of underage drinking. This campaign is being led by one of our state's great leaders. And he is passionate about dealing with this addiction, underage drinking issue. Ladies and gentlemen, I just want to recognize one of our true leaders in the state of North Carolina, Lt. Governor Jim Gardner, who is also our ABC commissioner chairman. Jim Gardner, welcome, glad to have you here. A young 81 years old! Jim Gardner has more energy than anyone in this room. He hasn't aged a day, either but he is passionate about this, and we're gonna continue this effort, as I promised two years ago, to deal with the addiction issue. If we don't deal with it now, we're gonna have to deal with it in Health and Human Services and Mental Health. This mental health issue and addiction issue is a plague on our state and our nation. And we're not gonna run away from it, North Carolina. Another area of public safety that we're not gonna

run away from is gangs in our streets, and frankly gangs in our towns, gangs along our highways, and even gangs in our prisons. I’m working with our Department of Public Secretary Frank Perry and our SPI Director B.W. Collier to implement our new intelligence-based initiative designed to prevent crime before it happens, to deal with this head on working with our local officials and our sheriffs and our DAs. In North Carolina, not only are we fighting drugs and gangs in our street, but we are also fighting gangs in our prisons right now. It’s a very serious issue that we’ve recognized as soon as we came into office. Correction officers are fighting the most violent people in our state in our prisons every minute of the day. Can you imagine having that job, especially in the high security prisons? Some are living right now as we speak under death threats, not only to them but also to their families. Working in this environment comes at a price. On average, a North Carolina correctional officer was assaulted every 11 hours during 2014. We’re unveiling this secret. We’ve got to let the people know and let you know this is a serious problem to which Frank Perry is saying “Governor, we’re going to take some leadership on this.” Some were sexual assaults; nearly 300 involved weapons. Weapons in our prisons. And retention of our correctional officers is a serious challenge, and just several weeks ago I had a call about a correctional officer who was slashed in the face. We will be submitting specific proposals, not only to fight gangs and drugs but to help our correctional officers, our state employees, who may have the most difficult job in North Carolina. The starting pay for them right now is $28,000 a year. $28,000 a year. We have an obligation to those who risk their lives defending. We need to help them, and we’re going to make proposals to do just that, and we wanted to make you aware of his problem. We also have an obligation to those who risk their lives defending our freedoms. In just two years, our administration has launched successful veterans’ initiatives including converting military training into college credit or professional license, giving credit for military experience when veterans serve as educators, creating driver’s licenses that identify veterans, and working to support a new Veterans Life Center in Butner. Those are just a few of the things that Ilirio Pantano has been working on, and thank you Ilirio. General Cornell Wilson’s been a great partner – two star general who’s also served overseas in Iraq, like Ilirio. They are putting their energy into doing anything we can to help our military and help our veterans, and for some veterans the transition is very, very difficult. There’s a major movie out right now that shows that difficulty of someone coming home, and literally we have thousands of veterans coming home from Afghanistan and Iraq right through North Carolina. Some of them have had problems with addition, homelessness, getting a job, and struggling with mental illness. In 2013 we established a veterans’ treatment court to help troubled veterans. The two courts now have been an unqualified success. The visiting them has moved me and visiting their graduates has moved me. Therefore working with our judicial leaders and the Governor’s Crime Commission and other efforts, our goal is to establish two more veteran treatment courts in North Carolina. Our veterans deserve a second chance, and we’re going to give it to them in North Carolina. In addition to these issues, we will have budget and legislative recommendations, and I’m just… I’m looking forward to working with all of you. Just in the past several months, Tim and Phil and I have had numerous phone conversations and visits, and we’re working together to share ideas and to chare your ideas and come up with viable long term solutions. I’ve met with the minority leaders of the House and Senate; we’re all a team here. We’re all working for North Carolina, so we’re going to have other opportunities and other recommendations, and that’s our goal.

In addition to helping our correction officers, we want to provide resources for Western Crime Lab. There's got to be improvement in our crime lab situation. We're hearing this from sheriffs, police officers, and DAs throughout North Carolina. We're going to continue that funding that would promised. Senators, you get this done! Also, my wife demands I say this and I believe it. We have to protect our pets from abuse and puppy mills. I'm embarrassed that North Carolina is not giving basic food and water and shelter to our puppies. We're going to continue to look for ideas to fight drugs and gangs, to improve mental health, and we're going to continue our fight to prevent addiction, just to name a few. All of our challenges and opportunities require money and resources. Like last session, money will be tight. My department of Revenue Secretary Lyons Gray, almost every day he updates me on the revenue that's coming in. We're lucky to have the talent of Lyons Gray working for this cabinet. He's counting every dollar because much of our spending is already obligated even before we sit down to write a new budget, which we'll deliver within the next several weeks. Let me just give you an example, which most people don't realize where dollars are already tied up. State workers pensions, health care costs for current and retired state employees alone. Those two items: State workers pensions, which we've got to keep strong, healthcare costs for current and retired state employees, which many of you receive, account for nearly 22% of our spending. Those two things alone. We've got to look for savings in other areas and everywhere. Here's what we're going to do in the McCrory administration to find continued savings in our current operations. One area where we think there is great potential, is workers compensation claims. They cost tax payers tens of thousands of dollars. In fact, during the past six years, we've spent $896 million on workers compensation claims in North Carolina. $896 million! That's about $150 million annually, which would've paid for 2% pay raises for teachers or law enforcement officers every year. We all want to pay legitimate claims, and give injured employees the best medical care possible. More importantly, under the excelent leadership of Office of State Human Resources Director Neil Alexander, we are increasing worker safety training. Not only to reduce workers' accidents, but to prevent them in the first place. That's our goal, to prevent any accidents in the first place and make our workplaces safe. However, our examination during the past two years of workers compensation estimates that 40% of worker costs are related to abuse or outright fraud. To take a hold of costs and get people back to work sooner, I'm signing and submitting an executive order placing the oversight of workers compensation under the Office of State Human Resources. One of our first priorities will be to responsibly settle cases that are over five years old, an action that could save taxpayers over $17 million over the next two years, and we will launch a major effort to stop fraud and abuse dead in its tracks so that money can be used for other state employees and other needed services in North Carolina. Now, many of you are also familiar with NC GEAR efficiency program. I'm so pleased to have Lee Roberts as our new budget director. He's doing an excellent job coming in and his learning curve has actually been amazing. I'm lucky to have that type of talent on my cabinet. Based upon some of the NC GEAR findings, I will take additional actions to streamline the operations underneath the governor's authority. Not only because they save money in many cases, but it makes common sense. For instance, the North Carolina zoo, the state of aquariums, museums, and our state parks, we think need to move from the Department of Natural Environment.

sources to the department that actually manages attractions, and it’s part of our mission, and it’s Cultural Resources, and that’s what we’re going to begin to do. Over the years, the Department of Administration has become the home for various divisions and agencies that have been moved to Bill Daughtridge’s department. We will begin, after extensive review, to transfer a number of these agencies from the Department of Administrations to areas where they’re better aligned within state government. Now one area where we found a lot of inefficiency – a lot of inefficiency – is in information technology during the past two years. What we have found is the piecemeal approach we’ve taken during the past decade to information technology has had disastrous results. 74% of the state’s IT projects have come in over budget and behind schedule during the past decade. 74%. Who would hire anyone or a company with that type of track record? We found that the state has 40 data setters with over 1,000 different computer systems. That’s hardly an example of efficiency. We discovered that obvious opportunities to pool the purchasing powers of several agencies are often bypassed. My administration is going to insert accountability into IT operations by proposing and working with you, as we have been on this issue for several months… by proposing a new cabinet-level Department of Information Technology. The IT professionals throughout the cabinet agencies and the departments of the executive branch will report to the new department; however, the IT specialists must remain housed near the secretaries in these departments so they can provide quick in-house expertise and good customer service and oversight, and I want to thank probably one of the most important people in state government during the last two years who has done a clear audit and review of the IT malfunctions, and his talent is incredible, and to have this talent as a part of our team, I just want to say thanks to Chris Estes, our Chief Information Officer, who’s helped many departments, not just in my purview, but many departments throughout the state of North Carolina. You all need to give Chris Estes a round of applause. I want to thank you very much. Stand up, Chris. He comes to me and tells me what the problem is; I said “What did you say?” I took Fortran at Catawba College, and we might still be using Fortran in state government right now. Seriously, we are. I rest my case. At a time when so many servicemen and women are coming home from Afghanistan and Iraq through North Carolina, as I mentioned before, we must have an efficient and well-coordinated process in place to meet the needs of active duty personnel and veterans. These services are right now scattered across many areas of state government with no accountability, causing delay, frustration and sometimes poor customer service. Thanks to the marine corps’ dedication and my Veteran Affairs Director Ilario Pantano and the leadership of the Department of Administration Secretary Bill Daughtridge, we have made some incredible progress. Cornell Wilson has also been a real leader in this effort, but we are going to do more to make this even more efficient and easier for our customers to understand. To strengthen our veterans affairs and the office of my military advisor, Cornell Wilson, I am proposing the creation of the Department of Military and Veterans’ Affairs in North Carolina. This department will be responsible for four major initiatives which are crucial to our state. The first is coordinating all efforts to protect and fight for the survival and growth of our existing military bases right here in North Carolina, which are crucial also not only to our national defense, but also to the towns and the cities in and around our military bases. We’re going to have to do this now. Another objective of this department will be to promote the health and safety of our veterans, the military families, as we’ve explained some of their challenges, and our goal also of this department is to work with the Commerce Department to help veterans get jobs and also use veteran

Or recruitment tool to bring new companies in North Carolina because they have the skills to fill the jobs gaps, the skills gaps that many industries are looking for right now. And also this individual and their team will work with unique needs of base communities throughout our state that have very unique infrastructure and transportation, water and sewer needs. So we exactly know how the communities can work better with the bases to retain that solid investment of the military in North Carolina. We’re going to coordinate all this into one department now and that’s going to be our recommendation to you. I’ve asked my military fares adviser General Cornell, Cornell Wilson to spearhead this new effort. He is already attending all of my cabinet meetings and I consider him right now a direct report to the governor. The military also has a special place in the heart for my wife Ann. She has hosted numerous advance for military families at the executive mansion outside of the cameras. She doesn’t seek the spotlight. Her knowledge of the sacrifice made by our military families comes naturally. She was born on a military base and her father Colonel William Flash Gordon was P47 army pilot in World War II. Now, tonight we have in attendance some very special people in the military. And I want to give special welcome to a person that’s become a ?? partner of my administration until this governor and the Lieutenant Governor. I want to give a special welcome to Lieutenant General Joseph Anderson, Commander of the XVIII Airborne Corps of Fort Bragg. And until December, he was deputy commanding general in Afghanistan. And during his deployment he saw a lot of action and his troops saw a lot of action, very, very tough action. And yet he continued to hon our North Carolina by displaying this flag right here over the; that once flew over our state capital, he flew it over the Kabul International Airport where his photograph with diplomats from 48 countries that comprised the International coalition. General Anderson the class act that he is, I just saw recently at Fort Fisher down on the coast. He is, he cares for North Carolina, he cares for his servicemen and women. In fact he wrote a little letter on the back of this flag, “To Governor, thanks for the State’s great support for soldiers and families around the world.” General Anderson brought our flag home and he’s brought our troops home. See this flag? People are at home. Ladies and gentlemen, please welcome General Anderson. You always look at somebody. Thank you General. Cornell, Cornell Wilson, General Wilson I appreciate both of you so much. You all need to give General Wilson a round of applause. I love him. He’s doing a great job for our military. I’m proud to have you as part of our team. As we end tonight, my vision for North Carolina is to have the best of everything. My vision for North Carolina is to have the best of everything. Think about it. We’ve beautiful mountains, big city skylines and we’ve the best beaches in the nation but it’s more than that. We must have both, big city opportunities and small town quality of life choices. From the mountains to the coast, we have the best of both Mayberry and metropolis right here in North Carolina. When we unleash our resources in education, transportation, energy and technology and commit to greater government efficiency and affordability, our state will be second to nobody. We will be the role model for the nation working together, not only for the day but for future generations. To continue the momentum of success that we’ve enjoyed during the past two years, we must continue to be innovative while maintaining the basic values that make our state great. We must continue to cultivate a culture, a culture that encourages building, growing, producing and inventing things. And we’re protecting our environment to preserve the natural beauty

Draws visitors, and have a quality of life from around the world to our attractions and our state park systems which will be celebrating their 100th anniversary here. As my father often said, Matt McCrory, when he was a city councilman in Ohio in the mid 60s and later, when he was a civic leader in Greensboro where I grew up. He said the following, we must walk the fine line between our continued economic prosperity while also protecting the quality of life and environment that brought us here to North Carolina and keeps us here in North Carolina. Let me repeat that. We must walk the fine line between continued economic prosperity while also protecting the quality of life and environment which keep us here and bring many people here. I have no doubt that the people of North Carolina will continue to live up to that challenge. We are resilient. We are strong. We are diverse. We are strategic, and we have already proven that we can deal with about any crisis thrown our way. As we have grown to become the ninth most populous state in the United States of America. We're number nine in population. Let's continue to fulfill our potential and create opportunities for all of North Carolina. So I ask you to join me. Let us work together to achieve the best for everyone, everywhere in North Carolina. May God continue to bless the people of North Carolina. It's an honor to be your 74th governor of North Carolina. This is the greatest state in the United States of America. Thank you, and God bless each one of you. [SPEAKER CHANGES] Senator Brown and Representative Daughtry are recognized. They will escort his excellency, the honorable Pat McCrory from the chamber. [SPEAKER CHANGES] Thank you, mister President. I move that the joint session be now dissolved. Pursuant to the motion prevailing earlier in the Senate, the Senate will reconvene on Thursday, February 5th, 2015 at 11:30 AM. [SPEAKER CHANGES] Seconded. [SPEAKER CHANGES] Senator Berger moves, seconded by Speaker Moore that the joint session be dissolved. All those in favor of the motion will say aye. Opposed no. The ayes have it. This joint session is dissolved, and pursuant to the motions heretofore made, the Senate and House of Representatives stand adjourned to reconvene Thursday, February fifth at times stipulated in their adjournment motions.