Governor Proposes Investments in Georgia's Future, Encourages Long-Term Perspective

Governor Sonny Perdue today delivered his annual State of the State address before a joint session of the General Assembly detailing how the state continues to fulfill its core mission through challenging economic times. The Governor’s Amended FY 2009 and FY 2010 budgets and policy initiatives continue his commitment to education, economic development and government transformation to deliver better value for the taxpayer’s dollar.

“We must not allow ourselves to be trapped in a short-term mindset where rash decisions result in dire long-term consequences,” said Governor Perdue. “Our perspective must be one of optimism even in the face of difficult economic cycles.”

Governor Perdue used his State of the State address to formally submit his Amended FY 2009 and FY 2010 budget recommendations to the General Assembly. Governor Perdue’s recommended Amended 2009 budget totals $19.2 billion and the 2010 budget stands at $20.2 billion.

The Governor thanked the legislature for working with his administration to help replenish the Rainy Day Fund, which now stands at $1.2 billion. In these budgets, Governor Perdue recommended using the maximum amount available for appropriation from the reserves, appropriating $187 million for the education midyear adjustment, $50 million in 2009 and $408 million in 2010. In 2009, a number of one-time strategies unavailable in 2010 will be implemented to balance the budget. Therefore, Governor Perdue recommended the largest portion of available reserve funds be committed to the 2010 budget.

The Governor’s 2010 budget includes a $1.2 billion bond package that will create an estimated 20,000 jobs and features projects in which both design and construction are funded in the same year.

“These projects touch every corner of the state and include new construction at our universities, technical schools, local school systems and libraries; harbor deepening at the Savannah port and needed improvements at state facilities.,” said Governor Perdue.

Governor Perdue also outlined a proposal to restructure the Department of Human Resources. Currently, $3.8 billion is spent within DHR every year. The plan calls for the creation of a new Department of Behavioral Health which will include all mental health and addictive disease programs. The bill also establishes a Department of Health, a combination of the public health and oversight programs in DHR and the current functions of DHR. Remaining social services, such as Developmental Disabilities, Aging, DFCS and Child Support, will come together under a reconstituted Department of Human Services.

Governor Perdue will also introduce legislation to ask those who receive Medicaid payments to help fund the system. This proposal takes advantage of the fact that every dollar used toward Medicaid purposes draws down almost two additional dollars from the federal government. The budget will reflect, and an accompanying bill will propose, a 1.6 percent fee on hospitals and health insurance plans to, not only fill the hole in Medicaid, but also to do what the healthcare community has asked of Governor Perdue’s administration. This proposal will significantly raise Medicaid rates, particularly for hospitals; and in conjunction with the SuperSpeeder legislation, provide $60 million for trauma to sustain and expand the state’s trauma hospitals, EMS and trauma physician infrastructure.

The Governor asked the General Assembly to carefully consider the consequences of cutting healthcare coverage.

“I implore you, do not rush into a short-sighted cut that would have long-term consequences for Georgia’s most needy,” the Governor said.

Governor Perdue highlighted the efforts by Gwinnett County schools to increase student achievement. Last week, the State Board of Education approved an IE2 contract and committed to be held accountable for increased student achievement above and beyond state and federal requirements.

For the 2009 session, Governor Perdue is proposing merit pay legislation that will award teachers who show evidence that their classroom instruction leads to increased student achievement. Governor Perdue is also proposing differentiated pay for math and science teachers. Additional legislation will ensure every student in Georgia has the benefit of responsible leadership at the school system level. This legislation will clearly define what citizens expect from Georgia’s school board members, and it will give the state the ability to replace board members who aren’t serving in the best interests of their students.

“Education means opportunity,” said Governor Perdue. “We spend more than half of our state budget on education because we know that opportunity is discovered in Georgia’s classrooms.”

Governor Perdue’s encouraged legislators and all Georgians to remember the resiliency of our great state, and while we confront the short-term challenges of today we will continue to prepare to take advantage of future opportunities.

“As I think about the American promise of freedom and economic opportunity, I know that rich promise will mean great things for Georgians in the years to come. The soil has proven too rich to dare believe anything else,” the Governor said. “As I look within, I find something within the human constitution that bounces back, something within this collective American spirit that rebuilds. This is the time to continue building our state, to prepare for the future, to plant the seeds that will enrich our children’s inheritance. Together, we will do just that.”



The text of the Governor’s State of the State speech is below…

Mr. President, Mr. Speaker, President Pro Tem Williams, Speaker Pro Tem Burkhalter … Members of the General Assembly. Constitutional officers and members of the judiciary. The Consular Corps and other distinguished guests. And, most of all, my fellow Georgians.

I want to begin this morning with the story of a young Georgian who embodies the resiliency of our state.

Just three years ago, Jeremy Lee was a 14-year old student from Clayton County on his way to the Ireland Youth Development Campus in Milledgeville because he and some friends made a bad decision.

He could have seen this as an indictment not only of his crime, but of his potential. He could have settled for a life marked by disappointment.

But Jeremy made a life altering decision, one that will benefit the lives of others for years to come. He chose to focus on what he could be, not wallowing in the self-pity of tough times, and invested his time and energy in preparing himself to emerge from that campus a better person.

Last summer, Jeremy walked out of those gates with a high school diploma and is now enrolled at Morehouse College.

Jeremy is now pursuing his goal to be a doctor, and that pursuit is a testament to his inner-resilience. I am pleased that he could join us this morning. Jeremy, please rise so we can recognize your efforts.

It’s Jeremy’s resilience and the resilience of thousands like him across our state that gives me confidence that we will emerge from these challenging times stronger.

This is a pivotal moment in our nation’s history. It is a moment in which we are asked to see beyond what George Will calls the “tyranny of the short-term,” beyond the circumstances of the moment, to the big picture – a picture that is informed by our history, bolstered by our character and steeled by our will to succeed.

Despite the stresses of a moment like this, we must not allow ourselves to be trapped in a short-term mindset where rash decisions result in dire long-term consequences. We must remain focused on the big picture … Our perspective must be one of optimism even in the face of difficult economic cycles.

… I look forward to attending President-elect Obama’s inauguration next week and I am confident that he and the new administration will do everything in their power to meet the challenges that face this nation.

However, we cannot plan by relying on the unknown, and the budgets I present to you today are balanced and do not assume money from Washington. Our latest revenue estimate for this fiscal year shows a decline of $2.2 billion, resulting in a $19.2 billion amended budget.

Political mantras aside, cutting more than 10 percent from a budget cannot be achieved by simply cutting waste. While we have worked for six years to do more with less, at some point, in business or in government, it becomes less with less.

The job of budgeting is hard right now, but it’s not because the directions are complicated. Like families sitting around their kitchen tables all over Georgia, we are doing what is necessary to balance our checkbook.

… I want to thank the legislature for working with us to replenish the Rainy Day Fund, which now stands at $1.2 billion. As you all know, at my request, you wisely passed legislation requiring us to retain at least four percent of previous year’s revenue in the reserve fund for balancing the budget at the end of the year if needed.

So I have recommended using the maximum amount available for appropriation from the reserves, appropriating $50 million this year and $408 million next year, as well as $187 million for the midyear education adjustment. We are using some one-time strategies to help balance this year’s budget that won’t be available next year. Therefore, I have recommended that the largest portion of available reserve funds be committed to next year’s budget, which stands at $20.2 billion.

I want to applaud our department leaders -- men and women who are on the ground, who know their mission, their people and their customers. This past spring, agencies willingly responded to my call for restrained spending and returned over $200 million to our state’s Rainy Day Fund at the end of last year.

And then this summer, when I asked them to identify potential budget reductions, their response was thorough and strategic. They were able to find the cuts and maintain the ability to execute their core missions.

That is a testament to those leaders and to the culture change we’ve made in state government!

In six years, we have transformed government making it more efficient and more accountable by instilling a customer-focused culture of public service.

Sometimes this difference isn’t seen in a budget document. But even then, it often impacts thousands of Georgians, who spend less time waiting on government and more time doing what they want to do.

Over the last three years, Joe Doyle and his team at the Office of Customer Service have led this culture change. For example, in Child Support Services, the time between a parent’s initial contact with the agency and meeting with a case worker, has gone from a 30 day wait to same-day service.

A year ago, when a prospective teacher seeking certification called the Professional Standards Commission, they waited nine minutes, on average, to speak with a person … 37 percent just hung up out of frustration. Now, those folks wait eight seconds.

The wait for a new driver’s license has gone from two hours to six minutes and the Medicaid approval process has gone from nine weeks to twelve days, with half of all applicants getting same day approval. And those changes didn’t cost a penny!

This year, we experienced a historic early voter turnout and this same group partnered with the Secretary of State’s to assist 13,000 voters: telling them where and how to voter early. They will continue their work with projects ranging from improving financial aid response times to speeding up DCH’s approval process for children with special needs.

Ladies and gentlemen, I want you to help me recognize Mr. faster, friendlier and easier … Joe Doyle.

We are working in every area of government to ensure that we are getting the best possible value for our investment and that we are providing the best possible service to every Georgian.

To that end, in February, I signed an executive order forming a task force to look at a possible restructuring of the Department of Human Resources. Folks, we spend $3.8 billion within DHR every year – an agency that hasn’t undergone major change since it was formed over three decades ago.

After a thorough review by the Health and Human Services Task Force, we have determined a course of action that will re-orient our approach to healthcare by shifting the focus from inputs to results.

First, we are proposing the creation of a new Department of Behavioral Health which will include all mental health and addictive disease programs. This will improve our responsiveness to mental health needs and will make funding more transparent.

We will continue to improve care by moving towards a community-based delivery system. I know some folks will be concerned with how this might affect jobs in their area, but when it comes to mental health, I believe we have an obligation to provide services to Georgians as close as possible to where they live.

Second, the bill would establish a Department of Health – a combination of the public health and oversight programs in DHR and the current functions of DCH. This agency, which will be led by Dr. Rhonda Medows, will deliver workable solutions on the key healthcare issues we face …

Issues affecting Georgians like how to best facilitate and finance healthcare coverage and how to provide needed access.

Preventative medicine will play a bigger role, inefficiencies and redundancies will be eliminated and every stakeholder in Georgia’s healthcare system – from county boards of public health to Medicaid providers – will work as part of a more coordinated effort.

The remaining social services – Developmental Disabilities, Aging, DFCS and Child Support – will come together under a reconstituted Department of Human Services led by Commissioner B.J. Walker.

We have made progress in the delivery of these safety-net services to our critical populations: we have improved from 50th to 5th in the nation for moving people from state hospitals to community facilities; DFACS has reduced out-of-home placements by 21 percent, and recurring child abuse rates have dropped from 9 percent to 3 percent in the last two years, 2 percent below the national average. I believe a more targeted focus on these programs will lead to even further improvement.

We know that improved lines of communication and enhanced coordination are critical, and I fully expect that these agency heads will meet regularly to coordinate policy and cross-agency service delivery.

I have charged the affected agencies to make this transition within their current budgeted amounts and, in the long term, we believe this reorganization will bring greater efficiency and greater value for the taxpayer dollar.

I want to thank all those who have helped make this happen, particularly the legislative members of the task force: Senators Jack Hill and Renee Unterman, and Representatives Ben Harbin and Mark Butler.

I look forward to working with the legislature and health and human service leaders and providers throughout this state to improve healthcare delivery for every Georgian.

When I came into office, Medicaid was growing annually at rates as high as 17 percent. Over the last four years, growth averaged just 3.4 percent, saving the state a staggering $4.7 billion. Those are numbers that any business would envy.

Even though we have controlled the growth of our Medicaid budget, we faced some very difficult choices this year. The federal government has told states that we can no longer fund Medicaid as we have since 2006. That decision could not have come at a worse time. Washington, in its infinite wisdom, has decided that if we assess a fee against our Care Management Organizations as we currently do, we must impose it on all commercial health plans.

We had to choose: everyone or no one. If we said “no one,” it would have cost Georgia $96 million in state Medicaid funds.

While I’m recommending cuts to many agencies and programs above ten percent, even a five percent cut to the state Medicaid budget would mean an additional $112 million reduction.

That one-two punch of federal mandates and declining revenues means we faced a $208 million hole in the state’s Medicaid budget. To be clear, this $208 million represents the funds paid to providers on behalf of Georgia’s most needy.

To ensure these needed services continue, I had to choose between some tough options. The first option was to eliminate discretionary Medicaid programs – the ones that the federal government does not require us to fund.

This would mean eliminating the medically needy category for eligibility, which serves 7,100 Georgians; eliminating the Katie Beckett Program for 3,100 Georgians; eliminating dental benefits for the 60,000 pregnant women that were covered last year; and eliminating Medicaid coverage for foster children over the age of 18.

In PeachCare, we would have had to eliminate dental benefits, freeze enrollment and reduce the enrollment cap, as well as increase premiums and – for the first time – impose premiums on children between the ages of two and five. All of those cuts combined would still have left a gap exceeding $150 million.

A second option, I could have cut reimbursements to our providers by $208 million. Providers have consistently told us – rightly or wrongly – they believe even our present reimbursement rates are already too low.

A third option would have been to impose the same 4.5 percent fee on commercial and Medicaid managed care and preferred provider plans, that we currently impose only on CMOs. While that remains an option, I prefer a broader based approach that spreads the burden.

I chose to ask those who receive Medicaid payments to help fund the system. This proposal takes advantage of the fact that every dollar we send to Washington for Medicaid draws down almost two additional dollars.

So my budget will reflect, and an accompanying bill will propose, a 1.6 percent fee on hospitals and health insurance plans to fill the hole in Medicaid, and to do what the healthcare community has asked of us for so long: one, to significantly raise reimbursement rates for providers, particularly for hospitals; and two, in conjunction with SuperSpeeder legislation, provide $60 million to sustain and expand the state’s trauma network.

Like most things we address here at the Capitol, this plan will not be universally acclaimed, but I have arrived at this solution after thoughtful, careful deliberation. I implore you … Do not rush into a short-sighted cut that would have long-term consequences for Georgia’s most needy.

Finally, for those that would wait for Washington … we have waited before. And while I am hopeful that we may receive additional federal funds, when I put the budget together, I did not have the option to budget for money that may never materialize.

… We all say, whether it’s in a campaign or a State of the State speech like this, that education is our number one priority. But what does that mean? To me, it means providing opportunity. We spend more than half of our state budget on education because we know that opportunity is discovered in Georgia’s classrooms.

In these budget times, there are certain things we can do to help our local school systems. We have already informed schools of our intention to relax expenditure controls, giving them additional flexibility. This move will allow those closest to the students to manage funds in the most efficient way.

… Last year, I proudly signed IE2 legislation. Let me boil it down for you … this is true local control with real accountability! In exchange for this flexibility, systems entering into a contract with the State Board of Education are held accountable for increased student achievement above and beyond state and federal requirements. And they will face serious consequences if they fail to meet those goals.

It’s exactly the kind of clear, straightforward and results-driven program local school districts have asked for since I came into office. And, just last week, the State Board of Education approved the first IE2 contract with Gwinnett County.

This means that ten percent of the students in Georgia will be under a performance contract to increase student achievement. I commend Alvin Wilbanks and the Gwinnett County School Board for continuing to lead by example.

In the weeks and months to come, I believe you’re going to see progressive school systems from all around the state sign on, and if you’re in a parent in Georgia, that’s something to be excited about!

As I outlined yesterday, I am proposing legislation that will ensure that every student in Georgia has the benefit of responsible leadership at the school system level.

Most local school board members in this state are in that position for all the right reasons and they do a great job for our students, but unfortunately, that isn’t universal. And we must take action, because when a school board is failing, every student that depends on them is cheated.

This legislation will clearly define what citizens expect from school board members and it will give the state the ability to replace board members with responsible, local citizens when accreditation is threatened. Never again, do I intend for the state to be handcuffed by our current law and powerless to help students who are being failed by the adults in their community.

Also, I will propose legislation to establish a high school principal incentive pay program for those principals who increase student achievement – raising graduation rates and improving SAT and End of Course Test scores.

I am proposing merit pay legislation that will award teachers who show evidence that their classroom instruction leads to increased student achievement. Currently, extraordinary teachers are locked into a compensation model that fails to reward excellence. This is the next step in moving education from a culture of compliance to one based on performance.

We are also proposing differentiated pay for math and science teachers. It astonishes me that this state produced just three physics teachers last year. We must introduce a market dynamic into the salary schedule to address these critical needs areas. Some may be surprised to hear these ambitious plans in these times, but, this more than any other period, is a time to continue improving education and the basic institutions of government.

We are fortunate to live in a state where people want to be. Last year, Georgia was the fourth fastest growing state in the nation. And in the last eight years, we have added 1.5 million people.

Not only do people move here, they stay here. Georgia ranks third in the nation for keeping our native-born population, with over 69 percent of people who were born in Georgia still living here. I don’t say all this just to share statistics, there is a story there, and it’s a story about Georgia’s competitive advantages and a great quality of life.

This enormous growth brings its own challenges … I call those the “problems of prosperity.”

We continue to work to protect our most precious natural resource … water. Last year, I signed into law Georgia’s first Comprehensive Statewide Water Management Plan to help our state balance water use and growth.

I want to, again, thank all of you for participating in what I consider to be the most inclusive piece of legislation we’ve worked on since I’ve been Governor.

The Lieutenant Governor, Speaker and I will soon announce our appointments to the Regional Water Councils. We are working to ensure that those selected will represent a good cross-section of Georgia talent – both in their personal experiences and geographically. These councils are going to put our Statewide Water Plan in action.

I am confident the rains will come, and I am encouraged by the fact that our new management plan will make us better stewards, both now and over the long term.

Our experience in working together on the water plan will be needed again as we address our transportation needs. A growing Georgia will depend upon a transportation network that supports mobility and commerce. Like most government programs, the money available is short of what our needs are, so we must guard every dollar that is spent to make sure we maximize its value. Reforming DOT has been one of the toughest challenges my administration has faced, and we are not through yet.

Last summer, I commissioned Investing in Tomorrow’s Transportation Today, or IT3, so that we as policymakers could understand the value of additional investment, while we continue to bring our transportation planning, funding and building policies up to date.

Transportation improvements providing access to markets, reliable and stress-free commutes and speedy freight movements can be the catalyst that propels our economy forward, just as we have seen over our state’s history.

The Lieutenant Governor, Speaker and I share a mutual commitment to address our transportation needs, and we will continue reforming DOT with a goal of standing up a system that can take that funding and provide the value Georgians deserve. Once I feel certain that we can deliver transportation value to Georgia citizens, I will support responsible measures to raise additional revenues.

… As Georgia grows, so do our energy needs and Georgia is meeting this challenge by creating a fertile environment for alternative energy production. Those efforts have been rewarded with $2.4 billion of investment over the last two years. That investment means new jobs for Georgians.

In November, Norcross-based Suniva, birthed right here in one of our research universities, began fabricating the most advanced solar technology in the world.

This summer, we will host more than 15,000 energy innovators for the biggest bio-lifescience conference in the world – BIO 2009. This is an outstanding opportunity to showcase Georgia’s progress in life sciences, and our potential to help heal, fuel and feed the world.

As we continue to attract new investment in biotechnology, we can secure our position as a leader in this industry by enacting laws that respect the role of the federal Food and Drug Administration as the regulator of the safety of drugs and medical devices.

But the best incentive we can offer an employer is a talented workforce that is ready to meet their needs, and our Work Ready program does just that.

We began Work Ready two years ago and Georgia workers have responded. There are now 111 counties – 70 percent of the state – working toward Certified Work Ready Community status.

As Georgia workers compete with peers as far away as China or as close as South Carolina, Work Ready puts them a step ahead. That is certainly the case with Joy Anthony.

Joy’s Work Ready Certificate distinguished her and gave her the edge she needed in her job search. Her employer was impressed by the skills Work Ready identified and they have designated her as a “Rising Star” in their company.

Joy is one over 35,000 Georgians to take control of their future, making themselves more marketable to employers looking for a talented workforce.

Ladies and gentleman, Georgia is ready to take advantage of our workforce and our strong balance sheet. We remain one of seven states with a triple-A bond rating and we will invest in projects that will be of long-term value to Georgians.

This year’s bond package, totaling over $1.2 billion in new investment, will put Georgians to work and build critical infrastructure. In the past, we have often funded the design phase of a project one year and construction at some later date. This year’s package will feature many projects in which both design and construction are funded in the same year, ensuring their timely completion.

In a time that we have trimmed our budget in other areas, we are aggressively increasing our bond package by a full twenty percent over last year. This will take advantage of low construction costs and create an estimated 20,000 new jobs in an industry that is ready to go to work.

These projects touch every corner of the state and include new construction at our universities, technical schools, local school systems and libraries; harbor deepening at the Savannah port and needed improvements at state facilities.

As I said at the outset today, we’re going to maintain a long-term perspective – we are not going to panic and make knee-jerk decisions that will have negative long-term consequences.

We stand at a crossroads, and as a father and a grandfather ten times over, I can say, we all recognize how important it is to the next generation that we get it right … right now.

Don’t hear me dismissing the scope or severity of this downturn. But, more importantly, don’t leave failing to hear the message that we need to look beyond this downturn.

Think about it, you don’t get anywhere in life without a long-term perspective and a long-term plan. You have to weather the turbulence - that’s true in a career, that’s true in the history of every successful marriage. Isn’t that right, Mary?

When the economy takes a downturn, you don’t give up on the economic promise of America that has proven true over the centuries. You don’t discard the promise … you build for the future with that promise in mind.

There is much to do in Georgia in this coming year but it can be summarized in that overarching mission to continue executing on the fundamentals of good government; to improve our competitive advantages, to make Georgia a better place to live and a better place to do business.

As I look back and think about our history, I am certain that this is not the tallest mountain we’ve been asked to climb.

As I think about the American promise of freedom and economic opportunity, I know that rich promise will mean great things for Georgians in the years to come. The soil has proven too rich to dare believe anything else.

As I look within, I find something within the human constitution that bounces back, something within this collective American spirit that rebuilds.

I’ll never claim to be a Nehemiah; but the prophet’s call, “Let us rebuild the walls,” rings true today. This is the time to continue building our state, to prepare for the future, to plant the seeds that will enrich our children’s inheritance. Together, we will do just that!

Thank you! God bless you. God bless America … and may God bless the great state of Georgia!

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