Lieutenant Governor Ivey, Speaker Hubbard, President Marsh, distinguished guests, members of the Alabama Legislature, Chief Justice Moore, members of the Alabama Supreme Court and My Fellow Alabamians.

22 years ago Alabama stunned the world when one of the most advanced auto manufacturers in the world chose our state for its first U-S Assembly plant.

The men and women elected to lead Alabama, so determined to change our state for the better, made a bold move, and never looked back.

They knew they would be questioned and criticized about the unprecedented incentives they offered Mercedes.

And they were.

Undeterred by critics, our state’s leaders knew that if Alabama was to ever earn the reputation of a great place to do business, they had to make a move.

They knew that if the 4 million Alabamians who elected them would ever have the opportunity for greater economic prosperity they must act.

They knew what needed to be done to change our state and help our people for generations to come.

That pivotal moment in 1993 launched Alabama’s growing and prosperous automobile industry.

And our state has never been the same since.

In just two decades Alabama would become home not only to Mercedes, but Honda, Hyundai and Toyota and numerous suppliers. Billions of dollars would be invested in our state’s economy. Tens of thousands of hardworking men and women would find well-paying jobs transforming their lives and those of their families.

And the nation would come to see Alabama as a premier model for advanced manufacturing recruitment.

One bold move had a lasting impact on our state.

Last year nearly 1-million automobiles were made by the skilled-hands of hardworking Alabamians.

Our great state produced nearly $6 billion worth of vehicles last year alone.

Since that first Alabama-made SUV rolled off the assembly line 17 years ago, vehicles have remained our State’s number one export.

99 countries today have cars on their roads that are “Made in Alabama”.

Our state is now home to a fast-growing aerospace industry.

Today nearly 400 aerospace companies employ Alabamians.

And next year in Mobile, where we created thousands of jobs, the first Alabama-made Airbus airliner will take off.

We have recruited over 63,000 new, future jobs to this state since 2011.

Alabama’s unemployment rate is at a level this state has not experienced in more than six years.

And our economy supported more jobs than it has since 2008.

Companies worldwide know Alabama is a state willing, ready and very able to work hard to make our state a great place to live and work.

I’ve met these people. I’ve been to their homes. I’ve been to their workplace. I’ve been to their churches, their schools, their Main Streets and their backyards.

And they, like me, want so badly to see Alabama grow and prosper.

In Vernon, Alabama almost the entire town turned out on a sunny day last October to celebrate the opening of K & S Lumber.

With some state resources the town of 2,000 people cleared a field for a future Industrial Park, the Lumber company was the first business to open there.

How many people were getting new jobs at K & S Lumber?

Eleven.

It may not be the largest economic development project in the state, but it is an example of the optimism of our communities and the ability of our State to do whatever it takes to create jobs.

Whether it’s 4,000 jobs at Mercedes, or 11 at K & S Lumber.

Since Alabama won the battle for Mercedes all southeastern states have become much more aggressive in their efforts to compete for jobs.

This year we must pass new legislation that will make sure Alabama remains a leader in recruiting new industry and in helping our existing businesses – both large and small.

And by encouraging investments that lead to greater, future economic opportunities.

To do this we have worked with local economic developers and national experts to help us update and improve the incentives we use to recruit new industries.

This Session we will introduce the Made in Alabama Accelerate Alabama Jobs Incentive Package. Our current incentives are 15 years old, out of date and 100 – percent dependent on borrowing money.

This new incentives package will no longer be based solely on debt.

It will increase incentives for new projects that locate in rural areas, like Vernon, Alabama.

It will offer incentives for those who invest in Small Businesses and Start-Ups.

It will provide research and development credits for work done with Alabama-based research centers. And it will provide additional incentives for new wages paid to our Veterans.

The Alabama Legislature has always played a critical role in helping to make sure our state is a leader in economic development, and passing the Accelerate Alabama Economic Incentive Package will ensure Alabama remains a leader.

Passing the Accelerate Alabama Jobs Incentive Package will once again make sure that Alabama leads the nation in the recruitment of high-skilled, well-paying jobs the people of our state need and deserve.

There is nothing more important to our state than job creation. And having students who are college and career ready is one of the critical components of economic development.

The Alabama Workforce Council made up of Alabama’s world-class industry leaders will be important to building and maintaining high quality partnerships between industry, education and workforce training institutions.

And I want to thank the members of this council for helping to prepare Alabama’s workers for high-wage, high-demand careers.

Last fall we announced a statewide effort to assist small businesses owners and entrepreneurs.

Small businesses create three out of four jobs.

There are approximately 400,000 small businesses in Alabama, and in 2011, over 5,000 jobs were created by our small businesses.

Last fall we launched the Alabama Small Business Commission, and Atlas Alabama, which help identify all resources available to small businesses, and bring them under one roof.

The Commission, made up solely of small business owners, will encourage innovation, promote policies to help new business start-ups, and allow small businesses to give state government ideas and suggestions to help their businesses grow.

Our people need the opportunity for good jobs, and our young children must have the opportunity to get a strong foundation for learning.

I want every child in the state of Alabama to have the opportunity to get a quality First Class Pre-K Education.

Our First Class Pre-K program is one of the best state-run programs in the country.

Last fall in Alabama more than 7,000 4-year-olds across the state were given the opportunity to go to preschool for free.

For the eighth year in a row, Alabama’s First Class Voluntary Pre-K program is one of only five in the country that met all the quality benchmarks set out by the National Institute for Early Education Research.

We must continue to expand our Pre-K program because it makes a real difference in the lives and the education of Alabama’s children.

Last year, children who attended our First Class Pre-K program were less likely to fail a grade in school, and across all grades, they consistently scored higher in reading and in math than those who did not attend.

Yet only 12% of Four-year-olds in Alabama have access to First Class Volunteer Pre K.

That is why once again we must continue to increase funding as we continue to expand this opportunity.

I want every parent to know, that at the end of my term, there will be a First Class PreK classroom available for their child.

We will also embark on a program to make our people healthier.

In the coming days I will, through Executive Order, create the Alabama Health Care Improvement Task Force, a panel of 30 experts which will bring me recommendations on how we can improve the quality, accessibility and affordability of healthcare for our people.

Alabama faces major problems with chronic conditions.

Many of our health issues are related to lifestyle choices, poverty and access to quality healthcare.

We must take real steps to reverse the troubling health trends in our state.

We have already begun this process by reforming Alabama’s Medicaid system.

As we try to get our people off Medicaid and into private payment programs through job creation we must realize that our hospitals, especially in rural areas, are dependent on Medicaid to survive.

We are establishing Regional Care Organizations and will focus on improved outcomes for patients to help lower costs and better manage the health care services given to those served by Medicaid.

But we cannot allow Federal bureaucracy, and the extremely flawed Patient Protection and Affordable Care Act to derail our efforts to make sure Alabamians have good quality healthcare, especially the poorest and most vulnerable.

We know the Healthcare needs in Alabama, and we intend to create solutions that are specific to the needs of Alabama’s people.

As a Conservative Leader, there are three things that are important to me.

Upholding the rule of law, using our state resources wisely and efficiently and preserving the autonomy of state government.

In Alabama, the problems that have plagued our prison system for decades has put those principles at risk.

The rule of law must be observed and those who break the law should be held accountable for their actions.

The blunt facts are alarming. Alabama’s state-operated prison facilities — the most overcrowded in the United States — are operating at more than 195-percent capacity.

We have been forced to rely on short-term fixes that have proven costly, dangerous and disorganized.

The result has been an overall increasingly inefficient system.

That is why over the past year, Alabama lawmakers, leaders in the criminal justice system, local and state judges, district attorneys, victims’ rights groups, and many others have collaborated as part of the Prison Reform Task Force to develop a new plan to reform our prison system.

It won’t be easy and it certainly won’t be cheap.

But we cannot ignore and under-fund what is an alarming and dangerous problem that must be addressed.

As leaders of this state, chosen by the people we serve, we are elected to fix problems, not pass them on to someone else, to a future generation.

The problems we must tackle may have been decades in the making, but it is up to us to solve them today.

We must have the insight to recognize what HAS to be done, and the willingness, the desire, the courage, the boldness to do it.

We have seen this for the last four years as together we have worked to make our government run more efficiently, to reduce spending and to save the hard-earned tax dollars of the people of this state.

Four years ago I stood before you at this podium and said “Alabama state government must live within its means. We must do a better job of prioritizing our resources to get the most out of our state expenditures.”

That’s exactly what we’ve done.

And this Legislature has been leading the way.

Together we took on the challenge of a state budget propped up with federal stimulus dollars that camouflaged the excessive spending, the waste and the inefficiencies that drained our badly needed resources.

We cut.

We trimmed.

We closed.

We consolidated.

We did without.

We made sacrifices.

We asked our state agencies to do more with less, our schools to make choices between teachers and textbooks.

Four years later the results are remarkable.

The size of state government has shrunk by 12- percent.

We’ve reformed Medicaid, consolidated the state’s Law Enforcement agencies and overhauled our Information Technology system.

We’ve passed a balanced budget each year.

And we’ve saved the Alabama taxpayer over 1-point-2 Billion dollars annually.

And still today – four years later- it is not enough.

We have a $264 million combined shortfall in our General Fund and Education Budgets.

Our state is in debt.

We owe Millions to the Federal Government.

We owe Millions to the Bank.

We owe Millions to our taxpayers by way of a borrowed-out Rainy Day Fund.

As the men and women elected and accountable to the hard-working taxpayers we must give them a more Efficient, Effective and Accountable government.

Because of our debt, and because there is no growth money going into our General Fund, we cannot adequately pay for and provide the basic essential services to our people.

We must break the cycle of draining our savings accounts to prop up the General Fund.

We must break the cycle of borrowing from our Education Fund to prop up the General Fund.

We must break the cycle of budget shortfalls – year after year.

We must do what every family in Alabama does everyday – Live within our means and manage our finances wisely.

And we must have adequate means.

If we are to solve our financial problems for future generations of Alabamians we must act today.

Like the hardworking people of this state, I want more for Alabama than just maintaining the status quo. I believe we all do.

When I was elected to this office, I began serving my time as Governor with an 8-year, long-term plan to serve our people, to solve our problems and to create opportunities for better education and well-paying jobs.

We made those deep cuts and have saved billions.

And we will never stop working to make sure state government lives within its means.

And we will continue to grow our economy with well-paying, highly skilled jobs.

Now, as we look to the future, we must take the steps necessary to help get our state out of debt and find secure financial footing.

Revenue must increase.

There must be growth money in the State’s General Fund.

The budget I will send you contains specific solutions.

If we are to pay our debts, cover the shortfall and create a stream of growth revenue for our stagnant General Fund we must look to increase our revenue.

We must look at all sources, and tax fairly.

I’ve been a Conservative Republican my entire life, and tax increases are not my ideal solution.

Taxes should be fair among all people. It is unfair for certain groups to be taxed for goods and services while others are not taxed for those same goods and services.

If Alabama families have to pay their fair share of taxes, so should large national and international corporations.

Almost two-thirds of the corporations operating in Alabama paid ZERO income tax.

Of the 3,000 Fortune 500 corporate tax returns filed in Alabama, almost 58-percent paid no income tax to our state.

By requiring combined reporting, we will eliminate that loophole.

The budget I will send you will contain 8 separate tax increase proposals – which are fair and necessary – for a total of $541 million in estimated increased revenue.

We must also free up funding so that our Legislature can better manage where the money goes.

Ninety-one percent of all state revenues for both budgets are already earmarked.

Alabama has the highest percentage of earmarks in the country, by a huge margin.

I will propose we unearmark some of those funds so that we can better determine the needs of our state and steer the taxpayer dollars where they will be best used.

The plan I am proposing will replace the funds that we unearmark and create more money in the Education Trust Fund.

The results will be an estimated $250-300 million more for K-12 Education, the State’s 2 Year systems and Higher Education.

The problems we now face have been years, even decades in the making.

We cannot put off solving these problems anymore.

We cannot cut our way out of this.

There is nothing more conservative than paying your debts and getting your financial house in order.

And by keeping spending at a reasonable level we will actually save money, and potentially create a surplus in the General Fund in future years.

The problems we face not may not have been ours to make, but they are now ours to fix.

We must continue to create opportunities for better education and better jobs and a better way of life for our people.

By 2020, a quarter of a million Service Men and Women will be exiting the military and returning to America’s communities.

In Alabama the Unemployment Rate for Veterans is at 7-percent.

Through our newly created Alabama Veterans Network we will work to make sure our Veterans are able are to find the jobs they need and deserve.

Through ALAVETNET we will introduce legislation that gives an employer tax credit for hiring any unemployed Veteran.

We will do everything we can to serve the men and women who have risked their lives for our freedom.

This year we will also introduce legislation that will give Alabama’s Foster Children tuition scholarships to our state’s public 2-year colleges and universities.

Fostering hope will offer children currently or formerly in Alabama’s Foster Care System the opportunity to get a college education.

By meeting certain requirements foster children who may not ever attend college will be given the opportunity for a better future.

Since 2011 our First Lady has been a voice for victims of domestic violence and their children.

This Session you will see Dianne in the State House pushing powerful legislation for Domestic Violence victims and their families. This legislation will modernize our current laws, expand victim services and strengthen victim protection.

We must defend the women, men and children who are going through this dangerous cycle of violence within their own homes.

I hope you will join with me and members of my Administration in our proud support of Dianne in her effort to protect Alabama families from domestic violence.

Everyday when I wake up, I thank God for the opportunity He’s given me to serve the people of this state.

And I am grateful for the privilege and the honor of serving the absolute greatest, hardest working, loving, caring and toughest people in the world – the people who make up this great state – the people who proudly call themselves Alabamians.

One thing I have always known about our people, and it has proven true during my time in office – They do not back down from a challenge.

Not when they are fighting for their basic civil rights, not in defending our nation’s Freedoms and not in the aftermath of Natural Disasters.

And as Leaders of this State, neither will we.

We will not settle.

We cannot settle for just barely getting by…

The people deserve better than that.

I’ve had the privilege to travel to every county and every corner of Alabama over the last four years, and most of you have been there with me.

I’m proud of Alabama.

I’m proud to be you Governor.

And I know you are proud to serve this state as well.

If there’s one thing I learned very early on, it’s that you can always count on the people of this state to work hard and do what we have to do to make this state better.

The night I was Re-elected as your Governor I promised the people that we will face our challenges head on.

We will work with both parties, across the aisle, to make our state better.

Because that’s what our people do – they work together – and that’s what they expect us to do.

Two decades ago, the men and women elected to serve our people dared to dream big.

They wanted our state to be even better, they wanted an economically strong state where our people had opportunities like never before.

They made a choice, and they forever changed the economic landscape in Alabama.

And they proved that one bold move, in the face of skepticism and even criticism, can forever change the course of our State.

It is time we change course.

It is time we lead our great state and the great men and women who sent us here.

It’s time for a bold move.

God Bless you All. And may God continue to bless the Great State of Alabama.