[applause] thank you. Bigger home well, lieutenant mcnally, happy birthday, randy, speakers pro tem tracy and 110thn, members of the General Assembly, justices, constitutional officers, general slavery, commissioners, friends, guess, fellow tennesseans, and the woman voted best first lady in the land [applause] [laughter] my kids evenam made it this year. [laughter] i am before you tonight to give my seventh state of the state address. Time really does fly. I would like to talk with you about the tennessee we can be. But first, lets start with where we are. Thanks to the hard work of so many tennesseans, i believe the state of our state has never been better. Our economy is outpacing the national economy. Not only do more tennesseans have a job today than ever in the history of our state, but tennessees median house goal Household Income has grown at the second fastest rate in the country. [applause] not only are we adding jobs, we are adding good paying jobs. On education, there is no state in the spotlight back tennessee. Spotlight like tennessee. Tennesseans are the fastest improving in the country in math, reading, and, as of this year, science. This past october [applause] this past october, we received a signed score from the nations report card. The sides being the fastest improving, we narrowed the gap between africanamerican, latino and white students. We completely eliminated the gap between male and female students. [applause] please, you already did, but please join me in giving all the teachers in this great state a big hand for making such a big difference for tea and for tennesseans. [applause] in Higher Education, while the rest of the country struggles with increasing tuition come over the last two years, tennessees colleges and universities have seen the lowest growth in tuition and fees since oh the 1970s. Since the 1970s. [applause] and we will see the very first ociates degree associate rewarded to students across the state. [applause] a second time in a state history, we have a triplea Credit Rating from all three agencies. Even before the tax cuts that im recommending in this years budget, tennesseans paid of the lowest amount of tax as a percentage of their income of any of the 50 states. [applause] the budget im recommending to you will take the states Rainy Day Fund to an alltime high. In addition, we are still the state with the lowest debt per capita in the country. [applause] year, it was the first year in tennessee recorded history that we did not take on any new debt. This budget will recommend that this be the second year in tennessees recorded history where we wont take on a new debt. [applause] you know, with all of that, we have still managed to create a surplus in tennessee. I want to be clear. Surpluses are a good thing. A combination of conservative estimates, strong growth, and having the discipline to not spend the budget. Many of my fellow states who are in a deficit position would love to trade positions with us. Saw revenueste come in most european i would like to spend a little time talking of i would like to spend a little time talking about the surplus. It is important for all of us to draw a clear line between recurring revenue and nonrecurring revenue. Recurring revenue would be items like your weekly or monthly paycheck. Revenue you can typically count on coming in from year to year. Nonrecurring revenue would be things like the money that your aunt edna left you in the will or the insurance settlement you got for your car or the money you saved out of last years budget. These are items you cannot typically count on on a yeartoyear basis unless you think and edna might die multiple times. [laughter] we have growth of about 400 million to 500 million that we or spend on newthink programs increased cost to them this year, the amount of new recurring revenue is 957 million, double the amount that we normally receive. [applause] however, it is important for all of us to remember that this is not 957 million without any claims to it. The tax cuts in the budget we are proposing will take over 200 million of that. Formula,he bp something we are all committed to in raises for teachers, will take another 180 million. Nondiscretionary increases caused by Health Care Costs in general and pharmacy costs in 130cular will take million of the 957 million. Raises and increased health care and insurance costs for state employees are another 107 million. In addition, obligations to our writer tarries and Pension Plans and Health Care Costs will eat up 125 million. Funding the complete college formula and Higher Education will require 80 million. Im also recommending that the maintenance of our buildings be funded on a recurring basis going forward, which i believe is a more conservative and responsible approach that it only puts maintenance dollars in the budget when we happen to have but funds available. [applause] as you can see, many of the items i listed are nondiscretionary. We dont have much choice to it. But can also see there are some discretionary funds in that list. We dont have to give raises to our teachers or to our employees. We dont have to cut taxes. And we dont have to fund the maintenance of our buildings in a recurring basis can recurring basis. But all of these are key investments in the future of our state. [applause] just of those seven items makeup 900 million of the recommended spending for the 957 million of the new recurring revenue that we have for this year. In addition, we are recommending several other places that we believe merit investment in the budget. We are recommending increasing the daily reimbursement rate that we get to counties for housing state prisoners in county jails. Public funding for defenders and investigators, more straight tubers and more statect attorneys more troopers and more district attorneys. [applause] it is also both smart and just to increase the amount of reimbursement we pay to some of the providers that take care of our most vulnerable citizens through the department of childrens services. We are also opening up more places in the Choices Program for those we serve in the intellectual and Developmental Disability communities. And, unfortunately come as drug use and opioid addiction plague our state, we are expanding Substance Abuse and crisis intervention Treatment Services and supports. [applause] if the onetime money, were focusing on items that can save state dollars down the road coming cleaning the improvement and maintenance of our buildings, including general government and higher ed p. M. We are putting 110 million toward paying down a 1. 2 billion liability for Retirees Health care. Im also proposing to add 132 million to our Rainy Day Fund to bring it to an alltime record high of 800 million, well on our way to the statutory guideline of 1 billion. [applause] in talking about the surplus, we should go ahead and talk about our transportation needs. It is hard to talk about one without the other. Core, transportation and infrastructure are some of the most basic needs provided by state government. And Reliable Network is vital to the tennessee we can be. While there are some functions people can perform for themselves without the government, no one can build a network of roads and bridges on their own. Wenessee, we lasted last funded our roads in the 1980s. Since then, since the rate was raised by . 21 per gasoline to . 11. Id has dropped if you are wondering how that can happen, the answers are fairly easy. The one form of revenue that does not have inflation built into it. Because it is charged on a cetns per gallon basis instead of the sale rate come inflation doesnt change the number. Secondly, improved mileage for vehicles has been great for the economy, great for the environment, and gray for consumers pocketbook. But it has also meant that everyone drives on our roads for a lot less of the cost than they did back in 1989. If they prove that, we are proposing to increase the gas tax seven cents and the diesel tax . 12 per gallon. And all new revenue only goes to address our transportation needs. [applause] the legislation will be 962 projects in all 95 counties, both urban and rural. Millionalso mean 78 dollars annually in increased revenue for counties and 39 million per cities. For cities. Scores of mayors have told me that, if we dont do something to address the fuel tax, they will have no alternative but to raise the property tax in their municipalities. I know some of you think we should transfer surplus money to the highway fund for transportation. We are. Million in of 277 last years and this years budget combined. Four real reasons why that is not a longterm solution. First, while we do have a surplus, we do not have a pile of money without a claim to it, as i mentioned earlier. Second, ive never felt it was a a longterm pay for need, like 10. 5 billion in approved and needed road projects, with a shortterm surplus. Third, and most fundamental, in my proposal, an estimated half or more of the increased revenue would come from nontennesseans and trucking companies. I dont know why we would take general fund dollars, which are mostly collected from tennesseans for tennesseans, and use that to subsidize our roads which are paid for by broad mix of instate and outofstate users. Allowed ying money pay money out of our surplus would leave our counties without revenue for local roads. I know that some of you have said that you will never hit the green button for any kind of tax increase. I understand. I would rather not address this either. To be honest, i would rather be known as the governor who worked with you to cut 500 million in taxes, brought our debt to record low levels and introduced the tennessee promise. Secondgine with me for a what kind of tennessee we would be if two different governors and two different general assemblies denied the foresight to address their needs back in the 1980s. Without them, many of the roads we now take for granted and hundreds of thousands of jobs would not be here. Earlier come i mentioned that tennessee has the lowest taxes in the nation as a percentage of personal income. If they improve act goes into law, we would still have the lowest taxes in the nation. [applause] today, we benefit from the decisions made and hard votes taken by those who came before us. Im hoping we can make the same commitment to our children and grandchildren to deliver the infrastructure they need to pursue Economic Opportunity and high quality lives. Of youalso heard many say that any movement in the gas tax would have to be accompanied neutrality. Revenue if you believe that, i would argue that there will rarely be as good a chance for us to do that if we that we have before us right now. The improve act includes tax cuts for our manufactures. While we take great pride in paying the lowest amount of tax as a percentage of income in that country as individuals, and force my, thats not true for our business taxes. We are the thirdhighest in the country in business taxes as a percentage of income and as a percentage of our budget. This tax cut of 113 million annually makes tennessee more competitive as we recruit jobs to locate or expand here in the state. Are we you may ask why targeting manufacturers with this tax cut . Because they are the firms come in addition to their own jobs, they bring a long trail of jobs with them. The average manufacturing job creates an additional three jobs out of their supplier rings. Just this morning, i had a conversation with a major manufacturer who is looking to locate in one of our rural areas in tennessee. The good news is that we are one of two finalists for the location. The challenging news is that they think they will pay more business tax if they locate in tennessee and they are weighing their decision right now. I wish i could say that is the only conversation like that ive had. But thats at least the fifth time that has come up in a recruitment conversation in the last four months. I am confident this tax cut will need more jobs for tennesseans in the future. [applause] will mean more tax jobs for tennesseans in the future. [applause] that we cutoposing the tax from groceries from 5 to 4. 5 . [applause] weights in addition to they half percent we cut several years ago would mean a full percentage cut in the grocery tax since 2012. [applause] savenew cut would tennesseans 55 million annually on the grocery bills. For a total of more than 100 million since we came into office. [applause] finally, i am proposing funding the cuts without income tax. The isw, constitutionally required to be eliminated by 2022. Its an entirely different thing to take the revenue out of the budget. Accelerates that while we have funds in the budget to address this. Those cuts will mean an additional 102 million in tax cuts during this General Assembly. In total, if this is approved, the General Assembly in and this governor will have cut 540 million in annual taxes out of the budget since 2011. [applause] let me repeat. 540 million in annual taxes since 2011. Are the sake of reference, that is nine times more than the highest amount ever cut by a General Assembly and a governor in the history of the state. 540 million in annual taxes [applause] and with the approval of the base reductions in this budget, we will have cut 550 million in ongoing expenses from the state budget over the last seven years. We have reduced the cost of government and we are returning those dollars in tax cuts. [applause] you know, ensuring the future health of our state is not just about roads and bridges. Countieshalf of our have an economic status of either at risk or distressed. Our role areas have assets that we can capitalize on. Ourre already making rural areas have assets that we can capitalize on. We are already making progress in this effort. In this budget, we are proposing including 21 million in recommendations for our Rural Task Force as tennessee moves ahead. We want to make certain that every part of our state is included. One of the best things i think we can do for those areas is increase their access to broadband internet. Last week, i introduced the second piece of our tennessee of legislative agenda, the tennessee Broadband Accessibility act. We talked about infrastructure with regard to transportation. The having the right infrastructure to handle tennessees potential growth also means talking about access to broadband. More than 800,000 tennesseans dont have that access. One in three businesses identified it as essential to selecting their location. Allowing tennessees private, nonprofit electric coops to provide Retail Service and expanding 15 million in grants will open upally rural areas to Economic Investment and job growth. Of course come accessibility without adoption doesnt accomplish right much. So we are also focusing on digital literacy. Interested tennesseans can maximize. We live in a world, where you have a strong internet connection, you can work from anywhere. Are serious about putting our Rural Counties on a level playing field, opening up Broadband Access is one of the largest steps forward we can take. [applause] as in prior budgets, you will notice this one makes another strong commitment to Public Education. Last year, we had the largest funding increase for Public Education without a tax increase in the history of the state. This year, we are proposing one of the funding increase one of the largest funding increases while cutting 270 million in taxes. We are fully funding the basic education program, including 22 million in additional dollars to help schools serve high need students. And 50 million for career and Technical Education equipment. 100 million is included for teacher salaries. Bringing the threeyear total since fiscal year 26 year 2016 to [applause] mean 430 million since 2011. Tennessee has shown he will not balance the budget on the backs of teachers and students. [applause] under this legislature and this administration, tennessee has increased total k12 spending by more than 1. 3 billion. [applause] we are also making unprecedented investments to Higher Education. The tennessee promise and keeping tuition low, tennessee has taken funding for its needbased Financial Aid from 56 million to 98 million dollars. Our focus on education has been about creating true generational change, regardless of your income level or your zip code. [applause] at the end of the day, there is no higher potential for providing more opportunity for our citizens than increasing access to highquality education. Is weand the whole point are doing it by maintaining discipline and responsibility to the taxpayer, keeping taxes and debt low and saving for when the economy ultimately slows. With that in mind, we introduce the tennessee promise three years ago in this speech. The promise was a Significant Initiative within our drive to 55. Every day, we are saying we are seeing this is not an bashar goal. It is connecting and resonating with tennesseans. We were2014, when discussing the tennessee promise legisln, these students, many of whom are firstgeneration students, succeed . Second, what about the adult tennesseans are graduated high school and either never went or never finished college . It is still early in the Tennessee College story. The result so far arincredibly encouragg. Orncthroamtaed than tee b 3000 students have enrolled in college as a result of tennessee promise. Than 33,000 students have enrolled in college as a result of tennessee promise. [applause] other students who began in the fall of 2015, 63 are still enrolled, far ahead of the average for our Community Colleg sdes. But for me, tennessee promise will always be one freshman who, on his first day in class, grad me and told me, you know, i have always known what i wanted to do with my life and i always knew that i had to get a degree. It before tennessee promise, had no idea how i would pay for it. Last year, we lead the nation and fast application for our high school seniors. This years numbers are ahead of last years. Maybwe will bence agn numb one in thnation [applae] just as encouraging as the volunteer spirit, we now have 9000 tennessee adults who have volunteered mentors for High School Students. And thoshigh sooltunt ha pvided er a milli hours commuty service [applae] and critically, at a time when the rest of the nations wondering what to do about student loans, tennessee h seen a 17 decrease in the number of students taking out loans. [applause] even with all the progress and unprecedented opportunity, we know we have more to do. Tennessee needs 871,000 more ofrees to reach the goal 55 . Mathematically, there is no way to reach our goal just by serving our High School Students. F you ve specifill discussed with me in the last three years, we have to do more for adults and tennessee. We need to retest adults in tennessee. We need to reach the working mother who went to college but did not complete. Or like sons, like his dad, did not go to college but needs to increase his skills. You know, we were the first date in the nation to offer a program like the tennessee progress tennessee promise. Togh im trucg e xtte i minceaith evyo iteese s the opportunity tu theirege. I proposing that tennessee become the first day in the nation to offer all adults access to Community College free of tuition and fees. [applause] just like the tennessee promise, tennessee reconnect will provide scholarships for adult learners attenone of ourommuni colleges for free and at no cost to the state general fund. With the reconnect at, tennessee would be the first in the nation to offer all citizens, High School Students and adults, access to a degree or certificate free of tuition and fees, no firstcome first serve, all. [applause] ju as we did with tennessee promise, we are king alear statement to families with reconnect. Wherever you my fall in lifes iss lifes path, this critical to be who we can be. Ive had the chance to personally witnessed tennessees National Guard in action, whether in afghanistan, gatlinburg, helping those counties, communities recover from devastating tragedy. Tonigh we arannouncinghe tennsee stng act to provide tuition free attendance for these men and women at our public universities in college. [appuse] if we can help our soldiers and airmen who protect us at home and abroad, i know you agree we should do that. Why of you may be wondering spend some of its time and energy on education and Higher Education in particular . I know firsthand what a College Degree can mean to someone. Specifically someone who is the first in the family to go to college. My dad, who is here tonight, you thet have heard him, was first and his family to attend college and get his degree. The trajectory of his life and mine w chang forever. Anim being th im t alonn atanofoun is roo whe the firsterson your mi tatnd clege orour pants were t first the tennessee weekend it provides not only access to opportunity, but the tools to be successful. Good roads that take you to good jobs, Broadband Access to conduct and grow your business anywhere in tennessee at the speed of the 21st century, a highquality Education System that educates all. We can do that in tennessee. Beuse of t fisca responbility we he show the teessee we c be ishe a safe and Reliable Transportation network that supports longterm growth, one of the best k12 systems in the country, and free access to a degree for all tennesseans. Opportunity and potential career earnings offered by Higher Education arent derailed by student debt. And we can still be the state with the lowest taxes in it and the lowest debt. [applause] two months ago, i was with and car wellander after tornadoes had wh tough soheastern tnessee life h aea thrown challengesur w. Her dahter and soninlaw who live next door to her had just been killed in the storm. After chatting for a while and not at all intimidated by having a governor, two senators and a speaker on her front porch, she turned to us and said, all right, you folks go on back to washington and nashville and do what you are called to do. Ill take care of things here. [applause] that is a trupicturef a teessee and and how we address the challenges that only we can solve. Of one of thend tougher weeks of our state. We suffered a Tragic School bus crash in chattanooga, fatal tornadoes sweeping across our ate, and t her aect firing gatlinburg that will go down as the worst fire in a history of our state. In the midst of all that, i have never been more proud to be a tennessee in. We are truly still are the volunteer state. I can spend hours recounting stories of courage and sacrifice, thousands of state employees and caring citizens who only had one question. How can i help . [applause] thats who we are in that is the tennessee we c be. May god bless you and may god continue to continue to bless the greatest state in the land of the free. [applause] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2017] tayinep wl ate li dcuio wh ck ads. Tangou clstwts emlsndoufabo qutis. Estellf e ctul obmsf ariths tbyarndwa grte cnt ithisry t wld nk am ithauorf gdath gatest re ithfodean exute decr t fodaonoribtynd eran gatss, orniti dicedo ominamic exptnasm a cbang tiecni wldde wahdthor dth le nn 30 m. Nsn onhtonftwas,ad talkshow ht hugh hewitt talks about his latest book, the fourth way, the conservative playbook for a lasting gop majority. L gop what did the gop do to just to avoid just sitting on their power and make the most of their opportunity, which could be over in two years. It will all be swept away. There will be no trace of the obama presidency. Tonight at 9 00 eastern on afterwards. C new jersey governor