With you and we appreciate so much what youre doing the sacrifices youre making. Also you staying so close to your this guy is amazing. His exactly what the state needs right now. Hes been a key part. We go name is a team effort. There are three branches of government government. Were well represented. We have four of the five Supreme Court justices that serve our state here today including the chief justice a longestserving justice. Lets on our judicial court. [applause] [applause] we have a fabulous turnout of state legislators hear from across the state. These people served all of you not just when theyre in session but all year round. We could have all of them here today please stand. [applause] [applause] were also very fortunate to be able serve with a number of other very dedicated statewide elected officials. Theres a number of them here today. If we could have the auditor in the tax yes can stand and do that. [applause] and sa were fortunate to have within our borders five tribal nations that touch our state. Thinks that were working in a number of them have come from a number estates. We like to recognize them. Please stand. [applause] for me, i want to acknowledge the first lady of north dakota, catherine and joke jesse and tom were not here today but watching on some webcast somewhere. The first family, thank you for your support, its been amazing. [applause] i think youve learned in the last year where like to start is with gratitude it is such an honor for Brenton Catherine and i and our entire team in the Governors Office to serve all of you. It is an incredible honor to do that. What it all starts with 670 people in the state like something about north dakota and where you just cant help but love north dakota for its uniqueness and difference and everything it throws at us. Its a place we can love and we love the people in it. We love the roles that were in. We have a chance to make it difference every day. We have a chance to meet so many people in the past year. It doesnt matter if you agree or disagree, whether its from grand forks to golden valley, across the state meeting people who care deeply and are passionate about north dakota is what makes this place great. When youre in the positions here and the thing ive learned is that people want to share with their leaders. Asked the first lady, people will share with us their most tragic losses. Loss of Family Members due to overdose. People share their stories and struggles. But, the also share their successes and enthusiasm about what we can do and what our potential is. Everyone of these interactions gives us a chance to learn from the wisdom of the people in north dakota. Thats a great part of their job. Peel actually get stuff done when you learn things from what is happening. We have an opportunity to go to work and to do things and make things move forward. His have to be grateful because of the context of north dakota doesnt exist without the context of the United States. Twin the ticket as part of the United States where we have freedom of speech and freedom of religion and the right to bear arms in the right to assemble the freedoms that are not exist everywhere the world but they exist here and we should remain grateful for that opportunity. Also your free markets and the ability to take risk the resilience that we have is really about entrepreneurs and innovators. Striven our state since the beginning. As part of this idea that we get to make a difference in peoples lives every day. That everyone we work with. We want to bring that forward. Our administration is adopting a purpose statement. That simple. Power people, improve lives and inspire success. This is what anybody who works in State Government just to every day. Thats a fantastic way to spend your day. So if were just gonna wrap it up, if we would wrap it up the state of the state is one of the unlimited promise and potential provided that we embrace change. We need to diversify our economy. The first half of that sentence is absolutely true for our state. Unlimited promise and potential. The second half represents challenges that we have to Work Together collectively to overcome. If we do that the top half will be ours. Lets take a look at that. A year ago at the state of the state are honored to step in and serve in this role. To begin a journey that journey if you want to go back and watch it some people might like it better than this one. Thats the beauty of online recordings. We laid out important themes. We talked about the budget and property taxes. We talked about transforming education and the impact of addiction on individuals. We talked about improve travel relations in building stronger communities. Im grateful for the team effort that weve been able to tackle a number those initiatives. Those things that we talked about became the Strategic Initiatives were working on. Well grateful for everyone. Before we look ahead at the Strategic Initiatives lets take a quick look back at 2017. This was a year that brought challenges. Some for seen and someone for same. Consumed a lot of leadership time cross government to deal with the crisis that came out. The first one year ago not just on the front pages here but around the world was the protests around the Dakota Access pipeline project. This started peaceful and prayerful, they began with a powerful spiritual intent. There are incredible historical moments that occurred. But by the time we took office in december it evolved into something much different. Its important that we respect the right for people to assemble, respect the right of free speech. We also have to understand the people of north dakota. One of the first things we did in office was spent time listening on Standing Rock. Spent time in cannonball and met with ranchers only listen. Sometimes we listen for hours. Theres a great lesson that in the middle of conflict the power being able to be present and listen to truly understand some of the energy and passion. From that we learned and understood that Standing Rock wanted to have the protests camps closed. We worked in partnership with Standing Rock and across the whole of government approach. By the time the last protester left the camp 76 days after we took office engaged with 11 different federal agencies and had help from 22 states and 31 emergency jurisdictions. In total we are coordinating 175 partnerships to deal with something unprecedented in our history. One key thing that we have was to resolve it peacefully clean it up. Part of the original intention was about protecting the water where the camp was situated. This is before the historic snowfall started coming in on the righthand side you can see last july. We get this cleanup achieved before the spring melt and run off. We are able to keep over 10 Million Pounds of debris left behind in the camp from polluting and that would not have happened without a Great Team Effort from our union affair groups. The tribal groups that helped with this cleanup was a huge team effort. Theres more dialogue to be had about the future of infrastructure in our state in the impact of industries on the environment, we can have those dialogues in a peaceful way that this is a celebration where we came together and protected the environment. We are all on the clean water team. [applause] we knew when we took office the protests were occurring. What we didnt know the middle of the record snow where having was less than five minutes later we would be in the middle of the historic drought. This is the drought map from july 25 the darkest areas are exceptional drought, the red is extreme. You can see virtually the entire western half of the state was in severe, extreme, or exceptional drought. This led to economic challenges for farmers and ranchers. It required a response. Our approach was to get out and listen. Farm programs are complex this federal and state in different agencies involved, bureaucratic programs meant to help but might not be helping. We did that as a whole government. We had great partnerships, the north Dakota State Emergency Services and fire marshals delegates from the congressional offices were at these to represent the federal standpoint. We held these round Western North dakota and listened. Trouts dont make great frontpage pictures. Floods make Great Television because of all the water. The judge is something that eats away economically so there is serious stress i just economically but im families only went to these things like take care of yourself because the drought like this can terror communities and families apart. We came up with a number of ideas. We should ten executive orders which helped us in declaring the drought and fire emergencies we waived hours of service and established a livestock water supply program. If those of you who are not farmers and ranchers need to understand when we met people people normally wouldve had 1400 bales to feed their cattle during the drought were sometimes pulling less than 40 bales. Two or 3 to their normal crap they were getting. So people that were desperately in need we there had to get the cattle the feeder the fee to the cattle. One thing we partnered with was a hay lottery. Therefore 92 applicants were ranchers applied to do that. That program moved over 289,000 round bales to help save and serve over 126,000 livestock. We are able to provide almost 4. 1 million in assistance. That reimbursed about 36 of peoples cost. Everything helps when youre in the midst of a crisis. The state Water Commission worked on coming up with 1. 3 million each green dot represents rancher applied for project these are for new projects. Every green dot represents is building resiliency. These are permanent. The help provide permanent Water Supplies to pastors Going Forward. When you have that much drought yet up with fires. Theres over 430 wildfires the Western North dakota. Near record. The largest was the magpie flyer. 5400 acres burned. Many more fires that werent because sometimes the local Fire Department or the ranch gets it put out before they ask for help. Want to shout out the north state forster, larry who is the longestserving state forster in the country and also we need to share gratitude with the firefighters, nearly all of volunteers who are fighting the fires there often Farmers Ranchers and were five other hats. But they did a great fabulous job this year. Lets give them hand. [applause] the drought impacts not only affected livestock and people and communities, it affected wildlife which is part of the hunting and fishing culture. Economically there communities that depend on hunting revenue. License purchases were down there were way down, deer hunting also some stress there but we did have over 54000 deer permits issued. Its fabulous to live in a state that has the kind of Natural Resources we do if youre not taking advantage of it its another reason to live here. Challenges remain. We might think about drought but we still might have areas considered severe in the western half of the state is still considered moderate. Fear driver a school bus are going to your kids is game youre probably happy theres not snoring the roads but we are short of moisture and could find yourselves with challenges were state of extremes. Just seven years ago the incredible historic floods we have not forgotten about the 700 million in damage the 4700 structures that were there. Legislature has stood behind they committed over 178 billion through the Water Commission know to say congratulations to everyone there for achieving the record of decision for the army corps of engineers. Flight control continues to be a Major Initiative were continuing to charge ahead on that. On the other end of the state it has had significant flooding multiple times. Theres great progress being made there, fargo also received its federal authorization to pass the sales tax and to protect which would be the largest flood protection in the state. Its also protecting the sales and 30 of the open jobs and over 14 billion of Property Value would be protected, so record on many measures in terms of scope and scale of the project. That came to a halt with litigation to the state of minnesota. The entire project was stopped we agreed to get together form a task force. The head of the dnr ktel six meetings there held in fargo or morehead i get a chance to spend five full days with a neighboring governor. We should a final report we think we have a possibility to solve the issues in terms of maintaining federal authorization. Getting more the water off of minnesota theres about five problems are trying to solve. Was like riding horseback with the bow and arrow. Through all of that we believe we have a plan that should solve the problems. Will protect one of the most significant things in our region. Budget challenges rather everybody knew this coming in, legislature understood it, the prior appropriations have been 6 billion we did that with you spending down to a historic shift and we havent really had to drive through dollar amount is the hardest piece of work thats been done since the Great Depression we are also able to shrink government to maintain services that doesnt count Higher Education and budget employees going into this but were trying to work smarter we funded virtually all including funding could k12. If we dont diversify we end up being very dependent on things we can control. Egg and energy be in our biggest energies if we take a look at what we been through take a look at the price of corn. You can see theres a time when corn prices were high and you think theyre going to say hi forever but you can see the drop they went through and then they stayed though. The stayed though and it puts pressure on the state. From an energy standpoint the same thing. Energy prices are volatile. We havent approached our state that is all of the above. Were supporting wind. Oil and gas most of that is going towards transportation fuels. With the wind. Thats a power the grid. We didnt have the Coal Industries have some of the most reliable in the country. As renewable continues to goal the dynamics put pressure on the economics between the two. We have to sort that out as we go forward. From revenue standpoint to the state were dependent on revenue that comes from oil and gas. We had a huge drop from june of 14 we had a 70 drop in the price of oil and when you have this much volatility to figure out how to do your spending. While production is back up production is starting to climb up. Its very likely we could break our high that is absolutely positively due to the fact that this industry has figured out through technology and entrepreneurship to get the breakeven cost down. We have people investing in making money, for five years ago they needed prices at 80 or 90 to make money. When were doing things like truly more walls and has better economics some challenges we have related to workforce theres more activity going on in the state as we produce more oil we produce more gas. If we do that the we have to do more gas capture. That means gas lines and working at the state and federal level because the travel answer states will need to make sure were doing it to make sure capturing all the gas we want to capture revenue be invariable thats a challenge the legislators facing. Was 6 billion in oil revenue. That is trapped in half. Were projected to be about the same in this. We need to do about half the revenue that came in for this important source. The are the thing that made forecasting trick is that we had a huge runoff and sales tax. If you look from 2,922,013 it doubled. Oil activity dropped and prices dropped the sales tax revenue followed to a lower level. Created great challenges from the forecasting standpoint. Through great teamwork through the legislature able to release appropriations from 6 billion down to 4. 3. And to keep driving ahead on the important initiatives. The good news and bad news is that prior legislators have built up significant reserves across different funds which goes to schools and Budget Stabilization which is met for improvement funds in the general Fund Ending Balance likely the money in your checking account. So many tech to way. When the revenue strapped we had a time when revenues were less than what were spending and were able to keep the Government Services rolling with her savings account or reserve fund balances. The gray is where were projected. The balances will be lower in some cases. They were run almost to zero on the back up again. Were working our way back out of the situation. We are not riskfree. More work ahead for the legislature from appropriating standpoint to make sure matching expenses with revenue. Another great thing that all of you if you are of a voting age is that the creation of the legacy fund. It takes 30 of the total revenue drive from oil and gas puts it away into a fund for the future. Was 2016 the money grew and it was created by a vote of the people on the ballot by the legislature. And it just grew and met which piece on their worth 200 million they came from the funding of 4. 3 million. It will continue to grow through 2018. I would say that the stake out my position as i dont think we should be tapping the principle. When he spend the interest in earnings i like to think creatively about how to use the dollars to transform what were doing not just from the basic services and operations. We may have to use it again but certainly in all the people in your lifetime therell be an opportunity to use the legacy fund part of the challenge we have is to keep the ideas coming about what be impactful. And to have this as a potential tool. Despite cutting down from the six to the 4. 3 the legislature is very supportive and strategic on