 Thank you so much, Lieutenant Governor Stack, Speaker Terzai, President Skarnati, Leader Corman, Leader Costa, Leader Reid, Leader Dermotty, members of the General Assembly, and above all my fellow Pennsylvanians, oh also mom and dad back there, thank you very much. In January we gathered outside in the cold as I took the oath of office. Six weeks later I'm sorry to say that it's still pretty much just as cold as it was back then. So today I'd like to talk about something that we can control, our budget and the future of Pennsylvania. I'm grateful for the opportunity to discuss how we can ensure that Pennsylvania's future is as bright as our incredible past. As you know I campaigned on the idea that we need a new approach to governing Pennsylvania, one that challenges the status quo and takes on old problems in fundamentally new ways. And one of the old problems we need to put to rest is the idea that Democrats and Republicans cannot work together to solve Pennsylvania's problems. I believe we can. And that's why I've, thank you very much, and that's why I've made it a priority over the past six weeks to meet with just about every member of this body, both Democrats and Republicans. And I want to thank you all for sharing your ideas on the issues where we agree and especially on the issues where we don't agree. I learned as a business owner that you can disagree with people without being disagreeable and that on every issue if you're willing to talk there's a much better chance that you can find truths that both sides can share. As I said six weeks ago the people of Pennsylvania need leaders today who are willing to listen to each other, learn from each other, and work together to give all the people of this state a shot at a great life. That's the different kind of approach we need to take to move Pennsylvania forward. And that's why the proposal I'm unveiling today is a different kind of budget. It's a budget that reflects my conversations with many of you here today. It includes Democratic ideas, Republican ideas, and clearly ideas that exist beyond party lines. It's rooted in the values of fairness, inclusion, and common sense. It's a balanced budget and it eliminates our 2.3 billion dollar deficit. But above all, it recognizes that Pennsylvania will not improve until we rebuild the middle class. To give Pennsylvania the fresh start it needs to get back on track. The plan I'm unveiling today dramatically invests in schools that have been devastated by cuts to prepare our kids for middle class jobs. It cuts taxes to attract companies that will create jobs that pay middle class wages. It streamlines bureaucracy and cuts red tape to create a government that works. And it does so while cutting property taxes paid by the average homeowner by 50%. And reducing the total tax burden on average middle class families. These are some of the things I've talked about since I started running for governor almost two years ago. They boiled down to three big themes that I hope will define my time in office. First, schools that teach because for our children to succeed tomorrow every child must have access to a great education today. And teachers must have the resources they need to deliver a great education. Second, second jobs that pay because for our economy to begin humming again we need to be good partners with the private sector enabling it to grow and create good jobs that will strengthen our middle class families. And third, government that works because for our state to be great again we need a government that is more efficient less wasteful. One that restores faith in the fundamental notion that our democracy still works. We need a new approach. We need to question the decisions that got us where we are today. For example, why are we paying Wall Street managers hundreds of millions of dollars to manage our pension funds? That doesn't help our middle class. It doesn't help our seniors and it needs to change. Why is Pennsylvania ranked at the bottom in terms of job growth? Pennsylvania has the resources to create good jobs. We can do better. Too many teachers have been have left the classroom due to budget cuts. With us today is a teacher named Katie Beth Klinger over here. Katie along with her daughter. Now Katie was a teacher. Katie, thanks for being here. Katie was a teacher in the Reading School District where she saw the difference she was making in children's lives at a school district that was severely underfunded. But in 2011 she was part of a mass furlough. Since then she has not been able to return to permanent work. Katie just wants to help teach and help students who she saw making real progress before the education cuts. She is stuck with it. She has been a substitute at Reading School District and when people ask her why she doesn't change careers or seek a position in another school district, she says she can make a bigger difference in the city of Reading with the children who need help most. Katie is a single mother and the stress of not knowing whether she can count on a stable income from year to year has been weighing on her. We need more teachers like Katie in our schools. We need teachers like Katie who care to make sure that our students in Reading, in Philadelphia, in Lockhaven, in Tawanda can get the education they need to succeed in Pennsylvania. My budget puts teachers like Katie back in the classroom. It's just this simple. Thank you. Thank you. Thank you. It's just it's just this simple to create jobs that pay schools that teach and government that works. We have to do things differently. That is what this budget achieves. Let's start with schools. Our commitment to education is historic. We are starting with education because in many ways education is at the heart of everything else we want to achieve. When I ran a business, finding talented people with a strong education was my highest priority. It's what made my company competitive in the marketplace. A great system of public education will help Pennsylvania attract new businesses, retain talent and grow the middle class. We need schools that help teach our kids the 21st century skills they need to compete and win against kids from China and India and Germany. Over the past four years, Pennsylvania took a step in the wrong direction by trying to balance our state budget on the backs of our schools. It left us with 25,000 educators out of work. It forced 75 percent of our school districts to cut academic programs. It forced 70 percent of our school districts to increase class sizes. It left 56 percent of Pennsylvania students with no access to a full-time librarian. And it forced too many schools to cut art and band to pay for reading and math. My fellow Pennsylvanians, this is not a formula for success. We can do a lot better. It's just as simple. Our state is never going to get stronger as long as we make our schools weaker. And that is why the very first thing my budget does is to restore the $1 billion in cuts to public education that occurred under the previous administration. This is not going to stop at simply reversing the cuts that have already taken place. We can't, because the way things were before is not good enough. For too long, we have not paid enough attention to the fact that Pennsylvania ranks near the bottom of the country in state investments in kindergarten through 12th grade education. We need to change that. This budget increases our investment in public schools at every grade level. It also recognizes that our responsibility to provide a great education does not begin at kindergarten, nor does it end with high school. That's why my budget also expands access to early childhood education by increasing the number of children in pre-K programs by 75 percent. That's why we're increasing funding to community colleges by $15 million. And that's why we're restoring 50 percent of the cuts to our state system of higher education. But those improvements come with a string attached. In return for these increases, today I am calling on our institutions of higher education to freeze tuition. And I expect them to answer that call. These investments in higher education and community colleges will help prepare our young people for jobs that pay. However, our budget doesn't just spend more on schools. It also includes accountability measures to make sure that this money is spent on classrooms and not on bureaucracy. But that is not the only thing that makes this budget's commitment to education history. For the first time in more than 40 years, we are proposing to increase the state's share of funding for public education to 50. 50 percent. Let me explain. Let me explain. Today, the state contributes just over 35 percent of the total cost of public education. That ranks us far below the national average. Worse than Alabama, worse than Mississippi, worse than West Virginia. As a result, here in Pennsylvania, more of the cost falls on local communities, largely in the form of property taxes that disproportionately burden lower income homeowners and seniors living on a fixed income. Furthermore, Pennsylvania is one of only three states that does not use a funding formula to distribute education dollars to local districts. That means poorer urban and rural districts are not getting the help they need. The gap in spending between rich districts and poor districts has, as a result, exploded. Now, a bipartisan commission is developing, I understand, a fair funding formula to no doubt correct that. And so will my budget. The funding formula we are proposing would provide more money to every school district, which will help alleviate the burden on local property owners. But our proposal will pay special attention to those places where challenges are the greatest. It will ensure that education funds are distributed in a matter that is efficient, equitable, and transparent. It will help take favoritism out of the process because if we know anything, we know that school funding should be a matter of need, not politics. Instead, it will tie funding to specific factors such as district size, poverty levels, and student makeup. It will incentivize school districts to develop innovative programs that improve student achievement and hold down costs. I look forward to the commission's proposal. Together, we'll get this right. If Pennsylvania is going to be one of the best places to get an education, we can no longer afford to be one of the worst in funding our schools. We need a historic commitment to education, and we're making it today. Now, I'm sure that all sounds great, and many of you are probably wondering, how are we going to pay for it? You might hear me try. Thank you very much. Thank you. You might hear me talking about education funding and assume that that means your taxes are going to go up, but in fact, my budget actually reduces the total tax burden on average middle-class homeowners by 13%. So how will we do it? We'll do it with tax reforms that are smart, pragmatic, and fair. We'll do it with changes that will help eliminate the deficit, protect the middle class, and set the table for robust private sector growth. It starts by doing what every other major gas producing state has already done. We're going to place a severance tax on the extraction of natural gas, and we are going to tie the revenues from the tax to funding for public education. Officially, our plan is known as the Pennsylvania Education Reinvestment Act. I'm proposing a 5% severance tax that is projected to generate more than $1 billion in annual revenues. The impact fee dollars will be preserved and will continue to support communities where drilling takes place, but under my plan, while local communities will continue to receive funding to address the impact of the drilling, the rest of these funds will be used to invest in public education. This is not about politics or ideology. It's simply common sense. Natural gas production is growing faster in Pennsylvania than anywhere else in the country, yet we are the only major producer of natural gas, the only producer of natural gas that does not ask drillers to pay their fair share or provide a return on our resources. The fact is consumers in Pennsylvania are already paying a severance tax every time they fill up their tanks with gasoline. Only they're paying it to states like Oklahoma, to Texas, to West Virginia, and every other state with a tax on oil and gas drilling. Why should those states get our money without Pennsylvania getting some of theirs in return? So this isn't a partisan idea. It's a recognition that Pennsylvanians are right now getting a bad deal. We deserve to be fairly compensated for the use of our resources. The benefits of this change don't end there either. By shifting the cost of public education away from local districts, we're also going to drastically reduce property taxes. Now this is something that Republican House majority leader Dave Reed has championed, and many Republicans have supported it from all over the state. Last July, Leader Reed introduced a bill to lower school property taxes, and our plans share common goals and similar approaches. So this truly is a bipartisan effort. Overall my budget will reduce average homeowners property taxes by 50 percent, putting more than $1,000 each year into their pockets. This will ease the burden on low-income and middle-class homeowners, and it will bring some much-needed relief to seniors living on fixed incomes, some of whom have been forced to leave homes they have lived in their entire lives simply because they cannot afford higher property taxes. In fact, under my plan many senior citizens will see their property taxes eliminated altogether. My plan raises the personal income tax to 3.7 percent. Again the same rate that Leader Reed proposed, but less of an increase than what some other legislators have proposed, and it will make up for the loss of revenue by increasing the sales tax from 6 to 6.6 percent, while broadening the base to include services that are currently not taxed because special interest groups have lobbied hard for special exemptions. This is a similar approach to House and Senate bills 76, which have been championed by many Republicans and many Democrats. These changes will allow us to make a historic commitment to our schools in a way that is fair, more equitable, and more sustainable. Let's talk about improving our economy. As a business owner, I know that the free market requires a constructive partner in government. That means our government should not try to do everything, but it cannot do nothing either. One thing it can do to create more economic opportunity is to make smart investments in public goods that are strategic, not episodic. We need to do a better job of connecting our transportation systems, starting with our three world-class ports in Philadelphia, Pittsburgh, and Erie. This budget seeks to build on public-private investments created by Act 89 to turn our state into a world-class transportation hub to drive private sector growth. Another thing we must do is bring manufacturing jobs back to our state, and that's exactly what I plan to do. We've proposed the creation of a Made in Pennsylvania Cashback Jobs program for manufacturing companies that increase their annual taxable payroll by at least one million dollars to create solid middle-class jobs. They will receive cash payments of up to five percent of new taxable income the following year. And let's go one step further. In our grant and loan programs, we should give priority to Pennsylvania companies. We should, and we will. Now to grow our middle-class, our citizens must have access to the education and training that today's jobs require. That's why we're proposing to restore job training and apprenticeship programs at our community colleges. To help middle-class families, to help middle-class families make the transition to jobs in this new economy. In Pennsylvania, we're also blessed with an abundance of natural resources, of course gas, timber, coal, sun, wind, fresh water, open spaces, agricultural land, beautiful scenery, and an opportune location that makes us the Keystone State. Not long ago, we were one of the top wind and solar producing states in the country, using the green economy to create jobs. But we took our eye off the ball and fell behind. To fulfill our potential, we must take full and responsible advantage of these resources. Right now, we export raw products, like timber, to other states and to other countries, who then use those raw materials to create higher value products, like kitchen cabinets. This doesn't make any sense to me. Why can't we make those high value products right here in Pennsylvania? That way, that way we'll have both the resources and the jobs those resources make possible. We'll train Pennsylvanians to work in the shale fields. Pennsylvanians will manufacture the steel pipe and the tanks to transport and hold the gas and the technologies to clean the water. And here's the additional opportunity. With shale gas, we can offer affordable energy and we can provide the feedstock necessary in advanced manufacturing businesses. Our natural resources, our well-trained and well-paid workforce, our growing businesses, that's what my plan enables us to achieve together. If we want to be a state where the next generation can envision a bright future, Pennsylvania has to offer a level playing field where entrepreneurs can be confident their risks will be fairly rewarded. Workers have to be fairly rewarded too. The companies and countries that are thriving in today's global economy are those that are committed to diversity, to inclusion, and to fairness. All of Pennsylvania's families deserve those same opportunities no matter what their race, their sexual orientation, where they started life or who they are. Our state has also long believed that hard work should be rewarded. Yet a full-time worker earning minimum wage today makes about $15,000 a year for a family with two kids as below the poverty line. And about 20% of Pennsylvanians live on that edge every day. I strongly believe that nobody who works full-time in Pennsylvania should be forced to live in poverty. And that's why I'm calling on this legislature to raise the state minimum wage to $10 and $0.10 an hour. Thank you. Now you all know, you all know the company I build has a profit-sharing plan. It's because I believe that my employees deserve to share in the benefits of their hard work but also it makes my company better. Paying good wages is not just the right thing to do, it's also the smart thing to do. That is how we're going to grow this economy. But that's not all. If we're going to lead in the 21st century, we cannot do it with a tax code that takes us back to some of the worst decisions of the last century. Now, cutting the property taxes I described earlier will help reduce the burden on businesses, making it more attractive to locate those businesses in some of our towns and cities. But there's much more we need to do, which brings me to the corporate net income tax. Today, the corporate net income tax is 9.99 percent, one of the highest in the country. I find that appalling. That is driving jobs out of our state. At the same time, loopholes in that tax code allow many companies to avoid paying the state income tax altogether. Because of these loopholes, more than 70 percent of companies that do business in Pennsylvania do not pay corporate net income taxes at all. That forces more of the burden onto small businesses and families all across our state. In other words, the problem is not only that our corporate net income tax is too high, the problem is also that we're not even seeing the revenues that tax is supposed to generate. It's the worst of both possible worlds. My budget will close the Delaware loophole and cut corporate net income tax rate by 40 percent in the first year and by 50 percent by 2018. That will take us from one of the highest in the country to one of the lowest in the country. And it will incentivize companies to come here and create good jobs in Pennsylvania. It'll do that while also ensuring that corporations pay their fair share. Here's another thing. For 17 years, we've talked about phasing out the capital stock and franchise tax. Now we're going to do it. As of January of next year, there will be no more capital stock and franchise tax in Pennsylvania. See, we can't agree on certain things. That's great. Okay, let's talk about healthcare. At a time when healthcare costs are placing a burden on every state government, we are also going to expand the Medicaid program by accepting the funds made available under the Affordable Care Act. Also, we will restore a small amount of funding for health and human services at the county level for our most vulnerable populations. It's not a lot of money, but it's important money. By consolidating some of the programs launched by the last administration, our Medicaid changes make the program better and save more. The changes that I am proposing today, however, are not just about raising money. They're also about making government work better and making it work for everyone. Since my first day in office, my administration has been committed to government reforms that increase efficiency, reduce waste, and eliminate cronyism and corruption. Our government should be transparent and fully accountable. Taxpayers deserve to know how every penny is spent. That's why one of my first acts was to issue executive orders forbidding employees of the executive branch from accepting gifts. The just say no thank you policy. I also signed an executive order banning no bid legal contracts that have wasted millions of taxpayer dollars. We also also established the governor's office of transformation, innovation, management, and efficiency to find ways to streamline management and better serve Pennsylvania citizens. The new office will focus on improving coordination between agencies, modernizing state government operations, and seeking out partnerships where appropriate with the private sector. Right now, our state agencies are giving incentives, and this is an example, to spend every dollar. If they don't spend their entire budget, their budget will likely be cut the next year. That's perverse. It's short-sighted, and it needs to change. Instead, we're going to give state agencies incentives to save money. We expect these efforts to generate up to 150 million dollars in immediate savings and hundreds of millions of dollars over the long term. And we're looking at even more reforms to make the government more responsible and responsive to the people it serves. For instance, we're going to modernize state-run liquor stores and make them more consumer-friendly. We are going to make the state and municipal pension systems stronger. Believe it or not, as I mentioned earlier, our state has been wasting hundreds of millions of taxpayer dollars on Wall Street managers to handle state pension accounts. But studies have shown that simply investing this money in a safe conservative account would produce a similar return over the long term while eliminating these excessive management fees. So here's what we're going to do. We're going to stop excessive fees to Wall Street managers. We're going to improve retirement security for state workers. With these and other improvements, we're going to save taxpayers nearly 1.3 billion dollars over the next five years while creating savings of 10 billion dollars in the unfunded liability. Individually, these reforms aim to increase efficiency and eliminate wasteful spending. But taken together, they make big strides toward a larger goal, a government that works. Another part of government that works is restoring trust, and that's why I look forward to working with the legislature on other important reforms that will improve people's trust in government, things like campaign finance reform and redistricting reform. So this is a budget that respects and honors the great potential of this state and of our people. The ideas that I am proposing today represent a starting point, and we need to get started right away. Because today, Pennsylvania stands at a crossroads. We have a 2.3 billion dollar deficit. We have an education crisis and a sluggish economy. Our credit rating has been downgraded five times in a row, making us one of the least credit worthy states in the nation. And since the beginning of 2011, Pennsylvania has been near the bottom in the country in job creation. That's clearly not acceptable. Now I'm not here to assign blame or pretend that I have all the answers. The reality is times have changed, and ideas that may have worked in the past simply aren't working anymore. It's time to do something different and work together to get this state back on track. Our budget should be as bold and ambitious as Pennsylvania has been over the past 300 years. Today, I laid out my plan and I'm going to fight for it. And I recognize that some of you won't agree with all or parts of it. And I recognize that we're going to have a robust conversation. That's how our democracy works. But if you don't agree with my ideas, here's my request. Please come with your own ideas. It's not good enough just to say no and continue with the same old, same old. It's our responsibility to the people of Pennsylvania. That's our responsibility to the people of Pennsylvania. They may have voted for divided government, but they did not vote for gridlock or dysfunction. We have to find ways to deliver the solutions that we all promised. I want ambitious people, and I know we all do, ambitious people to see Pennsylvania as the best place to begin a career. I want them to have confidence that if they come here and take a risk, it will pay off. I ran for governor because I refuse to be part of the first generation of Pennsylvanians forced to tell their kids they need to go somewhere else to succeed. I know that we can get our state back on track because we still have all the qualities that make Pennsylvania so great. We still have the most innovative, resilient people anywhere. There is no reason why we can't have the best schools. There is no reason why we can't have the most dynamic economy. There is no reason why we can't have the strongest middle class. The idea of Pennsylvania is the idea that all things are possible, and if we work together, there is nothing we can't accomplish. Keep in mind we are the state that built America. Let us be the generation that rebuilds Pennsylvania. Thank you very much. May God bless the commonwealth of Pennsylvania.