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Gov. John Bel Edwards speaks Wednesday, March 29, 2017, flanked by La. Dept. of Revenue Secretary Kimberly Robinson, at a press conference to announce details of his tax and budget reform proposals for the 2017 Regular Legislative Session starting on April 10.

ADVOCATE STAFF PHOTO BY TRAVIS SPRADLING

Gov. John Bel Edwards State of the State: April 10, 2017 (as prepared for delivery).

Mr. Speaker, Mr. President, Members of the Legislature, my fellow Louisianans:

Good afternoon – and welcome back.

Before I get to the work we have ahead of us, I’d like you to join me in welcoming a few guests.

First, I would like to recognize the heroic efforts of a young Central High School student – Daniel Wesley – who came to the aid of a victim of domestic violence. One Sunday in late November, April Peck had just been shot in Baton Rouge, pushed out of a vehicle and left for dead on the side of the road. Daniel immediately took action. As he rushed to her aid Daniel was told by the shooter “if you help her, I’m going to kill you.” The aggressor shot Daniel twice and struck him with his vehicle not once, but twice. Daniel is now thriving after undergoing successful surgeries to address his injuries. I’d ask you all to join me in welcoming Daniel Wesley to the legislature today. I also ask that you keep April Peck’s family in your prayers as they continue to heal from her tragic death.

We also have another very special guest with us today. The past year has been filled with

heartbreak in our law enforcement community. None of us will ever forget that morning in July when an attack on our officers claimed the lives of three brave men and left three others injured.

Just last month, we lost another dedicated officer in the line of duty. January 7 was another day that could have ended in tragedy. Agent Tyler Wheeler, a Department of Wildlife and Fisheries Agent, was shot in the head during what he believed to be a routine traffic stop. Thanks to the skills of an incredible medical team and the prayers of so many people from all across the state, Agent Wheeler is able to be with us today. Agent Wheeler, we want to thank you and all of your brothers and sisters in uniform who risk their lives every day to keep us safe.

And now, we turn our attention to this legislative session.

This is only my second State of the State, but since last year, Louisiana has endured more trials than we could have ever imagined. Two historic floods and a series of tornadoes. The tragic shooting death of Alton Sterling followed by the cowardly attack on our law enforcement community. The eyes of the nation were on Louisiana. On top of that, the worst budget crisis in our state’s history was still lingering in the background.

But time and time again we have proven that there is no challenge too great for us to overcome.

The heart of Louisiana is its people. I saw that in the neighborhoods I walked following the floods and in the men, women and children who came together peacefully to pray for our state last summer. Those are the people we are here to serve.

We still have a long road ahead of us, and the path to success must be driven by putting the people of Louisiana first and to do that, we must work together. There is simply no other way to make Louisiana the state we all know that it can be. I refuse to allow governing the state of Louisiana to look anything like what’s going on in Washington. It’s not working for them, and it will not work for us. There is too much at stake for us to let partisanship get in the way and none of us should tolerate it.

In the Old Testament, Isaiah was dealing with a task similar to ours. His nation was at a crisis point. The old ways just weren’t working. Speaking with words he understood to be direct from the Lord, he said, “Learn to do good and seek justice, correct oppression, defend the fatherless, plead for the widow. Come now, let us reason together.”

Already, we have begun to reason together for the good of the people of Louisiana.

I ran for governor for the same reason I suspect many of you ran for office: because you want to make a real difference in the lives of the people of our great state. We are doing that right now in a number of ways, but the clearest example is our effort to create a healthier Louisiana.

You’ve heard me talk a lot over the past year about Medicaid expansion, but I cannot overstate how important this decision has been for our state and her people.

The numbers speak for themselves:

Nearly 417,000 individuals have received health coverage through Medicaid expansion.

More than 77,000 individuals have received preventive care services since coverage began July 1, many seeing doctors for the first time in years.

These numbers include more than 6,200 patients receiving breast cancer screenings, resulting in 88 cancer diagnoses, 7,500 colon cancer screenings, resulting in nearly 2,200 patients having pre-cancerous polyps removed, and nearly 1,800 patients being diagnosed with diabetes.

Louisiana’s uninsured rate has dropped from 22 percent in 2013 to below 12.6 percent - a nearly 43 percent drop in the uninsured rate. It is one of the greatest drops in uninsured rates in the entire country.

In the process of doing all of this, Louisiana is projected to save nearly $200 million in the first year alone, and we’re projected to save more than $300 million in the next fiscal year. That’s money we have to use to better fund critical priorities, such as TOPS and higher education.

But at the end of the day, it’s not the numbers that have made Medicaid expansion the right choice for Louisiana; it’s the people.

People like Monika Calderon from New Orleans. I expected to introduce you all to Monika today, a student University of New Orleans where she is studying music with hopes of specializing in music therapy. Back in October, she was battling through some pretty severe headaches. After passing out, she was referred to the emergency room at UMC since she did not have health insurance. There she learned that she had a brain mass, and would need surgery to remove it. The day before her surgery, she applied for Medicaid under the expansion. After the surgery, doctors shared that Monika had been diagnosed with glioblastoma, an aggressive type of brain cancer. She received Medicaid approval three days after her surgery. Monika told me that without Medicaid coverage she didn’t know how she would have paid for all the medicines and treatment she would need. Monika couldn’t be here today because her doctors scheduled a MRI, but her story is powerful in itself. These are the testimonies I hear every single day when I’m visiting with folks across the state.

Our state has reaped tremendous benefits from Medicaid Expansion. We are getting more people treatment, which doesn’t just benefit the individuals that make up those statistics, but their families too.

I want to recognize Dr. Rebekah Gee for the excellent way in which she, and her department, have handled Medicaid expansion’s rollout.

And our successes don’t end there.

The charge I mentioned earlier about reasoning together also noted defending the fatherless. I am proud to say that was a sentiment shared by many this past year. Thanks to the hard work of Secretary Marketa Walters and her team at the Department of Children and Family Services, 735 Louisiana foster children found permanent homes last year – the most of any year on record. Her team accomplished this feat despite the fact that the DCFS has faced deep cuts over the last several years, with fewer employees working longer hours.

We’ve also worked hard to make Louisiana a more attractive place to work and do business.

We live in one of the world’s leading destinations for new business expansion and relocation projects. We are defining what the 21st century economy looks like right here in Louisiana. All you have to do is consider the $21 billion in capital investments made in Louisiana over the past year to know that we’re creating a more vibrant, diverse economy.

Our guiding principle should always be promoting a Louisiana that works for the people. This is why we revamped our Industrial Tax Exemption Program so that local governments have a seat at the table. I have heard from many of you and the people in this state that we simply cannot give away taxpayer dollars without having accountability for results that bring good jobs to Louisiana. The reforms to the ITEP program have done just that. We ensured that any incentives would be tied to job creation and job retention so that both competition and incentives remain strong.

And as you all know, we have also been working to stabilize our budget while protecting critical state services. We were successful in protecting K-12 education and minimizing cuts to higher education and our safety net hospitals. We’ve ended the practice of dishonest budgeting and faced the harsh realities of our state’s budget situation. We’ve laid the foundation for necessary long-term reforms that we all agreed we needed last year when the Legislature created the task force to study the state’s budget and tax structure.

Well, the day for the long-term reform we all know is needed has arrived. It is by far one of the most critical missions that we have as leaders of this state.

As you are all aware, Louisiana faces a more than $1.3 billion fiscal cliff on July 1, 2018 – a point when a significant amount of revenue disappears and expensive credits and rebates return to their full amounts, rather than the reduced amount they are currently operating under. On top of this cliff, the state is $440 million short of the revenue we need to fund the priorities our constituents have asked for – such as TOPS, improved roads and bridges and better funding for K-12 education.

This is the big moment. The structural deficits have gone on for far too long. The resistance to doing what is right and necessary to fix this problem once and for all is no longer acceptable.

Last year, you created a task force that spent months studying the most responsible way to reform our tax and budget structure. What we found from this review is that the options are no easier, or even substantially different, than the ones we have considered in the past. There are meaningful reforms recommended by the task force that we all should consider. So first, let me tell you – I fully support the task force’s recommendations for structural tax reform. Many of the recommendations of the task force were the very same solutions I proposed last year, and if we do not summon the courage to make bold changes now the problem will not get fixed, and these same options will be on the table again in the very near future. These recommendations are the clearest path to eliminating the deficits that have plagued our state year after year.

However, many of you have suggested that several of the task force’s primary recommendations simply are not achievable and that you will not support the plan.

So now we have a choice. We can simply go down the same road we have travelled time and again – hoping for different results. Or we can chart a new path. A path that broadens our tax base, reduces tax rates, and reduces and eliminates wasteful credits and exemptions. A path that achieves stability, predictability and fairness.

As you know, I’ve proposed a detailed, comprehensive plan that will provide the stability and predictability we’ve been lacking in Louisiana, while still incorporating many of the

recommendations proposed by the task force.

We can drastically reform the way we budget each year by withholding 2 percent of the revenue forecasted by the Revenue Estimating Conference to address our emergency needs in times of disaster and to avoid mid-year cuts. This has never before been done in Louisiana. While I will not accept a proposal that implements this policy in the fiscal year, we should all support this reform and allow its implementation only when the state’s revenues are stabilized and sufficient.

As a guiding principle, I have proposed that we move forward with the elimination of the fifth penny of sales tax as scheduled July 1, 2018, clean the remaining pennies, and model our sales tax structure utilizing best practices from other states. In addition, I am asking you all to give 90 percent of the citizens of Louisiana an income tax cut, and simplify the corporate tax structure by reducing the current five corporate income tax rates to three lower rates. Both of these shifts would be in exchange for eliminating the deductibility of federal income taxes – a practice that is only used in three other states, and is most beneficial to higher income earners.

The most significant part of this plan is in response to a problem we should all acknowledge – that our corporate income tax structure is broken. It is far too unstable, and is laden with credits, exemptions, and deductions that put too much of the burden of funding critical state services on individuals. If there are those of you that disagree with that premise, then I challenge you to defend what I am about to tell you. In fiscal year 2015, 80 percent of Louisiana corporations did not pay any state income tax. For C corps, those businesses that are taxed at the entity level, 80,000 out of 101,000 did not pay any income taxes. That means a CEO’s administrative assistant at some of the most profitable corporations paid more in state income tax than the companies they work for. That’s just not right. Basic fairness demands that we do better.

My proposal will ensure that those 80,000 C corps that pay no income taxes do their part – just like that administrative assistant does. The Commercial Activity Tax – or C-A-T as many of you have heard so much about – is based on gross receipts, but will be a minimal graduated amount for businesses with gross receipts of less than $1.5 million. Corporations with receipts of over $1.5 million will pay [point] 35% of their gross receipts.

For all other businesses in Louisiana - S corps, LLCs and partnerships, there will be no

percentage tax. These entities will instead be assessed with a set and graduated tax, based on their gross receipts. For example, if a gas station in Chalmette runs as a LLC and has gross receipts of less than $500,000, their income tax - the M-C-A-T – would only be $250. A doctor’s office in Shreveport with gross receipts of $2.5 million would pay $1,500.

While these taxes on “flow-through” entities, as they are called, would be new, they would also be fixed and minimal. It’s to ensure that these businesses only pay their share for using Louisiana’s roads and bridges, for having their employees educated and trained in our schools and universities. This broadens the base of our business income tax system to ensure that everyone pays their fair share.

As I have said to you all in announcing this plan, I am open to dialogue. I am open to

compromise. I am certain that we can find common ground on this issue because we have to.

However, here we are – nearly two weeks since I unveiled this plan– and not a single alternative has been made. In fact, in the 14 months I have been in office, only a minimal amount of cuts in services beyond the over $500 million I have put on the table have been made by the legislature.

Criticism is only as valuable as the input and action that follows it, but we have seen very little constructive input and no constructive action. That’s just not helpful.

We cannot continue down the path we are currently on. It’s unsustainable for our state. And we can’t keep moving the goal post because it’s politically advantageous.

If there’s a better idea out there – let’s see it. Don’t hide it. Let’s debate it.

A lot of folks are fond of using buzz words such as "less government," "cut taxes," "do more with less," "tighten our belt," "less revenue," and "we must reduce the size of state government."

I'd be willing to bet that a majority of you sitting here today have said one of those things in the past. And they are all fair statements. In many cases, I agree with you. We all want lower taxes and a more efficient state government. But when you make those sorts of statements, you're only telling half the story if you don't follow them up with the next piece of the equation which spells out the exact consequences of what you mean - exactly what you intend to cut. What college or hospital you want to close. What road in your district you'd rather not see built or repaved. Or, perhaps, the pediatric mental health program in your community that you want eliminated.

Because, you see, when you repeatedly make those statements, without addressing the

consequences to peoples' lives, you simply turn them into political sound bites. And ladies and gentlemen, we cannot deliver critical state services on political sounds bites.

I traveled this state over the last month holding meetings where every single member of this body was invited to attend. Most of you did. We’ve got to have a serious conversation about how to move this state forward. Then we must act. If not, the people of Louisiana are going to have some tougher days ahead.

Now, you have the option to choose. Accept the recommendations of the task force, accept the alternative proposal I have laid before you, advance your own plan or be willing to endorse specific cuts that will be necessary and vote for them. But, you will be responsible for defending those cuts to our constituents. My plan, as outlined, will allow us to make the necessary investments to fully fund TOPS for our young adults, will help better fund critical transportation priorities and provides further resources for K-12 education.

To be clear, I will work with you to strategically make further budget cuts so long as our critical priorities are adequately funded. That will be impossible, though, if we do not responsibly address the fiscal cliff that is looming.

With all the tough choices that need to be made this session, I understand how it might be easy to delay addressing the needs of our neglected infrastructure. But as governor, and even before then, I made a promise that we would get serious about improving transportation. This year, we put trust back into the transportation trust fund by only using infrastructure dollars for their intended purpose. We changed the way we approach Capital Outlay so that it is more realistic and transparent and less political. We worked incredibly hard to secure federal funding – bringing your federal tax dollars home - to chip away at our $13 billion backlog of projects.

And now, we have a comprehensive report from the transportation task force on how we can maintain our existing system while investing in projects that will keep Louisiana competitive.

The buck can’t stop there. Louisiana is ranked last in the nation for state investment in

transportation. One of the problems is that the value of our gas tax has plummeted over the years. There has not been an increase in state fuel tax revenue since 1989, resulting in a 56 percent reduction in buying power from inflation alone. We’ve got to restore the value of our gas tax if we expect to make any headway on improving our infrastructure. Otherwise, we’ll continue to lag behind and our roads and bridges will be clogged with traffic congestion. Over the coming weeks, you will have the opportunity to consider many of the task force’s proposals.

Secretary Shawn Wilson and his team have crisscrossed this state soliciting input on how to improve our infrastructure. I urge you to take a serious look at what we can do to better invest in our state’s roads, bridges and ports going forward.

One of the easiest decisions you can make this session is passing the 2017 Coastal Master Plan and the Coastal Annual Plan. We are in a race against time to save our coast, and the difference between success and failure lies in the quickness of our response and the boldness of our actions.

This plan meets our challenges head on.

As all of you know, I’m also asking that we work together to make Louisiana smart on crime.

You don’t need me to tell you that what we’re doing now is not working for our state.

Louisiana has the highest incarceration rate in the country, and we lock people up at a rate of nearly twice the national average. As I have said time and time again, it’s not because Louisiana’s people are more sinister than citizens of other states. We know that’s not the case--- our crime rates are comparable to other southern states that have lower incarceration rates.

As citizens, we have a responsibility to uphold the law or live with the consequences for failing to do so. But as elected officials, we also have an obligation to acknowledge when an aspect of our government is broken and we must work together to find a solution.

In 2015, we made a commitment to re-engineer our criminal laws. It is an initiative that began before I assumed this office – but it’s one I believed in and supported while I was sitting right where you’re sitting. We have known for years that affecting real change to Louisiana’s approach to criminal justice would require extensive research into how we classify crimes, especially non-violent crims, and what we tell judges about how to sentence offenders, and also exhaustive discussion about how we can actually accomplish change and enhance the safety of our citizens. The Task Force we created has completed the most comprehensive study of sentencing and corrections practices the state has ever seen.

The recommendations they have provided us are largely modeled after what has worked in other conservative states. This includes cleaning up our criminal code and safely broadening probation eligibility within the discretion of the probation and parole board. Their recommendations, significantly, also call on us to strengthen community-based alternatives to prison, address barriers to successful reentry that have long been ignored, and reinvest savings into practices and programs that we know will reduce recidivism and support victims.

If adopted into law, this package will safely reduce our prison population by 13%, and it will save taxpayers over $300 million over the next decade – savings we can reinvest into our efforts.

That last part, reinvestment, is very important. We spend a lot of time talking about the length of a prison sentence – as well we should. But what we don’t focus on enough is how that sentence is being spent. When we give prisoners the resources they need to turn their lives around before returning to society, we do more than just reduce recidivism. With proper resources, education and support, we give offenders a better chance of successfully contributing to their community once they get out of prison and we ensure there would be fewer victims of crime in the future.

Finally, I urge you to act on the wishes of an overwhelming majority of Louisianans by

supporting equal pay and raising the minimum wage.

Louisiana has the highest gender wage gap in the country with women making only 66 cents for every $1 a man makes. It’s a simple and unassailable idea – pay a woman, who has the same job and similar qualifications, the same you would pay a man. I’m the father of two daughters, and many of you are as well. Wouldn’t you want your daughter treated fairly for her hard work.

Yes, it’s a fairness issue, but it’s also a family issue. When a mother goes to the grocery store to buy a gallon of milk, it doesn’t cost 33 percent less because she is a woman.

The legislation I am proposing would help eliminate pay secrecy by prohibiting employers from taking actions against employees for inquiring about, discussing or disclosing their wages or another employee’s wages.

Let’s truly put our citizens first by making a modest but meaningful increase to the minimum wage.

Louisiana is one of only five states that have not adopted a state minimum wage. Forty percent

of Louisiana working families do not earn enough to cover basic monthly expenses. It’s time – no, past time – for us to change that. What we’re proposing is to increase the minimum wage to $8.50 over a two year period. It’s a simple change that will produce countless benefits.

Mark Twain once said, “The Mississippi River will always have its own way; no engineering skill can persuade it to do otherwise.” Engineering feats have certainly come a long way since Mark Twain’s day, but that sentiment remains the same for us today. Over the past year, we’ve faced a humbling reminder of the power of Mother Nature. There will always be factors we can’t control, challenges we can’t predict – that’s part of what has made our faith so strong.

But here in these chambers, we do hold the power to shape our future. Washington has become too much like that river – stubborn and set in its own ways. It doesn’t have to be that way here in Baton Rouge.

Louisiana’s uniqueness has always been our greatest source of strength. We are unique in our culture; we are unique in the natural resources God has blessed us with and the challenges that represents. Can’t we also be unique in the way we govern?

I believe that the people of Louisiana who put us here in the first place, expect more of us than business as usual. They expect us to be as strong, hardworking, innovative and courageous as they are – even in the face of great challenges. And just like in the book of Isaiah, they expect us to reason together. They deserve a government that reasons together. We simply cannot waste this opportunity to join together.

If we don’t, we’re going to end up right back here with a needless and costly special session where the options won’t be any better than they are now. Both you and I have a shared goal for our state, but too often, politics and partisanship blur the path that gets us to that goal. I have been, and continue to be, willing to work with everyone to ensure we do right by the people that sent us here, but that is only possible if we leave the cynicism at the door and look past the next election. We can get the job done right – we have to – and I am ready to partner with you all to see that we do.

God bless you all, and God bless the great state of Louisiana.

Follow Elizabeth Crisp on Twitter, @elizabethcrisp.