FULL TEXT: SC Gov. Nikki Haley State of the State address | The State

Mr. Speaker, Mr. President, Ladies and Gentlemen of the GeneralAssembly, Constitutional Officers, and my fellow South Carolinians:

This and every year, we will continue the tradition that recognizesthe certain truth that everything we have in this state and thisnation we owe, first and foremost, to the men and women in uniform whobravely serve on our behalf.

So now, please join me as we pay tribute to those who gave the lastfull measure of devotion in the service of their state and countrythis past year:

Chief David Lee Crenshaw, Pendleton

Sergeant Channing B. Hicks, Greer

Sergeant John D. Meador II, Columbia

1st Lieutenant Ryan D. Rawl, Lexington

Master Cpl. Sandra "Sandy" Rogers, Aiken

Private First Class Adam C. Ross, Lyman

Sergeant First Class Matthew B. Thomas, Travelers Rest

On behalf of all South Carolinians, to their families, know we willnever forget.

We love and respect our men and women in uniform here in SouthCarolina – few things make me as proud as the level of patriotism thatjust radiates off our state and her people.

When I make that call to the families who just lost a loved one, Ipromise them that the people of South Carolina will wrap their armsaround them and never let go.

And the citizens of this state have never let them down.

A wonderful example of that is the 4,150 volunteer members of theSouth Carolina Patriot Guard Riders.

You’ve all seen these selfless men and women – whether you know it or not.

Their mission is two-fold: to show their sincere respect for ourfallen heroes, their families, and their communities, and to shieldthe mourning family and their friends from interruptions created byany protestors.

They do it magnificently.

Please join me in extending a warm South Carolina thank you to BruceBallou, the State Captain of the South Carolina Patriot Guard Riders.You make our state so proud, and may God continue to bless you andyour volunteers for their service.

We have another very special guest with us tonight, a hardcorerockstar, Brigadier General Lori Reynolds, the commanding General ofone of the greatest military institutions that’s ever existed: theMarine Corps Recruit Depot, Parris Island. If you don’t believe me,tour it yourself – but take my advice, don’t mess with this General.

The Marine Corps has been at Parris Island since 1915 and has trainedthere for every major conflict of the 20th and 21st centuries. We areso proud of our Marine Corps, so proud that the most impressive Marinetraining facility in the world is located right here in SouthCarolina, and so proud that General Lori Reynolds now calls thePalmetto State home.

I’d now ask you to indulge me in a brief moment of personal privilege.

When we as a family started this Administration one of the biggestchallenges was moving into a house that was, more than anything, amuseum.

A wonderful, beautiful, historic building but a museum nonetheless.And so as a mom my biggest challenge was to make that house into ahome for all of us.

We were blessed to have a mansion family that welcomed us andunderstood the games our kids would play by putting wigs on statues,giving each member of the security team a nickname, and playing jokeson the staff constantly.

We love them all. But there was one person that blessed our lives ina way that no one else could.

He did the same for the Hodges and the Sanford families.

He did the same for many of you.

Chamberlain Branch became a staple of the Residence, not for the jobhe did but for who he was.

He greeted many of you and other South Carolinians in a way that wasGodly and unforgettable.

He made everyone feel special and welcome.

Most importantly, to this mom, he was the person my children couldn'twait to see when they got home and the one who truly turned that houseinto home for us.

Our family was blessed by his unselfish kindness to our children andeveryone he came in contact with.

By now you all know that Chamberlain was tragically killed in Decemberand our hearts remain broken.

Chamberlain has three young children – Chyann, Little Chamberlain, andChaniya – who were staples running around that house, and we areblessed to have with us tonight his amazing wife Cherisse.

Please join me and the Hodges and Sanford families in recognizingCherisse, and saying to Chamberlain Branch, one of the kindest, bestmen we ever knew, that while you will forever be missed you will neverbe forgotten.

I also have the pleasure of being humbled by two little ones whoremind me how cool it is to be their mom every day.

Whether it’s getting them up and out the door every morning for school– sometimes fighting about what to wear or whether to go to school atall – or them not having a care in the world about me being on tv,they have a way of making me remember what truly is important in thislife.

They put up with a lot but never lose the smiles on their faces, soplease join me in welcoming Rena, who still loves to dance and Nalin,who still has a passion for the game of basketball.

Of course, our family is clearly missing someone tonight.

Michael is not with us as he has deployed with the South Carolina ArmyNational Guard ADT 49 to Afghanistan.

We miss him terribly but he is doing exactly what he signed up to do –serve his country. He is excited to answer the call, and his only askto me was to remind our state and country that we are just one ofthousands of families that share the bond of knowing military service.

Michael, Rena, Nalin and I thank you for the many prayers and messagesof support that have been sent to our family. It has given usstrength and inspiration. And we look forward to having him and hisentire unit back safely with us next year.

Ladies and gentleman, the state of our state is productive – in spiteof the challenges that come our way.

The last half-decade or so has not been an easy one for our nation.Through the financial crisis and the deep recession that followed, wehave watched Washington flounder on both sides of the aisle, bouncingfrom one so-called solution to another.

The result of our federal government’s incompetence has beenpredictably poor: a stagnant recovery, listless jobs numbers, risingunemployment.

The opposite has been true in South Carolina over the last two years.31,574 jobs announced. Over $6 billion in new investment.Unemployment at a four-year low.

And two 11-win football teams.

Coming into office, I made a promise to the people of South Carolina,a promise to eat, sleep, and breathe jobs in our state.

We have all the tools to be successful.

A beautiful state, a place where any person would want to live, workand raise a family. A loyal, dedicated workforce with a burningdesire to learn and a work ethic to match. And one of the lowestunion participation rates in the country.

We needed to let the nation, and the world, know that South Carolinawas open for business. Show them the positives of our great state,and the progress that we have made as a state and as a people.

And we have.

In two years, we have announced new jobs in forty-five of SouthCarolina’s forty-six counties.

We’ve announced more than 6,300 new jobs to rural areas of our state.

We’ve cut taxes on small business – and special thanks to ChairmanBrian White and Rep. Tommy Stringer for their fight to make thathappen.

We’ve passed tort reform that, for the first time ever, puts a cap onlawsuit damages.

We’ve fought against the unionization of South Carolina, cherishingthe direct relationship between our companies – who know how to takecare of those that take care of them – and their employees.

We’ve, through Lillian Koller and the Department of Social Services,moved more than 14,000 families from welfare to work.

We’ve created an Agribusiness partnership to showcase the largestindustry in our state.

We’ve been awarded, for the second consecutive year, a Gold Shovel inrecognition of our economic development successes.

We’ve been ranked as the second best state in the nation as a place todo business. But as Secretary Hitt knows, we aren’t going to stopuntil we’re first.

We’ve announced $5 billion in foreign investment.

And we’ve seen no less an authority than The Wall Street Journal saythat, “Anyone still thinking the U.S. has lost its manufacturing chopshasn't been to South Carolina.”

South Carolina is truly becoming the “It” state when it comes toeconomic development and job creation – not just in the United States,but worldwide.

With us tonight are a number of people who are proof positive thatwhat we are doing is working, and I’d like to ask you to help mewelcome these wonderful friends of South Carolina.

To those whose names I call, please stand and remain standing. Andplease hold your applause until the end.

- Representing 500 jobs in Anderson and Lexington Counties, fromMichelin North America, Inc., Richard Kornacki

- Representing 126 jobs in Georgetown and Williamsburg Counties, fromAgru America Inc., Vicky Thornton

- Representing 124 jobs in Union County, from Belk, Inc., Dave Penrod

- Representing 100 jobs in Colleton County, from SarlaFlexIncorporated, Krishna Jhunjhunwala

- Representing 1,000 jobs in Lancaster County, from Red Ventures, Mark Brodsky

- Representing 200 jobs in Berkeley County, from Nexans, Cam Dowlat

- Representing 80 jobs in Florence County, from McCall Farms, Inc., Henry Swink

- Representing 750 jobs in Richland County, from WNS North AmericaInc., Reese McCurdy

- Representing 190 jobs in Chesterfield County, from Schaeffler GroupUSA Inc., Bruce Warmbold

- Representing 50 jobs in Bamberg County, from Tobul Accumulator,Inc., Jim Tobul

- Representing Honda of South Carolina Manufacturing, Inc., BrianNewman, in celebration of the fact that they just produced their 2.5millionth ATV.

- Representing Fujifilm Manufacturing USA, John Ueno, in celebrationof the 25th anniversary of Fujifilm being in Greenwood, SouthCarolina.

Please join me in showing our support to these great friends, old andnew, and thanking them for making South Carolina their home.

And as if we didn’t have enough to celebrate last year when Condé Nastnamed Charleston the best tourist destination in America, this yearwe’ve topped ourselves, as our beautiful Lowcountry city was named thenumber one tourist destination in the world.

Representing the Charleston Area Convention and Visitors Bureautonight is Helen Hill, who along with the hospitality industry, ourown people at PRT, and most importantly the citizens of Charlestondeserves a round of applause.

I’m also of the mind that when any South Carolinian succeeds, it’s agreat day in South Carolina. And we should all be exceptionally proudof a great friend to this state and a proud Clemson Tiger, Dr. LouisLynn.

In 1985, Dr. Lynn founded ENVIRO AgScience, Inc., and his successesand contributions have not gone unnoticed. This past year, the UnitedStates Department of Commerce gave Dr. Lynn the Ron Brown Award as thenation’s Small Business Person of the Year. Congratulations, Dr.Lynn.

That the companies represented here tonight chose South Carolina to betheir home is a tribute to the kind of state we have right now.

But we can absolutely do more.

And we will do more – because none of us should be satisfied untilevery person in South Carolina has the opportunity to find work.

First, we cannot rest on our laurels when it comes to our tax rates.

You’ve long heard me say that South Carolina needs to reduce our taxburden every single year. Never has that been more important thannow, with our citizens opening their paychecks this month and seeingthat, low and behold, Washington’s tax hikes on the rich somehow gotthem too.

This year, I propose that we eliminate the six percent tax bracket.

This reform cuts taxes for the overwhelming majority of people who payincome tax, and not a single South Carolinian will pay more.

Other states have seen the successes we’ve had in South Carolina andare nipping at our heels. Look around the nation and see all thegovernors, the legislators, the states that are proposing slashing oreven eliminating their income taxes. We have to keep up.

Second, we need to take a serious look at our regulatory environment.

If government is costing a business time, then government is costingthat business money.

And while the legislature convenes annually to look at new legislationand regulations, I know of no joint legislative and executive effortthat comes together to look at removing regulations that stymie theprivate sector and hold our economy back.

That changes this year.

Tonight I am announcing the formation of a Gubernatorial Task Force,largely to be made up of members of the business community, that willreview regulations and recommend those that can be eliminated.

Some changes can and will be made at the agency level – which is whyone of the appointments I make will be the Chairman of Commerce’sSmall Business Regulatory Committee, Dan Dennis, and why I will bedirecting by Executive Order all of my agencies to begin this reviewprocess.

But some may require legislative action, which is why I am asking youto join me in this effort and inviting Majority Leader Peeler,Minority Leader Setzler, Majority Leader Bannister, and MinorityLeader Rutherford to each make an appointment to the task force.

It has always been my belief that the best way to recruit newbusinesses in our state is to take care of the businesses we alreadyhave – and that with the business community as our biggestcheerleaders, there is nothing we can’t accomplish in the great stateof South Carolina.

Third, we have to address our crumbling infrastructure.

Our roads, our bridges – they simply aren’t up to standard. More than1,000 of South Carolina’s bridges are either load-restricted orstructurally deficient.

First and foremost, it’s a public safety issue. The citizens of SouthCarolina deserve to drive on roads that aren’t littered with potholesand on bridges they know won’t fall down.

It’s a core function of government. But it’s also an economicdevelopment issue.

South Carolina has announced our self as the new superstar of Americanmanufacturing.

We build things.

We build planes.

We build cars.

We build tires.

We build more ATVs than anywhere else in the world.

We need roads and bridges that match the quality of the companies thatmanufacture in our great state.

And we will get them.

But I will not – not now, not ever – support raising the gas tax.

The answer to our infrastructure problems is not to tax our peoplemore, it’s to spend their money smarter.

Why would we raise the gas tax to improve infrastructure when all thegas tax dollars we currently collect don’t go to improving ourinfrastructure?

Millions of dollars each year in gas tax revenue are being divertedaway from our bridges and our highways. Let’s change that.

And then let’s invest more of the money we already have into this vital area.

Every year you hear me talk about the “money tree” that falls duringsession, whereby new dollars appear above and beyond what wasavailable when we balance our budget in December or January.

Let’s prioritize that money differently this year.

We’ve released an Executive Budget that is balanced, funds the corefunctions of our government, strengthens underfunded needs like mentalhealth and law enforcement AND identifies an estimated $90 millionthis year for road and bridge improvements.

Let’s follow that blueprint. We can make our state safer – and ourbusiness climate even more dynamic.

With us today is Warden Mike McCall, one of the unsung heroes of SouthCarolina state government. Warden McCall runs Lee CorrectionalInstitution – one of our most dangerous prisons, housing the worst ofthe worst of our convicts.

As a legislator, it was always my belief that giving money tocorrections was giving money to criminals, and that there were better,more noble places our tax dollars should go.

Warden McCall will tell you that’s not true.

Twice in the past year, the Warden has had the prisoners take controlof parts of his prison. He has seen one of his guards viciouslybeaten and left for dead in a janitor’s closet.

Yet Lee Correctional has no towers, no wands, and few cameras. I’vebeen there. I’ve seen it.

Warden McCall will tell you that if we give money to his facility it’snot going to the prisoners, it’s going to the guards. And that forthem, it’s a matter of life or death.

Join me in thanking Warden Mike McCall – and then join me this budgetyear in helping to keep him, and all our prison guards, safe andsecure.

Of course, we can’t talk about security in South Carolina withouttalking about the Department of Revenue and the protection of thepersonal data of the people of our state.

Plenty has been said and written about the international criminalhacking that took place at DOR – I’m not here to rehash that or tolook backwards, except to say this: when it comes to data security,the state of South Carolina should have done better in the past andwill do better in the future.

That does not mean that we will be 100 percent protected. Thetoughest lesson I have learned is that in today’s world there is nosuch thing as absolute security. That is true for conventionalterrorism and homeland security threats, and it is true forcyberterrorism and cybersecurity threats. It’s a hard reality, butreality nonetheless.

What it does mean is that we will do everything we can to make surethat no state in the country has better security measures in placethan we do.

Already we have taken a number of steps in that direction at theDepartment of Revenue.

We are encrypting all personal and sensitive data.

This month we will have completed implementation of two-factoridentification for DOR employees.

We are segmenting our networks to make sure that our most sensitiveinformation is protected separately and securely.

We have created a Security Council within the Department, a team ofprofessionals that will meet regularly to discuss the state of oursecurity in this changing world and constantly update our processes.

And we have changed the organization of the Department so that theChief Information Security Officer reports directly to Bill Blume, thedirector of the agency.

By the end of this process the Department of Revenue’s data will be assecure as any data in the private or public sector.

But it’s not just DOR that requires our attention. In October I askedInspector General Pat Maley to review the IT standards and practicesacross state government.

His report made clear the following: while cybersecurity policies werecarried out on a near-daily basis in almost every agency, SouthCarolina lacks a single entity with the authority necessary to bettersecure our systems.

We must fix that, and fix that this year.

I have also directed every single cabinet agency to work with ourstate IT department to make sure that twenty-four hours a day, sevendays a week, fifty-two weeks a year, our systems will be watched.

These measures are not cost-free, but they are necessary, and I wantthe thank Chairman Hugh Leatherman and Chairman Brian White for theirhelp in enabling the state to respond forcefully to this attack.

My ask to you tonight is to ensure that it’s not just cabinetagencies, but every agency in state government that is working withour state IT department to provide our citizens the security theydeserve.

To date, more than 1.1 million of South Carolina’s citizens andbusinesses have signed up for credit protection, either throughExperian or through Dun and Bradstreet.

They are good, honorable companies who will help keep our informationprotected and at the same time be respectful to the citizens of SouthCarolina who have turned to them in our time of need.

So to every South Carolinian watching tonight, let me say this: if youhave not signed up yet for protection, if your parents have not signedup for protection, if your friends or your coworkers or your neighborsor your siblings have not signed up for protection, please, pleaseurge them to do so.

It is so important. Please visit: www.protectmyid.com/scdor and usethe activation code SCDOR123.

There is no question that what happened at the Department of Revenuewas a jolt to all of us. My pledge to the people of our state is thatas with all crises, all challenges, we will do everything in our powerto come out the other side stronger than before.

We’ve come now to the portion of the evening that may feel to somelike déjà vu. Restructuring.

Few of us would deny that our government structure is outdated,broken, and does not well serve the citizens of South Carolina.

Every year governors as far back as Dick Riley have stood before youand pleaded to bring our government into the modern era.

And every year it feels like we end up in the same place, preachingthe same changes, facing the same obstacles.

This year I want to keep it simple – two critical changes to the waySouth Carolina is structured.

First, our Department of Education.

Last year, for the first time ever, the House passed a bill that wouldallow governors to appoint the Superintendent of Education.

I cannot overstate how important this change is.

And all we are asking is that we give the voters the opportunity atthe ballot box to make this constitutional change.

General Zais supports it.

The South Carolina House of Representatives supports it.

And I believe that if given the opportunity the people of SouthCarolina will support it at the ballot box.

Let’s give them that opportunity. They deserve it.

And now to the Department of Administration.

Each of the last two years, I have made the argument as to why riddingour state of the unaccountable “Big Green Monster” that is the Budgetand Control Board would move South Carolina forward.

Some of you, like Senators Larry Martin and Shane Massey, have madethat argument with me.

For me to do so again tonight would be redundant.

I believe most of you know it is the right thing to do.

Instead, I will make this observation: if one came to South Carolinafrom another state or country and saw the way the Department ofAdministration bill was handled last year, he or she would surely beconfused.

The Senate unanimously voted in favor of it. A large majority in theHouse voted for it. And still, it didn’t pass.

How is that possible, one might wonder. How did the Senate not eventake a vote on the final day? That’s not the way our system issupposed to work.

One might conclude that some of the votes in favor of restructuringwere contrived. One might even think that some wanted to be on therecord in favor of it while at the same time trying desperately tostop it from happening.

Well, to that, I will say this.

I wish a warm welcome to all the newly elected members of the Houseand Senate, but I want to extend a special welcome to the new senatorfrom Lexington County, Katrina Shealy. Senator Shealy represents oneless excuse for those who don’t want to change the wasteful andinefficient way state government operates.

There are no more excuses left. Let’s pass the Department ofAdministration this year.

Unfortunately, our structure of government isn’t the only place SouthCarolina lags behind the rest of the country.

In recent years, there has become a palpable sense among the people ofour state that something is fundamentally wrong with the way manyelected officials have conducted themselves.

In some ways that sense is unfounded. The vast majority of ourelected officials are honest and honorable people. But in other ways,the public’s unease is fully justified.

For too long, votes weren’t being recorded.

Hundreds of would-be challengers were thrown off the electoral ballotwhile incumbents skated by untouched.

The people, by and large, believe that South Carolina government isset up in a way that serves the public officials of our state ratherthan the other way around.

We have made some progress over the last years, starting with thepassage of a bill that for the first time ever requires that everysingle vote on the floor of the General Assembly be on-the-record –and I thank you for making that a reality.

But we still haven’t done nearly enough.

The State Integrity Investigation took a look at every state’s riskfor corruption and gave South Carolina an “F”.

We got an “F” for our ethics enforcement agencies.

We got an “F” for our legislative, executive, and judicial accountability.

We got an “F” for our public’s access to information.

We got an “F” for our state budget processes.

We got an “F” in nine of the fourteen categories they considered.

Every single one of us knows that is not good enough, that the peopleof South Carolina deserve better, and that it is our responsibility –our obligation – to give it to them.

I think we each also know that if the public is going to trust thechanges we make to a system that almost exclusively governs us then weshould not be deciding alone what those changes look like.

Instead our ethical standards should be determined NOT by those insidethis Capitol but by those who have no stake in our rules.

That’s why, in October, I created a panel of individuals ofunimpeachable personal and professional credentials to help usnavigate this reform process.

The panel includes former prosecutors.

It includes former members of our ethics commission.

It includes former legislators.

It includes members of the press.

It includes appointees made from each of your bodies.

It includes Democrats and Republicans.

Most importantly it is made up of people who have nothing to gain fromtheir participation other than the satisfaction of moving SouthCarolina forward.

Rarely has such a talented and diverse group of people gotten togetherand worked so quickly, so meticulously, and so diligently toward thetask at hand.

While every member of the South Carolina Ethics Reform Commissiondeserves our thanks and praise, the co-chairs of the Commission arehere with us this evening, and I ask you to join me in recognizing twowonderful statesmen, two former Attorneys General, Travis Medlock andHenry McMaster.

They have thrown themselves into this process with an intensity andsense of purpose that gives me great hope for the recommendations theywill deliver to us within the next two weeks.

They have been thorough and thoughtful, taking testimony and gatheringresearch from those within the system as well as those outside it.

And I have every faith that their recommendations will make SouthCarolina stronger.

Our citizens must have confidence in how we do our jobs. Thatconfidence will come from adopting the recommendations of thisbipartisan, professional, and unbiased group of experts. Our citizensdeserve no less, and we should accept no less.

Now let's talk about health.

For all the debate we will have over health care in the cominglegislative session I believe we all agree that we want and need ahealthier South Carolina.

And no one can deny that this administration – working withlegislators like Rep. Murrell Smith and Sen. Thomas Alexander – hasmade health a priority.

We started 2011 with a Medicaid budget out of balance and we broughtit under control.

We started with one of the lowest rates of insured children in thecountry and now South Carolina is recognized for adopting leading edgestrategies to reach more kids.

We started with mental health and addictive disorder programs hobbledby cuts and together we have reinvested in both.

We started with a Medicaid program that required little accountabilityfor quality or cost and we've demanded better value.

These are successes we should celebrate.

But let us ask a simple question. "Are taxpayers getting the mosthealth for the money they spend on health care?" My answer is no –not by a long shot.

We spend more money for health services per person than any nation onearth. Year after year we devote a larger and larger portion of ourpaychecks, our payrolls and our state and federal budgets to healthcare services.

Maybe we wouldn’t worry about all of this spending if our outcomeswere better, but they aren't.

The United States is falling behind the rest of the world in infantmortality and life expectancy – and here in South Carolina we have oneof the lowest life expectancies and highest infant mortality rates inthe U.S.

With such high costs and such poor outcomes, why would we throw moremoney at the system without first demanding improved efficiency,quality, and accessibility?

The Affordable Care Act, known as ObamaCare, says expand first andworry about the rest later.

Connecticut expanded early under ObamaCare and just reported a $190million Medicaid deficit – in spite of subjecting their citizens to amassive tax increase.

California just raised taxes in part to cover their Medicaid deficitand yet needs $350 million more to pay for ObamaCare next year.

That’s not us. That’s not South Carolina.

The federal government likes to wave around a nine dollar match likeit is some silver bullet, some extraordinary benefit that we cannotpass up.

But what good do the nine dollars do us when we can’t come up with the one?

And what good are any dollars when they come through a program thatdoesn’t allow us the flexibility to make the decisions that are in thebest interest of the people of South Carolina?

In the end, I cannot support this expansion for a very simple reason:it avoids addressing our health system’s high costs and poor outcomes.

As long as I am governor, South Carolina will not implement the publicpolicy disaster that is ObamaCare’s Medicaid expansion.

Instead, we need to improve health care value. And we will.

We are taking a lead in payment reform. This year alone over $40million of payments are tied to performance – which means betteroutcomes for Medicaid patients and for South Carolina taxpayers.

We are asking Medicaid beneficiaries to be more engaged in theirhealth. If a patient doesn’t follow a doctor’s advice to stop smokingor doesn’t take their medication as prescribed we end up spending moremoney than necessary, and more importantly, they’ll never get healthy.

We have to improve patient engagement – and stop rewarding bad behavior.

And we are working on hotspots of poor health.

We’ve already reduced harmful early elective deliveries by half, andwe are one of the first states in the nation to no longer pay for thispoor practice.

We are investing in rural health, because if you have Medicaid andlive in Marlboro or Bamberg it is likely you aren’t as healthy as ifyou have Medicaid and live in Greenville or Lexington.

This is true for reasons that go far beyond health care, but thatdoesn’t mean we can’t implement changes that make a difference.

We’ve long known that rural hospitals face challenges that largerhospitals don’t, and now, for the first time ever, the State of SouthCarolina is going to treat them that way. Health and Human Servicesnow pays rural hospitals differently from urban hospitals, andstarting next year we plan to fully reimburse rural hospitals fortheir uncompensated care.

This isn’t new money – but money shifted from areas where we need itless to where we need it more, and we will continue to get creative aswe work to improve health in the parts of South Carolina that for toolong have been pushed aside.

As we go forward together through this debate on health, I ask that wekeep the following in mind.

First – health and well-being is ultimately driven most by income,education, personal choices, genetics and support from family andcommunity.

Second – when South Carolina says we are going to do something we haveto do it well and we have to pay for it.

We can’t promise expanded Medicaid but cut reimbursements so low thatdoctors won't see Medicaid patients. We can't promise expandedMedicaid while we continue to underfund mental health. And we can'tpromise expanded Medicaid while maintaining waiting lists forlong-term care services. We need to meet our current commitmentsbefore promising more.

Third – there is enough money in our public and private health caresystem today to make the system work. We can’t spend our way out ofthis problem – that’s too easy in the short term and too painful inthe long term.

The next three years is an extremely risky time for our state budgetand for our health system, and while it may be easier to take thefederal money and figure out how to pay for it later, I am not willingto commit us to a short-sighted decision we will not be able to backaway from.

Instead of expanding a broken program we will continue workingtogether to implement real health solutions for South Carolinians –because a health system that delivers the highest value will be ableto thrive regardless of what the future throws at us.

Finally, tonight, let us talk about education.

First, it would be wrong to have a discussion about education withoutfirst taking time to remember the victims of the tragedy at Sandy HookElementary School. Please join me in a moment of silence.

Thank you.

In South Carolina, we have done some useful things on education in thelast couple of years.

We’ve reaffirmed our commitment to charter schools.

We’ve invested in innovation with a focus on both rural and urbanareas through programs like Teach For America.

General Zais has pushed the federal government for more flexibility tomanage and evaluate our schools and educators – and he won.

So we’ve seen some progress. But our state still has a long, long way to go.

There is no surer path out of poverty and toward a quality life thanhaving a good education.

But it’s not only that. Having a well-educated workforce is a realfactor in attracting more businesses and jobs to our state. There’s areal economic element to improving education as well.

I know there are some strong school choice bills that are making theirway through the General Assembly, and as I’ve always said I supportschool choice. It will be good for the parents and children of ourstate to be able to make their own family decisions, and it shouldhave happened a long time ago.

But I have never been one who believes that choice is the only way toimprove education. It is one way, a truly important way, but we haveto do other things as well.

Tonight, I want to start a conversation about the way we fund Kthrough twelve schools in South Carolina.

I say “I want to start a conversation,” for two reasons.

Number one, I am not by nature a patient person but I know frompainful experience that the General Assembly is a body that does notoften move quickly. So I figure let’s start with a constructiveconversation rather than a controversial piece of legislation andlet’s see where that takes us.

Number two, I know that when we start to talk about how we fund ourschools, a lot of people can get really nervous really quickly. Solet’s take this calmly, and just start with a conversation.

As we all know, sometimes conservations lead to more.

My starting point for this conversation is personal.

Michael and I are the proud parents of two children in LexingtonCounty public schools.

I am grateful every day that my children attend public schools wherethe teachers are exceptional, the facilities are first-class, and thesense of opportunity and hope for the future pulsate through theclassrooms and hallways.

But let’s be honest in this conversation. What I’m describing is notwhat schools are like in all parts of our state.

I grew up in Bamberg, going to school in a brick box. My educationwas wonderful because of very special teachers, but when it came toresources, we didn’t know what we didn’t have. I know what it’s likein Bamberg and in many other rural and poorer areas of our state.

I am NOT one who believes that more money is the answer to oureducation problems. There are other bigger factors, including povertyand broken families.

But the amount of money that actually touches a teacher and student inthe classroom is without a doubt a factor in the differences betweenthose schools – and between the education that those children receive.

Now, here’s the tricky part.

We must not do anything that undermines the quality of our schools inLexington or Greenville or in any of the economically vibrant parts ofour state. The parents of those students pay the taxes that fundtheir education, and I will play no part in diminishing the returnthey receive.

But we do have to figure out a better way to bring up the schools inthe poorer parts of our state, and history shows that we cannot counton their own depressed local tax bases and restrictive federal dollarsto do it.

We need to spend our dollars smarter. We need to be more accountable. And we need to better serve all the children in South Carolina.

So, I want to start a conversation.

And I want to start it with three distinguished members of thisGeneral Assembly.

The first two are Senator John Courson and Representative Phil Owens,respectively the Chairmen of the Senate and House EducationCommittees.

The third person I want to reach out to for that conversation isSenator Nikki Setzler.

Now Senator Setzler and I have had some differences. That’s ok.That’s politics.

But I respect his commitment to public education. I know he shares myinterest in keeping our Lexington County schools as great as they are. And as the newly elected Senate Democratic leader, I know he and hiscaucus have at heart the areas of our state that are in most need ofattention on education.

So Senators Courson and Setzler, Representative Owens, I invite you tojoin me in this conversation.

I’m convinced that we can change our policies in ways that improveeducational quality for all our children. But I’m also convinced thatwe can’t do that without touching some sensitive topics, and withoutbipartisan support and consensus from all parts of our state.

Let us begin that conversation.

This new year, I have found myself reflecting on the last two.

I came into office wanting to make changes that move us forward in away the people could feel it in their homes and businesses.

We've had some great successes together whether they be jobannouncements, taking our pensions system from the red to the black,reducing taxes, fighting to protect Boeing from the federalgovernment, or creating an Office of Inspector General.

In the same vein we have had some challenges, watching a two yearrestructuring effort fall in the Senate on the last hour, learningfirsthand what businesses have been fighting for years as criminalhackers targeted our state, or watching with frustration as bothparties in Washington are unable to find resolutions that help statesbut instead place further burdens on them.

I come away from these reflections very optimistic because I know whatwe in South Carolina are capable of when we work together.

I know that we have added over 31,000 new jobs in South Carolinabecause we have acted as a team, from the county level to the economicdevelopment alliances to the state.

The success we’ve had in the jobs arena shows what can happen whenthere is a willingness to work together.

The challenges come in when we lose focus on the issue and the fingerpointing begins.

My goal is to continue to strive for a positive environment thatproduces results.

I ask that you join me in proving to the people of South Carolina thatwe are and will be more productive in the new year.

We won't always agree but we should always be willing to respectfullywork towards a resolution for the good of the state.

The people of our state have enough challenges, and they deserve thesatisfaction of knowing that Columbia is working for them.

We have a choice this year. We can spend our time playing politics.We can snipe at each other. We can use the pulpits we all have accessto – the wells of these distinguished bodies, the microphones on topof a podium – to score political points.

But I believe our state deserves better.

I believe this is the year we can make the people of South Carolinaproud by giving them successes on restructuring, on tax relief, onregulatory reform, on strengthening protections in cybersecurity, onhealthcare, on education and by raising the bar on the ethics ofpublic officials.

It is a great day in South Carolina, but it will only continue if wemake it so.

I for one look forward to the fingers going down and the handshakes ofcelebration beginning.

Thank you, God bless you, and may He continue to bless the great Stateof South Carolina.