House Journal 01/14/2005 1:00 PM

Thank you. Thank you very much. Lieutenant Governor Daugaard, first of all thank you for the very kind introduction. Mr. Speaker, legislators, fellow public servants, and the people of South Dakota, welcome to the start of the 2005 legislative session.

I want to start today with the same two words I started with last year, and those words are_thank you. We have much to be grateful for in South Dakota. We are moving forward and we are on the right track for the wonderful people of this state. Thank you to all the people here, the people listening on radio and the people watching on television. Thank you for giving me the privilege of working for you. And, thank you to the legislators and fellow public servants for giving me the privilege of working with you as well.

A special thank you to the men and the women of the Armed Forces of the United States who are serving in Iraq, Afghanistan, and around the world and to their families here at home for the sacrifices they make so we can enjoy the freedoms found in America today.

In the past 2 years, South Dakota has mobilized over 2,000 National Guard and Reserve soldiers. Over 1,600 National Guard men and women have served in Iraq, Kuwait, and Afghanistan. There are also many South Dakotans in the other Armed Services who are not only protecting our freedoms, but giving freedom to the people of the world. In Iraq and Afghanistan, over 50 million people now have the opportunity to live in freedom instead of tyranny and dictatorship.

There are more people living in freedom today than at any other time in the history of the human race. It's incredible and it's wonderful because the American soldier and the soldiers of other freedom-loving countries have put their lives on the line to both protect their homelands, and also give freedom to the oppressed peoples of the world. It's very important because a world with more people living under democracy instead of dictatorships will be a much safer world for our children and grandchildren.

That's the wonderful gift that the American soldier is giving to the world_Democracy_so that today's children and grandchildren can have a safer and better future.

To represent the American soldier here today, we have First Sergeant Bob Foster and Sergeant Tyler Campbell. First Sergeant Bob Foster volunteered to serve with the 727th Transportation Company during their deployment to Iraq. He lives in Estelline and was awarded the Bronze Star for meritorious service during his deployment. Sergeant Tyler Campbell was recently hired as a Recruiter in Brookings and he was awarded the Purple Heart while serving with the 200th Engineer Company in Iraq. Would you both please stand so we can show you our appreciation for you and all the men and women of the Armed Forces of America.

Ladies and gentlemen, America and South Dakota are moving forward and we are on the right track. We have many reasons to be optimistic about South Dakota today and the future of South Dakota.

Five weeks ago, I gave my budget proposal to the legislature for Fiscal Year 2006. I am fulfilling a constitutional requirement today to give you information concerning the state of our state. Our on-going state revenues are up 4.7 percent, which is more than inflation. Our on-going expenses are going up 4.3 percent, which is less than the revenue growth. Eighty-two percent of our state tax dollar spending is on education and taking care of those who cannot take care of themselves.

We're spending money where it needs to be spent_on taking care of people, on protecting people from those who would do us harm, and on education. For the last 11 years, spending in those areas has increased. But, in all the other areas of state government, there has been little or no increase. The problem is that we still have a structural deficit_our necessary expenses exceed our ongoing revenues. However, we are reducing that deficit from $28.5 (2 years ago) to $17.1 million in this proposed budget.

Some people have falsely claimed that the structural deficit was caused because past legislatures just wanted to spend more money. The truth is that the structural deficit was caused by the repeal of the inheritance tax, the loss of gold mining taxes and the repeal of the transportation tax. All of that added up to $39 million less in ongoing taxes collected every year.

The last several legislatures had a choice to make each year. They could cut education, cut money used to take care of people, and cut money used to protect us from criminals, or they could use some of our one-time reserve funds for revenues until revenue growth overcomes the $39 million revenue loss. Past legislatures chose to spend some of our reserves instead of hurting children, the elderly, the poor, and the sick. I think they made the right choice, and I hope you do, too.

In 2003, our two reserve funds_the property tax reduction fund and the budget reserve fund_totaled $115.6 million. Today, we are projecting they will be at $118.3 million on June 30, 2006_more than we had 2 years ago. The reason why we have been able to lower the structural deficit without our reserves falling is that we received $70 million from the Congress to help us through the most recent time of recession.

Some people have also been asking about FTEs, or full time equivalents. That's the amount of work done by one person working 5 days a week, 40 hours a week, or 2,080 hours in a year. I know it has been hard for legislators to explain the headlines we've seen. Here's the history. Total appropriated FTEs have decreased from 13,919 in 1996 to 13,896 in this proposed budget. That's still a decrease of 23 FTEs during that 10-year period. For agencies under the direct control of the governor, the decrease has been 509 fewer FTEs over the last 10 years, including this budget. Overall, the most important thing about this proposed budget is that it contains no tax increases. We don't need any tax increases because we are moving forward and we are on the right track!

Our gross state product increased from $25 billion in 2002 to over $26.5 billion in 2003. That's an increase of 6.3 percent over 2002, which was the 9th highest increase in the United States. The $1.5 billion increase in 1 year is also the highest dollar amount increase since we started keeping track of this figure in the 1970s. It's also a $2.5 billion increase from 2001 through 2003.

We've also just finished a great tourism year. The final figures aren't in yet for 2004, but the leading indicator_tourism related taxes_are up 7 percent. We are making excellent progress because niche markets and emerging markets are being targeted and because we are putting more emphasis on vacation packages.

    We are also creating more jobs in South Dakota. After losing 1,200 jobs in 2002 due to the national recession, South Dakota gained 1,300 jobs in 2003, and we're adding more in 2004. From November 2003 to November 2004, we added 3,700 total nonfarm jobs in South Dakota. Our strongest growth is in construction, financial services, trade, transportation, and utilities.
    Our unemployment rate is one of the lowest in the nation. November figures show that we are tied for the third lowest at 3.2 percent. That's more than 2 percent lower than the national unemployment rate (5.4 percent), and it's 1.1 percent lower than January 2003. More and more people are finding jobs and working in South Dakota, and at the same time, they are good jobs.
    In 2003, South Dakota was second in the nation for per capita personal income growth. The growth rate in South Dakota was 6.2 percent, while the growth rate for the United States was 2.2 percent. Also, in 2003, South Dakota's median household income rose 3.1 percent. This was the ninth highest percent change in the United States. And we did well in 2004 also. From the third quarter of 2003 to the third quarter of 2004, which are the most recent numbers that we have, the national personal income growth rate was 5.2 percent, but here in South Dakota our personal incomes grew 6.5 percent.

In our agriculture economy, livestock prices are higher than they were at this time last year. Crop prices are lower than they were at this time last year, but we are having higher yields for many of our crops. Wheat, oats, and barley all had record setting yields this year. Corn production is forecasted at a record 520.7 million bushels, which is 22 percent higher than last year. And, soybean production is forecasted at 20 percent higher than last year.

We are also continuing to have a robust housing market. In 2003, homeownership in South Dakota was 70.9 percent, more than 2.5 percent higher than the national rate. From December 2003 through November 2004, there have been 505 more building permits issued for family houses in South Dakota than there were the previous year. The value of building permits is also up to $95.3 million in the last 12 months.

I also have a lot to report on how far we have advanced with the 2010 Initiative, but I'm going to save that for the Tourism and Economic Development banquets later this session and that will save you sitting here for an extra 30 minutes. If you would like regular updates on the 2010 Initiative, they are available today at 2010Initiative.com.

We're moving forward with our plans and I believe we are on the right track. And to keep that momentum moving forward, I recently appointed a Red Tape Task Force. South Dakota's business climate is one of the nation's best. However, we can't rest on our laurels. We must always try to do better. That's why I've asked a group of 22 business leaders to help us eliminate unreasonable or unjustifiable barriers to doing business in South Dakota. For example, we want to remove barriers to entry into business and investment in South Dakota, and we want to remove the hurdles, roadblocks, and unnecessary burdens that stop businesses from expanding and creating more good jobs. The task force will examine how state government can do a better job of promoting business success and job creation by eliminating government interference with business. I'm looking forward to its recommendations.

All of this positive movement forward in creating jobs, boosting incomes and growing our state's economy has been caused by the everyday hardworking citizens of the state of South Dakota. They are the ones who deserve the credit for South Dakota's economy becoming stronger and continuing to grow.

Our new legislators have joined us at a time when we are building the economic base and the tax base of this state without tax increases and any proposed tax increases for the coming year.

To continue economic growth and development, we've changed the REDI fund guidelines to make it more available to more people. Therefore, we've been very active in helping businesses start and expand in South Dakota. In the last 2 years, we've issued $24.5 million in REDI loans that have sparked $93.6 million in capital investments in our state by those companies. We've also worked with individual companies and local economic development groups throughout South Dakota achieving a grand total of 1,013 business expansions or new business startups in our state in the last 2 years.

We are working on the Deep Underground Science and Engineering Lab project. This is the South Dakota Science and Technology Authority. The science community is participating with us in developing a proposal to be delivered to the National Science Foundation (NSF) in February as part of "S-2" to compete for funding for the future home of the NSFs Deep Underground Science and Engineering Lab. We call it DUSEL.

We will also be introducing two bills to move the project forward. The first bill clarifies that the Science Authority may invest its funds with the South Dakota Investment Council. We believe it can already, but to try to remove all doubt, we are asking for this new law.

The second bill would give the South Dakota Science and Technology Authority the power to use eminent domain on a very limited basis involving subsurface areas below 100 feet underground to be used as a deep underground laboratory in areas where the authority will own the existing mineral rights once the transfer is complete. You see, Homestake was a mining company and their rights had to do with the extraction of minerals and the exploration of minerals. As we change this into an underground laboratory, we have to change the right from that of extracting ore and minerals to the right of being able to have an underground laboratory there.

This session I will also introduce legislation just as important as creating the underground lab. It involves the creation of more electricity in South Dakota so that we can have low rates here for economic development and our citizens' ongoing power needs. But, just as important, we need to create and sell the electricity we don't need to the businesses and people in other states. Creating this additional electricity and exporting it will create good, long-term, excellent jobs for the citizens of this state.

Currently, the dams on the Missouri River generate about 56 percent of the electricity produced in South Dakota. Coal-fired plants produce about 42 percent of our electricity. The remaining 2 percent is created by natural gas, oil, and renewable sources, such as wind power. To create excellent jobs in the future, South Dakota should do more and become a leader in creating and exporting electricity. That means more wind energy than the 44 megawatt capacity we have now. And, that also means more coal-fired generation of electricity. A $1 billion expansion of the Big Stone Power Plant, called Big Stone II, is being planned. A new $1.5 billion coal-fired electricity generation plant is also being planned for somewhere in South Dakota, North Dakota, or Iowa.

Our challenge, this session, is to create the right incentives that work well for both projects to proceed. We've been working on ideas for a month already and will have legislation ready by the deadline at the end of January or sooner. I wish I could give it to you today, but we want it to be right for both plants. The economic benefits of one or both of these plants are enormous_hundreds of construction jobs for many years and then very good ongoing jobs after the plants are built.

More energy production is very important because if we make it happen, more transmission lines with more capacity will be built here in South Dakota, and that means more production opportunities and more jobs in the future. It also is important because, in the future, electric generation plants will locate where transmission lines and capacity are available. So, when existing transmission lines are upgraded or new transmission lines are built for the coal plants, transmission capacity will be available for wind power plants that could be built nearby.

I want to make electricity production as successful as our ethanol production. We use about 30 million gallons of alcohol in South Dakota every year, but we create over 450 million gallons. That means those additional 420 million gallons are exported to other states and the dollars from those sales then come to South Dakota to benefit the ethanol companies, their employees and the farmers who sell their corn to our ethanol plants. That's what we need to do with electricity as well. We need to create and export more electricity to create jobs here and to bring the money from export sales to South Dakota.

Now, I'd like to shift gears a little bit and I'd like to talk about a different function of state government_how we take care of those who cannot take care of themselves, the very young and the very old.

Together, we have annually funded special tax refunds for our elderly and people living with disabilities, and we increased the money nursing home residents can keep for their personal needs.

Last year, we created the special sales tax on food refund program so that sales tax relief is targeted to those who need it the most. Since July 1, over 29,000 households have received at least one refund payment.

We have also increased the number of physicians eligible for reimbursement for practicing in rural areas and we have also created more incentives for dentists and other health care professionals to practice in rural areas. When the dentist program was created in 2003, up to three dentists were allowed to participate in the program at any one time. So far, dentists have been recruited to Gregory, Redfield and Deadwood. But, there are still many towns under 10,000 in population that want to recruit a dentist into their community. Therefore, I will be introducing a bill to expand this program to five dentists this next year. I can't emphasize enough how important these incentives are to the health and well-being of people in rural areas. Since starting these programs, in addition to the doctors and dentists, we have recruited 42 nurses and 18 other health care professionals to our rural areas.

Over the past 2 years, we expanded health care coverage for children. This year, 9,875 children are receiving their health care coverage through the state's Children's Health Insurance Program. That's about a thousand more than a year ago. Over 55,792 are getting medical care through Medicaid. That's 2,100 more than last year.

We also established a risk pool that now provides health care coverage for 530 people who lost their health care coverage through no fault of their own. At any time, this risk pool could incur a significant expense. It's very important that the state maintains our financial commitment of $500,000 annually and our $1.5 million reserve to keep this pool in effect.

The Department of Human Services has also helped 851 people living with disabilities enter the workforce in careers of their choice.

As a result of the pharmacy benefits management transparency bill that you passed last year, we will be saving $900,000 or about 8 percent on pharmacy costs for state employees. That's direct savings to our taxpayers.

We also have a Methamphetamine Task Force working to improve what we do to prevent meth use and to treat its victims. Thirteen communities are working together to develop local strategies to stop meth use. Specialized treatment programs have been created for victims, and we are proposing two new laws to address the issue. The first bill will regulate the sale of products containing pseudoephedrine, which is used to manufacture meth. The second bill will revise the definition of abused or neglected children so that when we find children whose parents or guardians have put them in an environment where meth is being used or distributed, we can take those children out of there and place them with relatives or foster parents.

The Methamphetamine Task Force has also created nine goals that attack this serious problem. We will be implementing many activities to achieve those goals and significantly reduce and hopefully stop meth use in South Dakota.

We are also in the beginning stages of creating a new healthy South Dakota initiative. You've all heard of my state employee examples that I believe have been an example of success in containing health care costs, so I won't give them to you again, once again saving you some time in here from sitting and listening to the litany of what I consider to be a successful program, but I do believe that the bottom line is that incentives and health management activities work. They create a healthier workforce and reduce medical costs and drug expenditures. But more important than just saving government costs, we want more and more South Dakotans to live longer and be free of health problems. Being overweight and obesity are major risk factors for many chronic diseases for South Dakotans of all ages. When people are overweight or obese, they have more health problems and more serious health problems, in addition to higher health care costs. The bad news today is that 60 percent of South Dakota's adults are overweight or obese and 33 percent of our students are overweight or at risk of becoming overweight. The good news is with some change in habits, we can prevent people from becoming overweight or obese.

At the end of this month, we will be launching a Web site designed to give South Dakotans reliable information about making healthy choices of food and activities. In March, we'll hold a statewide summit on nutrition and physical activity to kick-off the Healthy SD Initiative. I've invited Dr. Julie Gerberding, a South Dakota native and current director of the federal Centers for Disease Control and Prevention to keynote that event.

But, even before that plan is complete, we are starting some pilot projects. For example, we're working with Great Western Bank in Watertown and Rapid City to pilot a worksite wellness program and with the communities of Brookings and Sisseton to pilot community wellness projects. The experts tell us that adding even a small amount of physical activity to our daily routines can have excellent health benefits.

Another project is the South Dakota Schools Walk Program, which some of you may have read about in your local papers. One hundred and thirty-five schools now have walking programs that get students out and walking on a regular basis.

We are also continuing our efforts to work with the Indian tribal governments. The Indian Child Welfare Act Commission, created by last year's legislative directive, has held five meetings and conducted nine listening sessions_seven held on reservations, one held in Sioux Falls, and one in Rapid City. The commission will be issuing its final report, along with the compliance study report in the next few weeks which will contain more than 60 recommendations that identify ways the state can improve the services provided to our Indian children and their families.

The Tribal Government Relations Office is working with the tribes every day on many issues on which we can cooperate. Six tribal employment rights agreements have already been signed, three comprehensive tax agreements have been completed, one fuel tax agreement has been signed, and we are working on the tribal gaming compacts. We are also working with tribal organizations and individuals in areas such as economic development loans, creating tribal business directories, tourism promotions, housing projects, and education. For example, we had an excellent Indian Education Summit last year, and we will have our second one this spring.

In education, in the last 6 months, four new research centers have been started in public higher education. We are also increasing our public university doctoral programs. With six new proposals to keep our best and our brightest right here in South Dakota, in terms of doing more research and providing our students doctoral opportunities, I believe that we are moving forward and we are on the right track.

We have also created and expanded our scholarship plans. Opportunity scholarships are funded by the legislature to encourage students to select a more rigorous high school curriculum and to stay in South Dakota for their higher education. Beginning with last fall's semester, 826 students qualified for these scholarships. Dakota Corps Scholarships are funded without general funds for students who are willing to work in critical need occupations or areas in South Dakota for at least 5 years.

The Hagen-Harvey Scholarships encourage Native American students to earn higher education degrees. In the past year, 14 students have received a total of $28,500 and one has already graduated.

Because of these and other programs, our fall public university enrollment has increased by over 2,700 since the year 2000. During that same time, our K-12 enrollment has decreased by 4,100 students. These higher education enrollment increases mean that we need more teachers. This is not a bad thing. More teachers for more students mean quality education.

Another name for more teachers is more Full Time Equivalents or FTEs. That's one reason why the Board of Regents is requesting more FTEs in this budget proposal. Another reason is that some of those students will be graduate students. We allocated $3.6 million for university research and our universities are also winning millions of dollars in grants from the federal government and the private sector in competition with universities from other states. They use those grant monies to employ students to do research here in South Dakota. It's a win-win-win situation. The necessary research gets done, our students earn their masters or doctorate degrees, and they are paid for the research work they do. Another name for these full-time research jobs and student research jobs is more FTEs or Full Time Equivalents. It adds up to over 146 FTEs, but since many of the student researchers are part-time, 146 FTEs could mean as many as 300 young people working on research and earning higher degrees in South Dakota using federal grant dollars and private grant dollars. So, if we can't get the FTE approval from the legislature, those students would have to do their graduate work and research in other states, not in South Dakota. I don't believe that will happen. We want those students to continue their educations here so that they will stay here after they have completed their studies.

Since my budget speech, there has also been some confusion about state aid to local schools. In a special speech to the legislature on January 16, 2003, I proposed giving schools $7.3 million in additional funds, and I said it was one-time money that I believed would be available for the following year. I made no promise that this $7.3 million would be available beyond a second year. I called these funds one-time monies in my speech. Then, the next year, I referred to this amount again as one-time money and two of the budget slides label the $7.3 million as one-time money that I was proposing to give to schools for one extra year.

For next year, we don't have an extra $7.3 million that we can give to schools. But, I am proposing giving schools the largest ongoing increase in state funding per pupil in 10 years. And, it all adds up to a 2.9 percent increase in ongoing revenues. Some school leaders are now saying that the one-time money of the past was really supposed to be ongoing. That's not true.

Most school leaders know that governors and the legislature have been and are still very supportive of local schools in many ways. Because of these efforts and the efforts of you, the legislature, other elected officials, and by educators and parents and our students, we have students in K-12 that are achieving and they are improving.

If you look at the annual school report card, our students are improving in math and reading in every student sub-group. When you combine all those national test scores together_ACT, SAT, NAEP and others_South Dakota students ranked 10th in the nation. We're doing better than 40 other states. But we can do better.

Because reading is so very, very important to all future learning, I want to briefly highlight three of our South Dakota reading programs. With our Reading First program, we are implementing new research-based reading programs for kindergarten through third grade students so that they become excellent readers for the rest of their lives. Kindergarten through third grade teachers are also getting extra training to improve their teaching skills.

The second reading program we are doing is called Reach Out and Read, and my wife, Jean, has been promoting it around the state. When a child under five visits one of our cooperating 126 clinics for a shot or a doctor's visit, they are given a prescription to read and books to read. So far, over 53,000 books have been distributed_that adds up to about 8 tons of books!

South Dakota was also the only state last year to be chosen for the federal government's Summer Reading Achievers Program. To participate, a student must read at least 10 age-appropriate books during the summer. Over 8,300 students in 120 school districts took that challenge and read at least 10 books. Again, because reading is so important, I asked the top two readers to be with us today. They are sitting in the balcony with my wife, Jean, and I'm going to ask them to stand when they hear their name. Third grader Kimberley Becker of Harrold read 222 books, and second grader Jacob Boomsma of Brandon, are you ready for this, read a total of 295 books this past summer. Not bad. The speaker has announced that that's at least 200 more than what he has read this summer. I would also remind him that those books that they read were probably also age appropriate.

Within the next few months, we will also be launching the education version to the 2010 initiative. It is called 2010E, and its emphasis will be on goals, objectives and tangible results.
How much money to give local schools is a difficult decision every legislative session. Legislators want to know, "Are we getting results?" At the other end of equation, educators want to know, "What do they want from us?" Answering with general phrases like "an excellent education" isn't good enough. We need to tell our educators the tangible results we want from the education for our young people. We need to be more specific. That's what 2010E will be all about. See, I believe that if we share goals and if we have specific tangible results that we are trying to achieve, then those professional educators will know which tools to use to do it the most effective and the most efficient way. That now brings us into a discussion not in terms of the numbers of dollars in terms of percent but what are the tools we need to obtain the goals that we are united in achieving by the year 2010? I believe we are moving forward and we are on the right track in education, but we can do better.

For example, when streamlined sales tax revenues start coming in future years, I will propose spending those revenues on property tax relief and additional funding for education within our state.

We certainly can't count on that money yet, but I'm going to work very hard with the National Governors Association and with our congressional delegation to make the streamlined sales tax project a priority so we can make those commitments to property taxpayers and to educating our children sooner rather than later.

We're moving forward in agriculture as well. We've funded 21 feasibility or marketing studies with the Value-Added Subfund for boosting our agriculture economy in the past 2 years in areas such as bio-diesel, beef processing, oilseed crushing, custom dried forage and using pigs for diabetes research. Some of our earlier recipients of feasibility funding are now open for business, such as Dakota Natural Brands, Dakota Lamb, and TJ Technologies.

In the past year, ten new dairy production facilities have been built, averaging 800 cows each and generating 100 new jobs. These dairies alone represent $40 million in new investments in South Dakota.

Ridgefield Farms is moving forward with its beef processing plant in Huron. This is a $43,000,000 project that will have 260 employees. It will process 600 head of livestock per day. Its $20 million equity drive is done, and construction has started. It will be a state-of-the-art plant that will include the ability to trace beef back to the ranch where the cattle were raised, and it will be operational in January 2006.

Dakota Turkey Growers, LLC, is also on the right track. It's a $45,000,000 project with 1,000 employees. Plant capacity will allow the processing of 8 million birds a year. It will be the first state-of-the-art turkey processing and cooking plant in the United States since 1988. Construction started last August, and this plant will also be operational in January 2006.

During 2004, the state also helped McFleeg of South Dakota, Dakota Layers Cooperative, and Lake Norden Cheese expand and worked with many other value-added ag companies.

The South Dakota Certified Beef program is moving forward. Dakota Certified Beef is a seal that will be placed on beef born, fed, and processed in South Dakota. The intent of the program is to integrate profit into all levels of South Dakota's beef industry by demanding a higher price for our quality beef. The South Dakota Certified Beef product label will increase consumers' confidence in that beef product because the beef will be source verified (traceable to the producer) and meet production and processing protocols to ensure safety, wholesomeness and quality will be adhered to.

We established a South Dakota Certified Beef Market Advisory Committee last September to collaborate on development of South Dakota Certified Beef processor protocols. The processor protocols are expected to be in place mid-January of this year. We are collaborating with the U.S. Department of Agriculture to develop a Quality Processing Manual that will add an additional level of integrity to the South Dakota Certified Beef seal. We are also working with several small scale South Dakota beef processors to kickoff a pilot South Dakota Certified Beef program this summer. We are in the legal process to gain a trademark for South Dakota Certified Beef. And, we will be developing a South Dakota Certified Beef marketing campaign in the summer of 2005.

We do have a problem that reappeared 2 weeks ago_another mad cow report in Canada. The United States Department of Agriculture made a decision to open up the Canadian border to the importation of Canadian beef with restrictions. Then, almost immediately, there was the report of another infected cow in Canada. This unfortunate situation spotlights even more the Canadian timeline for the elimination of feed products that carry the disease. Therefore, I believe the United States should immediately reconsider the importation decision until such time as scientists tell us, with reasonable certainty, that livestock from Canada are free of BSE. As of today, the evidence isn't there to support that conclusion. Last week, I sent a letter to the President asking him to reconsider the Canadian beef importation decision.

We are also moving forward and I believe are on the right track in our Corrections programs. When the Corrections Workgroup was appointed in 2003, I asked them to look into why our prison population continues to rise, and see what can be done to reverse that trend. The group includes a diverse group of interested citizens that represent the public and the private sector and are involved with the criminal justice process or services. Together, they spent 12 months studying and discussing three specific areas: sentencing, incarceration, and aftercare. I received those recommendations this week and will be carefully considering all of them. In adult corrections during the past year, our population continues to increase, but the rate of increase has been slowed.

In Juvenile Corrections, South Dakota was recognized by the Council of Juvenile Correctional Administrator's for our participation in the Performance Based Standards Project because each STAR Academy program uses outcome measurements to assess its programs. This demonstrates accountability and improved outcomes. Our statistics show that 13 percent of individuals coming out of our juvenile corrections systems become incarcerated in our adult system within 3 years of discharge. While we're working to improve that statistic, that percentage is low compared to 30 percent in Maryland or 49 percent in Texas.

During the past year, our Game, Fish and Parks Department made hunting more accessible to more South Dakotans. Over 930,000 acres were available for public hunting access. That's 27,000 more acres than the previous year. We also changed the access program to make it better for landowners and hunters alike. A new payment structure provides a base payment to landowners, but also a bonus for habitat quality and permanency. So, we have a better habitat for more pheasants and that's better for the hunters as well.

We are also providing more training in communications skills so our conservation officers can better communicate with the public and receive feedback from landowners, hunters, and other conservation-minded individuals.

They also had two significant victories in 2004 concerning endangered species. As a result of excellent research from our Game, Fish and Parks staff, South Dakota is now excluded from being listed as an area of critical habitat for the Topeka Shiner. We are also completing a prairie dog management plan and we are grateful the prairie dog is no longer near the top of the list for endangered species classification. I should also mention that, during the next year, I'm going to be working with Governor Bill Owens of Colorado and the 16 other western governors to change the federal Endangered Species Act. We want to change its implementation to the original purposes for which the Act was originally put in place, and that was basically for recovering endangered species and preventing species from becoming endangered. Right now, the Act is used by some groups and people to create a lot of lawsuits that do very little to actually help the recoveries or prevent species from becoming endangered.

For the third year in a row, the water level on Lake Oahe dropped steadily due to a persistent drought in the western Rocky Mountains and the Northern Plains. The vast majority of which is in the Missouri River Basin. By last Labor Day weekend, Lake Oahe was nearly 50 feet below full. Runoff to fill the lake was only 66 percent of normal in 2004. Total system storage is supposed to be 57 million acre-feet. That's the amount of water that would be held in the upstream dams. If you took an acre of land and put 1 foot of water on it, that's an acre-foot of water. Normally in those mainstem dams, there would be 57 million acre-feet. But today we only have 35 million acre feet. Unless we have a major change in our weather patterns, the future does not look any brighter. From Pierre north to Pollock, and all the towns in between, boating and fishing are big parts of their local economies. If you take a look at the river up by Pollock, you will find that literally you've got to travel hundreds of yards to get down to where the river is now from what it used to be. With many boat ramps closed or compromised by long waits and single lanes, fishing and boating activity were down and businesses suffered. In 1996, boating and fishing on Lake Oahe had a $25.7 million impact. Now, it's down to between $8 and $9 million a year. But, thanks to the hard work of our Game, Fish and Parks Department, 13 key boat ramps were kept in service and safe boating access was available this past year. The 2004 effort to maintain access to the water cost us $1.1 million. We are prepared to do it again if this is what it takes to keep some of the ramps open.

The only good news, if there is any good news in this, is that our fisheries are rebounding. We have larger fish for our anglers to catch_and they're in a smaller area_but the anglers have to get to the water and if they'll take that extra effort, they're going to find some excellent fishing opportunities in the coming year. But, our fish, our recreation, our irrigation and all our uses of the Missouri River are threatened if the drought continues and the Corps of Engineers decisions aren't changed.

If the current runoff forecast becomes the reality by March 1 due to continuing drought, we are asking the Corps of Engineers to forego all navigation during the month of April and make suitable cuts in the navigation season length for 2004. Even if the runoff forecasts become much better by March 1, we are still asking the Corps to only support navigation below Kansas City at minimum service for the month of April this year, and to reduce flows from Gavins Point Dam to a flat of 25,000 cubic feet per second from May 1 to the end of the navigation season in September this year.

We don't know what their decision will be until after March 1. Here's what's at stake. In addition to our problems, if total system storage goes below 31 million acre-feet, and remember we're at 35 million acre-feet today, if it gets below 31 million acre-feet, we will have what is called navigation preclude. That means all navigation on the lower Missouri River must stop. We are telling the Corps that if they start navigation flows this year on April 1 and the drought continues, they will hit navigation preclude next year and there will be no navigation. But, if they follow our suggestion and delay navigation this year by just 1 month, they may still be able to have a navigation season both this year and next year. And it will allow us to have a higher water level for our fishery and for recreation. Hopefully, the downstream states will realize that they should be on our side on this issue. The reason for that is that if navigation preclude happens, power generation from power plants that use the Missouri River water will be reduced significantly, impacting millions of downstream consumers with higher electric bills.

Those of you who have served in the legislature in these past 2 years can be proud of what was accomplished by you for the people of South Dakota. You have set an excellent example and a standard for new legislators to follow. To our new legislators, we welcome you. We welcome you to this wonderful opportunity to serve the people of this state. We will be spending 40 days this year and 35 days next year together creating new laws. You will be voting thousands of times, and I hope that most of those votes will show a large consensus with few divisions between Democrats and Republicans, between East River and West River or between cities and rural areas. When people try to divide us, I ask one favor of you. Let's agree on the facts in those cases first. Let's get as much information as possible so we can avoid fighting. And we can reach agreements that make good things happen for the people of South Dakota.

In 2002 and 2004, we had the highest number of voters voting in the history of South Dakota. In selecting us, they have put their faith in us to do a good job for them. They have said with their votes, we trust you to do the work of government for us. That, ladies and gentlemen, is a wonderful compliment to all of you from the people of this state, and it is also a wonderful challenge to all of us.

Recently, on a radio show, I was asked about my favorite place in South Dakota. I told them that one of them was Iron Mountain Road in the Black Hills. Many people don't know that this road and many others were designed by Governor Peter Norbeck, one of South Dakota's greatest governors and a former United States Senator. He did such a wonderful job in designing Iron Mountain Road that the Evening Huronite newspaper out of Huron, South Dakota, wrote that Peter Norbeck was the_and I quote_

Leader in the development of a new form of art. In laying out these magnificently beautiful roads, he pioneered the framing of natural scenery for the public. He found great pictures in nature and gave them to the world by building roads to them.

That's why I and so many others love Iron Mountain Road. It winds and it curves and turns and follows the contours of the land so that you can see some of the most beautiful scenery in the world. You know the road that I am talking about. It's the one with the pigtail bridges. It's the road where you can see Mount Rushmore in the distance. through tunnels carved beneath granite spires.

When Governor Norbeck designed it, he wasn't thinking about helping people get from one point to another with the shortest route possible. It's not a straight line. It isn't meandering though either. Norbeck had a purpose. His design forces the traveler to slow down and see the beauty that would have only been a blur if a normal road had been built. His road wasn't just a quick passage through something either. He made it a window to showcase what for over 70 years produced the word "wow" on the lips of millions of visitors traveling slowly along its path. Instead of encouraging us to ignore the beauty with a short trip, his road design added substantial value and enjoyment to the trip. He designed more than a road. He designed a beautiful experience for the first travelers on that path and for all the future travelers since then.

We have the same kinds of choices in business and in government. We can do things the cheap way, the simple way, for the short-term and without regard for the future. Or, we can make the extra effort, do the hard work, absorb the criticism and make decisions that will cause a better future.

With the 2010 Initiative and many of the other things we do in government_especially the things we do for children_we are getting some short-term benefit. But, more importantly, is the value we add, the value that we create for a better life tomorrow for our children and all future South Dakotans. That is the unique and wonderful challenge 106 of us have. We have problems to solve and new opportunities to create for the people of South Dakota. I welcome the privilege of working together with all of you. Thank you.