Thank you, thank you very much. Thank you. Okay, sit down. Sit down. Sit down. Thank you. Thank you very much. That was very kind of you. Thank you. It is good to have you back in pierre to the legislature, welcome. Im sure youre going to enjoy this experience immensely. Before i begin today, though, i would like to note a historical milestone. Today is the beginning of Lieutenant GovernorMatt Michaels seventh session as president of the senate, and prior to that, he presided for four sessions as speaker of the house. Those 11 sessions make Matt Michaels the longest serving officer in the south dakota legislature. Lets recognize him and thank him for that service. [ applause ] thank you very much. Over the past six years, weve undertaken many significant initiatives together, and have made progress in many areas. Today, im going to provide updates on many of our efforts in the areas of education, transportation, criminal justice, workforce and Tribal Affairs among others. I want to update you on our accomplishments and also in some cases talk about adjustments we can make to continue to improve. First, a brief update on our state revenue situation. I have some good news and i have some bad news. Ill start with the bad news. Since we met in december, revenue has not strengthened. Sales tax continues to run below even revised projections. Overall revenue is down another 5. 8 million, so we will need to continue to watch revenues over the next two months to insure we adopt the structurally balanced budget in march. We all know that the farm economy is one reason for weakness in the sales tax, and another reason is the continued growth in online sales. Many online retailers do not collect and remit sales tax, as you know. The state has taken several steps over the years to try and collect more of that tax, and after last session, the department of revenue reached out to many online retailers to encourage them to remit tax. And thats the good news. Today, im pleased to announce that the state has reached an agreement with amazon to collect and remit state and local sales taxes in south dakota. Amazon will begin voluntarily to collect sales tax on february 1st, and will remit beginning in late march. Amazon, as you know, is an online leading online merchant, growing every year by double digits. Their decision to collect sales tax doesnt solve the sales tax issue for online purchases, but its a big step in the right direction. Eileen sullivan is here today, representing amazon, and for their decision as a good Corporate Citizen to join the many south dakota retailers who collect and remit the sale taxes, i would ask her to stand so we can thank her. Eileen. [ applause ] thank you again. In past years, i have talked about a better government initiative, a constant effort to make State Government more efficient, more open and accessible. We made good strides over the past six years, and ill be asking you to help us further improve this year. First, we continue to work on red tail repeal. Red tape repeal efforts. Over the past six years, we have proposed and you have passed a repeal of over 4,000 sections of obsolete or unnecessary rawhal laws and rules accounting for nearly 470,000 words. We will be proposing more of these bills this year. Another important component of better government is to be more open, accountable, and accessible. I have made this a priority, and we have made considerable progress. We recently launched an online pardon application site, making south dakota the first state in the nation with a completely online pardon application process. This year, i will also be supporting the attorney generals proposal to make booking photographs also known as mugshots, open to the public. As in most states. Last year, i asked Lieutenant Governor michaels to lead an effort to improve our states internal controls. You passed legislation creating the board of internal controls and that body has been meeting monthly since may. Internal controls within State Government itself are already strong, in fact, we just completed our comprehensive annual financial record for fiscal year 2016, the earlier completion in 20 years. With an unqualified clean audit from the department of legislative audit. But we must do a better job of monitoring federal funds that pass through the state to nonstate entities. This is a complex area, but the board is working hard to establish these standards. One important aspect of internal controls is avoiding conflict of interest. Most conflicts of interesting are innocent and can be avoided through education. Two years ago, you passed and i signed legislation creating new conflict of interest standards for state employees. And that system is working well. We now have a system that makes state employees more aware of potential conflicts so they can be prevented or publicly disclosed and identified as not against Public Interest. Last year, i signed similar legislation for state, board, and Commission Members and for local school board members. After one years experience, i will support legislation this year to clarify and streamline that law so that boards can achieve our objective of bringing transparency to these situations. Over the past six years, we have taken many steps to make State Government information more accessible. We put Economic Development grants online, we have put restaurant inspections online. Information on oil, gas, and water drilling is now online. Open. Sd. Gov has been completely redesigned and is a central hub for information, including grants and contracts, pay roll information, and checkbook level detail on vendor payments. The state legislature itself has been a leader in this area. It was 20 years ago that the ledgislature launched its excellent website that allows for online tracking of legislation and live and archived internet streaming of all legislative meetings. In the executive branch, rules. Sd. Gov allows citizens to track and comment upon proposed rules. Two years ago, we also launched a portal to centralizing information on state boards and commissions in one place. Membership information, agendas, meeting materials, minutes, financial reports, and audits. This year, i will ask you to support legislation to institutionalize the boards and commissions portal. Today, i can require state agencies to utilize this site, but i want the law to require it after im gone. This site only works if boards are required to post their information online, just as we require them in law to post their Public Notices at the location where a meeting is held. Were also making state board and Commission Meetings accessible with internet streaming. South dakota public broadcasting recently launched sd. Net, which is a one stop website to stream Commission Meetings as well as other public broadcast and coverage such as High School State tournaments. And all these efforts have paid off. In 2011, shortly after i took office, south dakota received a dplus for Online Access to government Financial Data from the Public Interest research group. As of the 2016 record, south dakota has improved that score to an aminus. One reliable advocate for openness over the years has been News Reporter bob mercer. Of course, as a reporter, bob has written about the need for openness. But when he has seen opportunities to improve, hes also shared them with my office, and i have always appreciated that. Several of these improvements were bobs suggestions. Including the rules website, the expansion of the boards and commissions portal, and even the case outside our Capitol Building for posting notices. Bob is confronting some health challenges, as you may know, and he will not be here this year to cover the legislative session, but i hope we will all keep bob and his family in our thoughts as we continue these efforts toward openness. Since i last spoke to you, since i spoke to you last year at this time, im very proud that south dakota has now obtained aaa ratings, the highest possible, from all three major Credit Rating agencies. One reason for our aaa rating is the breadth of Financial Information that we compile and make available online. Transparency is important in its own right, but it also has a positive financial impact. The aaa rating saves money when our schools, universities, and hospitals issue bonds. We get a lower Interest Rate because of our bond rating. Two years ago at the behest of the Lieutenant Governor, you passed legislation that also allows School Districts to benefit. Districts borrowing through the health and ed authority can now leverage our Credit Rating. Since this began, at least eight School Districts have realized saving. Redfield saves 185,000. Mead county saved 150,000. The Lakota School district was able to refnls a 2013 debt and save 3 million. Our aaa rating is the consequence of the many sound Financial Decisions that governors and legislators have made over the years. We have balanced our budget for 128 years, and recently, excuse me, recently, placed an explicit requirement for a balanced budget in the constitution. We have made it the norm to have a structurally balanced budget. Which supports ongoing expenses with ongoing revenues only. We built and maintained a Rainy Day Fund that is 10 of our general fund budget. We have been conservative in estimating revenues and expenses. And when we have one time money to spend, we prudently used it to repay debt early, secure an existing asset and ongoing assets or create a new asset. And we can all be very proud of the management of the south dakota retirement system. The plan is well funded and routinely rates as one of the strongest in the nation. That is no accident. Over the past few years, the Retirement System Trustees have proposed and you have passed several important adjustments to the plan that have strengthened it for the long term. This year, the trustees are bringing another bill that will protect the plan from swings in inflation or investment returns and i hope you will support that also. Now, some management also involved the stewardship of tangible assets. Regular maintenance of state owned facilities prevents larger problems in the future. But we also need to constantly reevaluate our need for the facilities that we have. When i first ran for governor, i talked about the need to scrutinize stateowned land and buildings and to sell assets that were underutilized. This has been an ongoing process now for six years. We first addressed the Human Services center in yankton, and with your support, we sold unneeded land and demolished many vacant and delapidated building wher build. We also negotiated a lease purchase for the historic mead building. If you havent seen it, this building is being beautifully restored. Next, we looked at the campus of the south Dakota Developmental Center in redfield. Like the yankton facility, this large campus was built to house over 1,000 south dakotaens with developmental or Mental Health issues, often for their entire lives. Today, the campus serves only about 120 persons. This year, i will be asking you to authorize the transfer of several vacant buildings and the adjoining lands from that campus to the city of redfield, which has expressed an interest in refurbishing the buildings and returning them to a public use. We are also evaluating the former State Training School campus in plankenten. This property has been leased for over a decade to a private company that operates the Aurora Plains Academy fair. Were considering the potential to sell the campus and i will be asking you to authorize that potential sale as well. Im also asking you to approve the potential sale of the star academy property, outside of custer. Which closed last march. There are too few juveniles in the corrections systems to justify this large camp, and even if an increase in juveniles in corrections, even a future increase of juveniles in corrections will not justify reopening star academy. We would use smaller, more efficient facilities closer to population centers. My hope is that the star academy property, which is at a scenic black hills location, can be sold and developed to create jobs and Economic Activity in the area. The construction of the new state Veterans Home in hot springs has also led us to evaluate the adjoining lands and buildings, and ill be asking you to approve legislation that allows us to explore repurposing portions of that campus. Likewise, a building formerly used by western dakota tech in rapid city will be reverting to state ownership, and the state has no use for this building. Ill be asking you to authorize its sale as well. And i also hope to continue to discuss with the board of reej nlts the former school for the deaf buildings and property located on east 10th street in sioux falls. We owe it to the taxpayers to keep the states footprint to a minimum, to avoid spending tax dollars on maintenance of unneeded facilities and to return these properties to the tax rolls when possible. Of course, state infrastructure is not confined to buildings. We also have transportation infrastructure, and over the past six years, we have made great progress in this area as well. We have refurbished two significant stretches of stateowned rail line. In 2014, you appropriated 7. 2 million in general funds to upgrade the state owned line from chamberland. We also provided grants from the future fund and the state rail fund and received a tiger grant. Because of this upgrade, wheat growers constructed a 50 million grain handling facility which was completed this fall. In addition, we upgraded the britain line, aided by a future fund grant and a loan from the state rail fund. This line runs from aberdeen into north dakota and connects shippers to both the Canadian Pacific rail line and the burlington rail line. As a result of this upgrade, the Wheaton Dumont elevator and the united grain omeration built a 40 million state of the art facility. That facility opened this fall and is shipping grain today. Both of these upgrades have created more shipping and selling options for farmers, created jobs in rural areas and added significant grain handling facilities to the praurpoperty rolls. Well also make Major Investments in our highways. A major phase of this multiyear project will let bids this summer to connect this new urban corridor to i90 west of brandon. That phase of the project should be completed by 2019. We have also provided aid to local government infrastructure. Two years ago, we created the bridge improvement grant fund, which is now granting millions each year to reduce the backlog of necessary repairs to local bridges. Still another piece of state infrastructure i spoke last month about the need to replace the state Animal Disease Research and diagnostic laboratory at sdsu. Even in a lean budget year, im hopeful we can secure for the long term our Animal Health laboratory, which protects our citizens and livestock industry. Beyond our tangible infrastructure, a critical duty of our state is to provide a system of k12 education. To be effective, we need to recruit and retain good teachers, and we compete with our neighboring states to do that. Last year, we passed major legislation to increase teacher pay and rewrite the School Funding formula. Were already seeing success from those changes. First, on teacher pay, as you know, when the Blue Ribbon Task force met, our average teacher salary was just over 40,000. Our new formula was designed and funded to afford an average of 48,500. We knew we wouldnt reach that average in one year because schools need time to become more efficient and repurpose their own funds into salaries. Still, according to the preliminary school reports, our average salary this fall is 46,937. Just short of 47,000. The states average salary increased by 11. 9 . Our smaller rural districts are especially challenged to attract teachers. So i was particularly pleased that preliminary data shows very sizable salary increases in many small districts. In jones county, the average teachers salary increased by 22 . In easton, it increased by 20 . In mobridge, salaries are up 25 . In faith, up 18 . Iroquoi, up 23 . Florence, about 20 . Burke, up 19 . And the highest increase in south dakota as a percentage was in wabe, whose average salary is up 26. 3 . Larger School Districts also enjoyed sizable increases, although they had higher salaries to begin with. And therefore, their percentage increases are generally lower. I have already heard from many superintendents that these changes are having an impact. Fewer teachers are departing, fewer vacancies are left unfilled. Positions are getting more applications and more teachers are staying in south dakota rather than leaving the state. I know some have expressed concern about the new formulas impact on Small Schools. Because the new formula calculates state aid based on actual number of enrolled students. In other words, it no longer allows a school with declining enrollment to receive funding based on the higher enrollments of past years. Even with that change, however