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Transcript of Gov. Kasich's State of State speech

The Associated Press


We've also proposed broadening the base. And we've done — and in doing so, we will be able to provide a 50 percent tax cut to our small businesses, a 50 percent tax cut.

For example, if a business has $40,000 worth of income, they will only pay taxes on $20,000. What a shot in the arm. And remember something: These are the people who create nearly 50 percent of the jobs.

You know, when we think about job creation, we tend to think about all the, the big companies, the big operators. Over 50 percent of the jobs that are created in our state and across our country are those small business people. A 50 percent tax cut for them will spur economic development in our state and we have also proposed cutting the personal income tax by 20 percent over the next three years.

And look around the country and see how many states are trying to wipe out their income tax. Yeah, it's a race to see who can create the best business climate.

You know, and we did all of this with the income tax to avoid driving some of our best and brightest out of our state. And in case you don't believe me, talk to your friends. See how many people escape Ohio to go to a place where the taxes are lower. We don't want to drive our best and brightest out of our state. We don't want to drive them out because they take their charity and their ideas and their innovation. We need to stop it, and it will breathe new life into Ohio's economy.

You know, we've also proposed modernizing the severance tax so that all Ohio can benefit from the oil and gas discoveries in our state.

I know many of you are concerned about that. Since we started talking about it, I think the amount of money invested in our state in our reserves is about $4 billion. People are coming here. The state of North Dakota has a severance tax of 8 or 9 percent. They're exploding. They can't even find enough workers out there. The problem is oil companies only pay two dimes of tax, 20 cents, on a $90 barrel of oil. It's not sustainable. And I want us to think about that.

What does it all mean? Well, maybe two business owners said it best in regard to this program. Kathleen Dewey from the Mt. Carmel Brewery in Cincinnati said, "These tax cuts mean a lot to us. What means more to us at Mt. Carmel Brewery Co. is that our government is behind us."

And Cindy Woodward of Early Express in Dayton said, "The real thing this means to me is it brings hope because we have someone in power who cares about small business, who understands that we are the engine that fuels the economy, and I haven't felt that way in a while."

Look at our tax cut plan, and keep that family sitting around that table in mind as we move forward on this issue.

I'd like to talk about another job creation program, our plan to improve the infrastructure, our roads, our highway, our bridges. We're within 600 miles of 60 percent of the country. It is an incredible economic advantage when I talk to CEO, I said you want access to the North American market, you want to be in Ohio. We've got the size, the skill, the people, but we got the location. We can move things so quickly through our state because we're improving our infrastructure.

You know, the fact is when you make things here, you got to be able to move them. But here's the problem. We have significant infrastructure needs. Under the current system, we fall way short of funding those needs. So we figured out a creative way to leverage one of our great assets, the Turnpike. By bonding against the tolls of the Ohio Turnpike, we're going to be able to raise one and a half billion, and when combined with other federal, state and local funds, we will have $3 billion, $3 billion to fix our roads, our highways and our bridges.

And we will bring some projects that were going to be executed 20 years from now into a six-year window. And at the same time we do all of that we estimate that this will create a minimum of 65,000 jobs for people who help to rebuild our state.

Folks, JobsOhio just went into the market and did a bond deal at four percent money. Members of the Legislature, we're going to debate all these different things, let's try to move it as quickly as we can. Because we have a window out there, we have a window out there of cheap money. We got to go and get it, and as quickly as we can move it.

I know what's going on, I know the debate about where's all the money going to be. You know, we work through all this to make sure you get what you expect, and we'll work together and we'll get it done, and we'll capture some of that really good money to help put people to work and make Ohio an even stronger state.

You know, in the 21st century when we have job opportunities, we need to make sure that we have the skills to take advantage of them and nothing's more important than our K-12 education system. We're going to reflect on the school reforms that we've achieved before we get into the details of what we're doing next.

We enacted Third Grade Reading Guarantee. I really want to thank you all for that. Look, in my opinion, you can't have a kid that can't read, a student that can't read at the third-grade level pushed to the fourth grade. You just can't do it. OK.

Now, it's not good enough just go test them. You got to start early. You got to make sure that they have the skills starting, you know, pre-K, kindergarten, first, second, third grade. We will intervene and we will help to make sure these children can pass, can really have good quality. Because, you know, in the early years, when you go to school, a young child learns to read so that later in their lives they can read to learn.

And the studies indicate that if a child does not have good reading skills by the 10th grade, going to drop out. It's like going to a country and not speaking the language. Thank you for what you did on this.

We also have created the A through F report card, and also a building-by-building comparison. So, look, not only do moms and dads know how their school's doing but also inside the school, school boards, teachers, administrators.

We can figure out where we're strong and where we're weak, and then get about trying to fix it. That's why we need this A through F. And I want to thank the Legislature for giving it to us. And we delayed it for a year because I thought your request was reasonable, and so we're going to move forward with this program, and we're going to monitor it, and I want to thank you for what you have done there.

We've also, of course, expanded school choice for parents with children in failing schools. And in our new budget, we have proposed expanding school choice for kindergartners who live in poverty. It is an expansion, this program, and we're excited about it.

We know about education. You got to have it. It unlocks your future. You don't have it, it's not going to work. You're going to fall behind. And you think about GEDs and that's great, we've got to take care of that problem, but we've got to have good education.

We have proposed a plan — I want to be clear about this, and I will put this out so you can read it — we have proposed a plan to help every boy and girl, regardless of where they live. Our plan provides a total of $1.2 billion in new funds over the next two years. That means that by the end of the next budget cycle, Ohio will actually be providing our K-12 system more in state aid than they received at the height of the one-time federal stimulus money in 2011. That is an unbelievable amount of money according to anybody's calculation.

When it comes to school funding, we have one common sense guiding principal: Ohio must help those schools that do not have the resources to help themselves. Schools that are poor, or schools that have growing student enrollment, they need more help than those who are getting richer, or those that are getting smaller in terms of student population.

Every school deserves help to meet the individual needs of its students, because on top of the basic formula we know that we've got to help schools who have children who are disabled, students who are poor, students who are learning to speak English, students who are gifted, or students who have limited access to early childhood programs. This school funding plan does all of this.

Under our plan, Ohio's poorest and urban districts get more money than Ohio's wealthiest districts. They get a bigger share of overall school funding than the wealthiest districts. They also get more per pupil before funding guarantees are factored in.

Additionally, the poorest schools in Ohio receive $1.1 billion while the wealthiest receive less than half of that. The very poorest district will receive $7,500 per pupil — $7,500 per pupil in the very poorest district — and the wealthiest will receive $110. It's an objective plan that applies equally to all districts based on their property tax wealth and residents' income, as well as the individual characteristics of the students they serve. And most important, this is driven by the needs of students, not by the needs of adults. This is driven by the needs of students, not by the needs of adults.

The simple fact of the matter is now, this plan also guarantees that no school district will receive less state formula funding than they did last year. No one receives less, even if they have fewer students or growing wealth. You see, we would believe it would be destabilizing for schools to suddenly allocate funds strictly by the formula where all dollars follow the student. And districts only receive funding for the students they are teaching. We're not moving on this now, but we're in a period of transition, and over time, Ohio must begin to look at this guaranteed funding to find a way forward that delivers resources in the way that helps our boys and girls the most.

The simple fact of the matter is we're going to have to work together to make sure that we are moving our resources to those districts that have unique students, that are not as wealthy — those districts that do not have the population — we've got to do it together, because the current system is not serving the boys and girls in our state as effectively as we could be doing it, but we're going to have to do it together.

Also critically important, we're giving a significant increase to vocational education.

And somewhere Jim Rhodes is smiling. You know, he came up with the whole idea of vocational education and somehow we got away from it. We're going to give a 16 percent increase to vocational education. And we know this — look, if a student has a passion to make things or do things, and doesn't want to follow the traditional academic route, God bless them. I like to say my plumber makes more than my lawyer.

OK. The fact of the matter is, feed kids' passions. Whatever they want to do, let them have it. If they want to go home at 4 o'clock in the afternoon to work on a car, let them work on the car in school, and teach them about advertising because they're not going to sell their services if they can't write English. Talk to them about math because they're going to want to charge for the work that they do, but don't cut them off from the possibility of a two-year or four-year education. We're going beef up the academics in those vocational schools so you can have it all.

Higher education. These community college president s and four-year presidents, they're heroes. You know, what they decided for the four-year schools that only 50 percent of the money they get from the state to run their operations will go to them upon a student's graduation, not on enrollment, on graduation, because we want kids to graduate. That is something they stuck their necks out on. It would have been easy to try to say no, we don't need to do that or come up with excuses. They're saying when a child, a student, or an adult enters our schools, our hallways, we want to make sure that they're going to graduate. And the same is true for our community colleges. When they go there, you get reimbursed on, on completion of courses, not just walking in the door. Because can you think of anything worse, two or three years in a four-year school, huge debt, you quit. You got big debt, got no job, got no certificate. It doesn't work. And so these community colleges and university presidents have stepped up and they have answered the bell.

You know, a lot of places in this country, they cut this higher education. We love higher education. It is one of the great assets for the state of Ohio, and I never talk to a job creator where I don't stress the fact that our colleges and universities can pinpoint and prepare our kids for the 21st-century jobs. They need an amazing amount of credit for what they have done and we are now leading the country in stressing graduation over enrollment. It is going to strength en the economy of the state of Ohio.

We got to integrate business with academics. I mean, this is a big challenge and it's a big challenge worldwide. Some countries get it better than others. Germany does a pretty good job at this. America's floundered on this. You see, if we can bring our business community, our job creators in to K-12 and the two-year and the four-year schools and help to design the curriculum and help to give people a view of what it means to work in those different entities, we're going to turn kids on for education.

And it's all this business of job training, and all of you in the General Assembly, you get it. I appreciate and thank you for your attention. I understand the first two bills of the Ohio Senate are on job training. And we're going to work on this day and night until we fully integrate it. We are making great progress, but we have a way to go. And it involves changing the culture of our state, changing the culture of academia and convincing businesses that working with us, we will produce the kind of worker that can answer the bell in the 21st century.

Thank you for your work in this area, and we are going to stay on it, and we're going to be aggressive and together, if Ohio solves this problem of having skilled workers, it will be another incredible arrow in the arsenal of what we do to attract jobs and bring companies, not just expand in Ohio, and not just somebody in Indiana, but somebody that might even come from India. Let's do it together. OK?

Let me remind you of my background. I was in Congress for 18 years. Of those 18 years, I spent 10 years fighting to balance the budget. Tom Sawyer was there during some of those years. I even worked against the president of my own party when I thought he wasn't being aggressive enough.

It wasn't comfortable. But I felt we needed to balance the federal budget. Because of all that work I became Chairman of the House Budget Committee. Pretty amazing. And in 1997, I was one of the architects of the Balanced Budget Agreement, and our budget was truly balanced for the first time since Neil Armstrong walked on the moon. We had large surpluses, we paid down large amounts of the publicly held debt, and we were growing jobs. It was bipartisan. A lot of meetings, a lot of long hours, a lot of yelling and shouting. We all kind of liked one another though, respected one another. And we got it done. And I'm proud of it. I understand programs like Medicaid and Medicare. I worked on them. I understand the issues that are involved in reforming Medicaid and Medicare.

My staff helped create some of the direction that we were going to fix some of the problems. I know that Medicaid and Medicare have to be transformed, there's no question. And transformed in some ways along the lines of what we have done with Medicaid in the State of Ohio. And when they finally, the federal government, finally figures out how to begin to solve the problems of Medicare and Medicaid, we will be ready to navigate those changes. But in the meantime, while we're waiting for answers, we should not shoot ourselves in the foot and send our tax dollars to another state to be spent. It is not fair to the taxpayers of the state of Ohio, plain and simple, because if we don't do what we should do on Medicaid, they'll be spending it in California.

You count on it.

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