Standing before the members of the General Assembly and special guests assembled in the House chamber, Governor Larry Hogan delivered his inaugural State of the State address. The full transcript of his speech can be found below:
State of the State Address
“A New Direction for Maryland”
As Prepared for Delivery
Wednesday, February 4, 2015
State House, Annapolis
Speaker Busch, President Miller, members of the General Assembly, distinguished guests, ladies and gentlemen.
It is an honor, and I am truly humbled, for the opportunity to appear before this 435th General Assembly – as Maryland’s new governor – to report on the state of our state.
Marylanders are among the nation’s hardest working and most educated people. We have universities and schools that are among the best in the nation.
No state can match the beauty of the Chesapeake Bay, our beaches and farms, or the mountains of Western Maryland, the Port of Baltimore, or the historic charm of every corner of our state.
But while our assets are many, and our people are strong and hopeful, their state is simply not as strong as it could be – or as it should be.
We have a lot to do, to get Maryland back on track and working again.
The challenges we face are great.
High taxes, over-regulation, and an anti-business attitude are clearly the cause of our economic problems. Our economy is floundering, and too many Marylanders have been struggling, just to get by.
40 consecutive tax hikes have taken an additional $10 billion out of the pockets of struggling Maryland families and small businesses. We’ve lost more than 8,000 businesses, and Maryland’s unemployment nearly doubled.
We’re number three in the nation in foreclosures, and dead last in manufacturing. We’ve had the largest mass exodus of taxpayers fleeing our state – of any state in our region, and one of the worst in the nation.
And, while most states around the country have turned the corner – sadly, Maryland continues to languish behind. The federal government ranked our state’s economy 49th out of 50 states.
That is simply unacceptable.
According to a recent Gallup poll, nearly half of all Marylanders would leave the state if they could. As a lifelong Marylander who loves this state – that just breaks my heart.
We fail all Marylanders if we simply accept these dismal facts as the status quo.
Well – I refuse to accept the status quo, because the people of Maryland deserve better.
Over the past few years, as I traveled across the state, I listened to the concerns of Marylanders from all walks of life. The common theme I kept hearing was frustration. People everywhere feel a real disconnect between Annapolis and the rest of Maryland. They feel that we are way off track, heading in the wrong direction, and that change is desperately needed in Annapolis.
The problems we face aren’t Democratic problems, or Republican problems. These are Maryland’s problems.
And they will require common sense, Maryland solutions. With the will of the people behind us, and with all of us working together, we can put Maryland back on track.
And we will.
Today, Marylanders look to us for leadership. They look to us to put Maryland on a new path, toward opportunity and prosperity for all our citizens.
Ladies and gentlemen, it is time for us to listen to Maryland’s hard working taxpayers and our job creators.
The people of Maryland simply cannot afford for us to continue on the same path of more spending, more borrowing, more taxes, and politics as usual.
It is time for a new direction for Maryland.
Our administration will chart a new course; one guided by simple, common sense principles. Our focus will be on jobs, struggling Maryland families, and restoring our economy.
And every decision I make as governor will be put to a simple test.
Will this law or action make it easier for families and small businesses to stay in Maryland?
And – will it make more families and small businesses want to come to Maryland?
Our administration will work with all of you to enact the necessary budgets, tax reductions, regulatory reforms, and legislation that is necessary, to ensure that we turn our economy around.
Just 24 hours after being sworn into office, I proposed a budget for Fiscal Year 2016 that fairly and responsibly controls spending.
When my team began the budgeting process, we encountered a baseline budget of $17 billion in expenses and projected revenue of only $16.3 billion. The state was poised to somehow spend $700 million that we simply did not have.
Mandatory payments on state debt had increased by 96 percent just this year. We face an $18.7 billion unfunded pension liability.
Faced with this troubling reality, we revised that script – delivering a fiscally responsible budget that only expends what we take in. This is just common sense. And will come as no surprise to anyone that manages a family’s finances, or runs a small business.
Our team created a structurally balanced budget for the first time in nearly a decade. This budget sends a clear and important message that the days of deficit spending in Maryland are over.
We had to make some very tough decisions in just the first few days of our administration in order to get this state budget under control. But our budget puts Maryland on sound financial footing, without raising taxes or fees, without eliminating agencies, departments, or services, without imposing furloughs and without laying off a single state employee.
Our new budget also funds our priorities, including providing record investment in K-12 education and increased investment in higher education.
This proposed FY2016 budget is just a start. We will have much more to do in the days and months ahead to correct our state’s fiscal course. I am eager to work cooperatively with the General Assembly to meet these challenges head on.
Before I became governor, increases in spending were promised that simply could not be kept. If ever Maryland needed a dose of honesty, it’s now.
The debates that take place in this chamber in the weeks ahead cannot ignore the certainty of our current fiscal situation. We will make every effort to be fair, judicious and thoughtful, and my administration will work hard to preserve jobs and to fund priorities.
Budget choices are never easy, and you may have different ideas and solutions. And we look forward to hearing them, and to working together with you to find common ground.
As long as those solutions don’t include increasing taxes, spending more than we take in, or going further into debt.
And remember, every penny that is added to one program, must be taken from another.
Failing to spend the taxpayer’s money in a responsible way could eventually jeopardize our ability to adequately fund education, transportation, environmental programs, and provide support to the vulnerable and those most in need.
We simply cannot let that happen.
So, how do we begin to change direction, and to improve the state that we all love?
- Making Maryland More Competitive
Maryland’s anti-business attitude, combined with our onerous tax and regulatory policies have rendered our state unable to compete with any of the states in our region. It’s the reason that businesses, jobs and taxpayers have been fleeing our state at an alarming rate.
It’s at the heart of the fiscal and economic issues we are currently dealing with, and it is something we must find solutions to.
A year ago, I held my second annual Change Maryland Business Summit on Improving Maryland’s Economic Competitiveness.
We became the leading voice on these issues – it’s the reason I have the honor of being your governor, and it will be the primary focus of our administration.
I want to commend Senate President Miller and Speaker Busch for recognizing the need to make Maryland more economically competitive.
A year ago, at their urging, this legislature created the Maryland Economic Development and Business Climate Commission, also known as the Augustine Commission, to make recommendations to make Maryland competitive. It was a great first step, and we are anxiously awaiting the recommendations of this commission.
But, I am confident that we will find many areas of agreement to make Maryland a more business friendly and more competitive state, so that we can create more jobs and more opportunities for our citizens.
- Making State Government More Efficient And More Responsive
I’m proud of the experienced, diverse and bipartisan Cabinet that we have assembled to take over the reigns of state government.
Many of them bring fresh, innovative ideas and valuable real world, private-sector management expertise to their agencies. Their primary mission will be to find ways to restructure their agencies and to make state government more efficient, and more cost effective.
But, we also want to change the culture of state government.
The voters have given us an opportunity to build a government that works for the people – and not the other way around.
Comptroller Franchot noted at his swearing-in last week that we must reinstate old-fashioned customer service to every aspect of government.
I completely agree – and together we will.
- Repealing The Rain Tax
Dealing with the problem of storm water management and working to restore our most treasured asset, the Chesapeake Bay, is a goal we all strongly agree on.
But in my humble opinion, passing a state law that forced certain counties to raise taxes on their citizens – against their will – may not have been the best way to address the issue.
If there was one message that Marylanders have made perfectly clear it was that taxing struggling and already overtaxed Marylanders for the rain that falls on the roof of their homes was a mistake that needs to be corrected.
This week, our administration will submit legislation to repeal the rain tax.
- Tax Relief For Retirees
Nearly every day I hear from folks who say that they love the state of Maryland, that they have spent their entire lives here, and that they don’t want to leave their kids and grandkids. But, that they simply cannot afford to stay here on a fixed income.
We are losing many of our best and brightest citizens to other states.
Eventually, once we solve our current budget crisis, and turn our economy around, I want to reach the point where we are able to do away with income taxes on all retirement income, just as many other states have done.
This week, we will start heading toward that goal by submitting legislation that repeals income taxes on pensions for retired military, police, fire, and first responders.
These brave men and women have put their lives on the line for us – they deserve it – and they have earned these tax breaks.
- Tax Relief For Small businesses
I have spent most of my life in the private sector, running a small business in a state that, at times, seemed openly hostile to people like me.
There is much more for us to do, but as a first step, I’m proposing cutting personal property taxes for small businesses.
This burdensome tax and bureaucratic paperwork discourages the creation of new business, and drives small businesses and jobs elsewhere.
This legislation would create a tax exemption on the first $10,000 in personal property, entirely eliminating this tax for more than 70,000 small business owners — or one-half of all Maryland’s businesses.
- Repealing Automatic Gas Tax Increases
After syphoning a billion dollars from the Transportation Trust Fund, a decision was made to enact the largest gas tax increase in state history. This legislation also included language that would automatically increase taxes every single year without it ever having a coming up for a vote.
Marylanders deserve the transparency to know how their elected leaders vote every time the state takes a bigger share of their hard-earned dollars. This is a regressive tax that hurts struggling Maryland families and our most vulnerable, and which adds to the cost of almost everything.
These automatic tax increases should be repealed, and we will submit legislation to do so.
- Improving Transportation
Over the last several years, monies for local road improvements have been slashed by up to 96 percent.
Our administration is committed to restoring the money that was taken from the transportation trust fund, and to making sure that it never happens again.
Today I am pleased to announce a supplemental to our FY2016 budget that will increase Highway User Revenues by $25 million and give counties and municipalities the most money for road improvements that they have received since FY 2009.
Further, we are committed to increasing the local share of Highway User Revenues from 10% today to its original high point of 30% over the next 8 years.
This initial tax relief package is just a starting point in the process of rebuilding our state’s economy, and of course tax relief is only part of the solution. We have other important initiatives as well.
- Improving Education For All Maryland children
Education is our top priority.
In our proposed budget, we spend more money on education than ever before. We fund K-12 education at record levels and have committed over $290 million to school construction.
And this is the first time in history that any administration has provided additional supplemental funding for education through GCEI in their first year.
We have some great schools here in Maryland, but the gap between the best and the worst schools is dramatic.
I believe that every child in Maryland deserves a world-class education, regardless of what neighborhood they grow up in. We must fix our under-performing schools while also giving parents and children realistic and better alternatives.
So, let’s expand families choices. Let’s encourage more public charter schools to open and operate in Maryland.
This month, our administration will submit legislation to strengthen Maryland’s charter school law. This legislation will expand choices for families and make it easier for more public charter schools to operate in Maryland.
Our administration will also push for the enactment of the “Building Opportunities for All Students and Teachers” legislation, also known as “BOAST.”
It provides tax credits to those who make voluntary contributions to private or parochial schools, and it will help free up more money and resources for our students in public schools.
This legislation has been debated in these chambers for more than a decade. The Senate has already voted to support it. We need to work to convince our colleagues in the House that it is the right thing to do.
- Protecting The Environment
A healthy Bay is key to a strong economy and high quality of life – for all Marylanders. It will be a top priority of our administration.
Even after spending $15 billion in Maryland tax dollars, the health of our Chesapeake Bay has declined. Maryland just received a D+ on a recent report card.
This is just the latest indicator that our current strategy for protecting and restoring our greatest natural asset is failing. Our administration intends to reverse that trend.
It’s time for a new approach. We can, and we must do better.
We all agree on the problem: there’s too much phosphorous, nitrogen, and sediment entering our bay. We must take action to prevent as much of this pollution as possible from entering the bay.
However – restoration of our bay must not fall on one group disproportionately. Placing unreasonable burdens upon Maryland’s farmers will serve only to devastate more rural communities.
We will work with the agricultural and environmental communities to find fair and balanced solutions for limiting phosphorus. In addition, we will take a comprehensive approach to restoring our bay by addressing the long-ignored impact of upstream polluters, and the sediment spilling over the Conowingo Dam.
We will work with all stakeholders to come up with fresh, innovative solutions to protect and restore our greatest natural asset.
10. Tackling Maryland’s Heroin Epidemic
As I travel throughout our state, I hear the devastating stories from our families and friends who hurt from the devastation heroin has wreaked on our communities.
Throughout Maryland, from our smallest town to our biggest city, it has become an epidemic, and it is destroying lives. I have tasked Lt. Governor Rutherford with bringing together all of the stakeholders in order to come up with a plan to tackle this emergency.
Later this month, we will execute an executive order to address this heroin epidemic.
11. Campaign Finance And Election Reform
The strength of our democracy rests on a balanced, honest and open political process that challenges convention and encourages progress.
The Fair Campaign Financing Act for gubernatorial elections provides this balance and opens discord. It levels the playing field and holds our elected leaders accountable.
And while many said we would never elect a governor because of the low spending limits mandated in our public finance laws, I stand before you today as proof that the system does work.
We must replenish this fund as soon as possible and make it available for future candidates. Therefore, we will submit legislation to reinstate the voluntary check-off which allows a taxpayer to make a donation to go towards the public campaign financing system each year.
Finally, we need to address redistricting reform.
We have some of the most gerrymandered districts in the country – this is not a distinction that we should be proud of.
Gerrymandering is a form of political gamesmanship that stifles real political debate and deprives citizens of meaningful choices. Fair and competitive elections – and having checks and balances – make for a more vibrant and responsive citizen republic.
To advance this discussion, I will execute an executive order that creates a bipartisan commission to examine Maryland’s redistricting process with the goal of fully reforming this process and giving this authority to an independent, bipartisan commission.
Though this is an ambitious agenda, I believe that these actions will begin to put Maryland on a new path, one that leads to a new era of opportunity, and prosperity for all our citizens.
Though our visions may differ, our goals are the same: a better, stronger, cleaner, healthier, and more prosperous Maryland. We can’t accomplish these goals alone. We need your help, your ideas, and your support.
And while I’m sure we will disagree on a few points in the coming weeks, I am prepared to create an environment of trust and cooperation, one in which the best ideas rise to the top based upon their merit, regardless of which side of the political debate they come from.
So let us commit ourselves to that goal: to live up to our potential, to work together to solve the big problems with cooperation and good faith, for the sake of our children and grandchildren.
Let us renew our sense of optimism, and make Maryland a place of unlimited promise. Together, let’s change Maryland for the better.
Thank you, God bless you, and may God bless the great state of Maryland.
Stay tuned to the Harris Jones & Malone’s legislative blog this Session to see how the Governor’s plans unfold!