“I would say that right now it will not pass, nor is it even close, at least not right now in the Senate,” Saslaw said to reporters after the governor’s address to the General Assembly’s money committees Thursday.

Saslaw also said he doesn’t think the governor has enough support for the plan in the Republican-controlled House of Delegates.

McDonnell is pushing hard for the plan as a way to pay for Virginia’s much-needed transportation improvements.

But Saslaw said the proposal is based on fuzzy math.

“There’s no way you can make the numbers work without tripling the amount of booze that’s consumed in the state of Virginia,” he said. “I mean, that’s great. We’re gonna build roads by putting drunks out there driving these cars.”

A spokesman for the Republican Party of Virginia said in an e-mail statement late Thursday that Saslaw “has a transportation fever, and the only prescription is higher taxes.”

The governor plans to call legislators back for a special session, likely the week after the November elections, according to several sources. McDonnell advisers say they have yet to officially start “counting noses” to see if they have the votes necessary to pass the plan.

Remarks of Governor Bob McDonnell to the Joint Meeting of the Senate Finance, House Appropriations and House Finance Committees

RICHMOND – This morning at 9:30, Virginia Governor Bob McDonnell will address the joint Senate Finance, House Appropriations and House Finance Committees in Richmond. Below are the Governor’s remarks as prepared for delivery.

********

Thank you.

Chairman Colgan, Chairman Putney, Chairman Purkey, members of the General Assembly  money committees, ladies and gentlemen: good morning.

As is the custom each summer, I come to provide a summary of the recently concluded fiscal year, and some thoughts on the challenges and opportunities that lie ahead.

Seven months ago we met in the State Capitol for my first Address to the Joint Houses of the General Assembly.

In my remarks I noted that, together, “…We must agree to put in place policies that will unleash the innovation and ingenuity of the people of Virginia, opening the way for a new era of prosperity and progress. It starts with policies to promote job creation and economic development.”

The only difference between that time and today is the temperature outside. Our top mission remains the same.

Creating good jobs for our citizens and turning Virginia’s economy around are the twin objectives that guide our Administration.

The challenges are many.

While well below the national average, the unemployment rate in our Commonwealth remains unacceptably high at 7%, meaning nearly 300,000 Virginians are not able to find a job.

Credit is very tight, too many homeowners have mortgages that are under water, concerns of a double dip recession linger, the stimulus bump is about over, and some federal policies and regulations have stifled business development.

In this tough environment we must remain fiscally conservative, embrace government reform, and look for more cost effective ways to deliver government services.

We live in a global economy. As we close the 2010 fiscal year and plan for the upcoming session, it is important to remember that we cannot control Greece’s credit rating, the buying power of China’s middle class, Singapore’s innovation, or Iceland’s solvency. However, we can control the steps Virginia takes to compete and succeed in the global marketplace. So on the mission of seizing control of our fiscal responsibilities and managing our resources with good stewardship, we have reason to be pleased with some of the progress that has been made.

Last session we faced a potential $1.8 billion shortfall in the remaining FY 2010 budget. Today I am pleased to report that we closed the fiscal year with a $403.2 million surplus. We collected $228 million more in revenues than expected and spent $175 million less than budgeted. But please don’t get too excited, most of it is already obligated in statute or in the budget to meet various needs.

This modest surplus and fiscal turnaround was achieved by two Administrations, two houses of the General Assembly, and two political parties.

I applaud former Governor Tim Kaine for the tough cuts he made in this budget prior to leaving office. Governor Kaine also exercised conservative judgment in his revenue reforecast in December. Our Administration continued that policy of restraint during this session.

With a politically divided General Assembly, nothing meritorious is possible without bipartisan cooperation. The spending cuts and fiscal discipline that led to this surplus were the result of tough negotiations and agreement between a Republican House and a Democratic Senate. Thank you for your leadership and cooperation in this endeavor.

We have seen some slight economic growth recently in the Commonwealth. I thank Virginia’s business owners and entrepreneurs for their willingness to take risks in a tough economy. Those risks are paying off in the form of new jobs and increased tax revenue.

The other side of the surplus is found in savings. Virginia’s dedicated state employees deserve credit for their efforts to save nearly $175 million in tax dollars at the end of the fiscal year, rather than spending their budgets down to zero. Our managers found savings, and the Cabinet found smarter ways to do business, adhered to our hiring freeze, and brought in strong leaders.

Of the $228.5 million collected above the official forecast for general fund revenues and transfers, individual non-withholding payments and corporate income tax payments accounted for $169 million of that total.  In addition, withholding and sales tax collections, which are directly tied to economic activity in the Commonwealth, exceeded the forecast by $62 million.  This revenue growth occurred in the last four months of the year, beginning in March.

Our consensus revenue forecast process, which included the input of business leaders and General Assembly members, emphasized the need for caution and established the outlook for fiscal year 2010 at a level consistent with the lower growth forecast, which Governor Kaine built into the introduced budget.

In addition, during the midsession review, we held the line on revenue projections and your prudent actions enhanced our results.

Let me note briefly what did not contribute to these results.

The surplus did not come from the accelerated sales tax. Revenue from that policy, first enacted in a different form by the General Assembly in 2009, was already built into the revenue forecast in the budget, and actually came in slightly less than anticipated. I do not like the policy of the accelerated sales tax. It is an unfair imposition on Virginia’s retailers. This spring I sent you budget amendments to begin to phase out this policy by the end of my Administration, and I appreciate your approval of this request. Further, the revenue surplus is not tied to the deferral of payments to VRS. VRS rate reductions are part of the FY 2011/2012 budget.

Despite the growth during the last quarter of fiscal year 2010, total general fund revenues still declined in fiscal year 2010. However they declined less than anticipated. While we had forecasted a 2.3% decline, the final figure revealed a decline of only 0.7%. This slight improvement is worth noting. But it does not erase the fact that this was the first time in history that general fund revenues declined two successive years.  Clearly, while the fiscal year finished with some optimistic trends, we must budget conservatively going forward.

Let me now discuss the savings component of the surplus.

Today I can also officially report that $174.7 million remained unspent in agency general fund operating appropriations on June 30, 2010, excluding amounts otherwise mandated for reversion in the budget.  This total is comprised of $103.6 million in mandatory reappropriations to the affected agencies, and $71.2 million in undesignated discretionary balances.

Together, the $228.5 in additional revenue plus the $174.7 million in savings equal a $403.2 million surplus. And that leads to the question you all have been asking: where does it go?

The majority of the money is pre-designated by the Appropriation Act or by the Code of Virginia.

I am pleased to report that $82.2 million of the revenue surplus will go to provide the general fund share of a one-time 3% bonus to state employees on December 1, an action we all agreed to in the budget last session. Our state employees have not received any increase in pay since November of 2007. A prudent budget strategy we adopted was to incentivize state workers to generate savings and not spend their entire agency budgets by the June fiscal year close.  Our employees knew there would be a financial reward for saving taxpayer dollars and returning unspent balances to the General Fund. I thank our hard working state employees, though there are fewer of them, for saving so much even after their budgets were reduced.

What this result also shows us is the power in economic incentives.  This notion of gain sharing or economic rewards for getting results is a concept widely used in the private sector, and long overdue in practice and implementation within state government operations.  I plan to look for more ways to use such incentives in the budget and amendments I submit to you in the coming years.

Another $36.4 million from the surplus is designated by statute for deposit to the Virginia Water Quality Improvement Fund to help with cleanup efforts of the Chesapeake Bay, for both point source and non-point source pollution. For the first time ever, $32.7 million will be set aside for transportation purposes as required in law by HB 3202 from the 2007 session, whereby two-thirds of all undesignated surplus balances go to transportation. This is a very small new investment in transportation, but it demonstrates what will be possible when better economic conditions return to the Commonwealth. I was also pleased that in May we issued for the first time nearly $500 million in transportation bonds authorized by HB 3202, and we will issue approximately $300 million annually during my time as governor.

Another $16.3 million will be slated for “nonrecurring expenditures” also pursuant to the provisions of HB 3202.   This is the first time since FY 1999 that we had the equivalent of an undesignated fund balance for use in these types of investments.

The preliminary balance sheet for June 30, 2010 indicates that the Commonwealth ended the fiscal year with cash equivalent assets in the general fund of $872.9 million.  This is the first time since June 30, 2007, that we have seen an increase in general fund assets from the previous fiscal year.

As I noted, this balance is largely committed already.  Under current law:

• $295.2 million of this balance is reserved for the Revenue Stabilization Fund
• $132.2 million is already designated in the 2011-12 biennial budget
• $112.9 million is set aside to meet mandatory reappropriation of capital and operating amounts as specified in the Appropriation Act
• $69.9 million is slated for deposit or distribution to other accounts, (most notably $37.5 million to Communication Sales and Use Tax allocated to local governments and $27.7 million to the Transportation Trust Fund for its portion of the accredited sales tax receipts) and
• $23.1 million is reserved for the state’s share of obligations attributable to ongoing natural disaster authorizations.

The fact that we had sufficient resources to reserve for these items is, indeed, noteworthy.  I will incorporate all of these actions into the budget recommendations I submit to you this December.

After providing for all of the aforementioned requirements or commitments, there is still a $71.2 million discretionary balance in the general fund as of June 30, 2010.

The Appropriation Act gives me until November 1 to make a determination about whether any of these balances should be retained by the affected agencies or spent on other priorities.  I will also determine a recommended best use of the $103.6 million in reappropriations and $16.3 million in non-recurring expenditures when I submit budget amendments to you in December.

Finally, I am pleased to report that the good news in Fiscal Year 2010 is not limited to general fund revenue collections.  In particular, the Commonwealth Transportation Fund (CTF) revenues exceeded the official forecast by $64.4 million in fiscal year 2010.  That revenue surplus was attributable to solid growth in motor vehicle sales tax collections.  New car sales increased by 4.2 percent and used car sales grew by 4.0 percent in fiscal year 2010, after falling by 27.5 percent and 10.8 percent, respectively, in fiscal year 2009.

Working together during this past General Assembly session, we made the very tough choices necessary to close an unprecedented $4.2 billion shortfall in the FY 2011/2012 budget through reducing spending, not increasing taxes. And we did it on time, in a bipartisan fashion.

We also made Virginia one of the only states to have already balanced a budget for FY 2012, the first year in which states will no longer receive Federal stimulus funding.

This current biennial budget brings our spending levels down to those of 2006. Just like families and businesses must operate in this tough economy, we had choices to make and priorities to set. Thank you for putting partisanship aside to put Virginia on a solid fiscal course moving forward.

One of the toughest choices we made in the FY 2011/2012 budget was to defer about $620 million in payments to our retirement system to avert further spending cuts. Pension solvency and security is a top concern and priority for me and most governors, and such actions are bad long term policy for our state employees. While our deferral is far less than those in other states, it is still significant money that must be paid back. I know we are all committed to paying at least the $74 million per year noted in the Appropriation Act, and as times allow, I will accelerate those repayments.

Another tough choice came in cuts to K-12 education. For the most part, public education was spared the budget cuts that were experienced by other state agencies in 2008 and 2009. Unfortunately, the current economic problems were so significant that many previously untouched programs could not avoid reductions in this current budget cycle. The easy cuts had already been made. Our main duty was to protect the dollars going directly to the classroom and we made decisions that minimized the impact there as much as possible.

As noted, the redirection in payments from the retirement system is not a permanent savings. However this budget action will allow localities to use the estimated biennial local VRS payment savings of approximately $627 million, along with $115 million of bond proceeds for education technology in the budget, and $123 million in federal recovery funds, to offset cuts made in the introduced budget and during the session.

Further, as a result of recent federal legislation, Virginia school divisions can apply for an estimated $249.5 million in additional assistance that was not accounted for in the budget.  School divisions must use this money as required by law to retain, recall, re-hire, or even hire new staff to prevent any reduction in the quality of education services. In the future, I will ask that more money go to the classroom, where our children learn, not to bureaucracy and overhead.

It is important to note that when this $249.5 million is added to the resources previously mentioned from local VRS savings, bonds proceeds, and federal recovery funds, these new sources of support for education totaling $1.12 billion offset the major portion of the $1.22 billion in reductions made in Governor Kaine’s introduced budget and by us during the session.

Finally, school divisions were the first beneficiaries of today’s revenue surplus.  A portion of the revenue surplus in 2010 was due to sales tax that supports public education.  As a result, school divisions received $18.7 million in excess of the amounts originally designated for them with the checks sent in June.

While we have balanced our budget responsibly by making tough choices and not raising taxes, other states have chosen a different approach. Wisconsin, Massachusetts, California, New York and many others have chosen higher taxes as their solution to budgetary shortfalls. These choices have repercussions for future economic growth.

In this global and competitive economy, capital moves freely and quickly. A line on a map means nothing compared to the need to meet a bottom line. Employers have no hesitation in moving to states and nations in which they can be more productive, invest more aggressively, and innovate without excessive regulation, litigation and taxation.

Virginia is welcoming these employers.

In March, Mercury Paper left California to establish its North American headquarters in Shenandoah County.

In April, Fortune 100 Company Northrop Grumman followed suit, leaving Los Angeles for Fairfax County.

Phoenix Packaging Company chose Pulaski County for the site of its American headquarters. Virginia beat out Georgia, North Carolina, Kentucky, Tennessee and West Virginia to attract the South American manufacturer’s first North American facility.

All told there are 145 economic development projects, resulting in the creation of almost 8,000 jobs and over $1.18 billion in new capital investment, which the state has been a direct part of since January. I thank Lieutenant Governor Bolling, Secretary of Commerce and Trade Jim Cheng and my Senior Economic Advisor Bob Sledd for leading the job creation effort. There are significant new opportunities in the pipeline now.

During this past session of the General Assembly, we advanced a comprehensive economic development package of budget amendments and legislation to create jobs, attract new investment, and encourage existing businesses to expand their operations and increase their workforce in Virginia.  You funded these economic development initiatives in the amount of $63.3 million. As of July 1st, we have increased the Governor’s Development Opportunity Fund, created investments in tourism and technology, begun the process to open overseas trade offices and implemented many other new incentives.  I thank you again for giving me the tools to tell the Virginia free enterprise success story around the nation and the world to help create jobs for our people.

From February to June, Virginia ranked 3rd highest nationally in the total number of jobs created, trailing only Texas and Pennsylvania, and 4th highest nationally as a percentage increase.

Our statewide unemployment rate has fallen to 7.0%, which ranks Virginia the 12th lowest rate in the nation and the 3rd lowest east of the Mississippi behind only Vermont and New Hampshire.  During these tough economic times, it appears that our business-friendly policies are bearing fruit as we fare better than most states.  Virginia’s workforce remains one of the most diversified in the country, but workforce development remains a top priority to facilitate greater competitiveness in the growth industries of tomorrow.

Earlier this month, the Pollina Corporate 2010 rankings named Virginia as the “most pro-business state” in America, the fourth time Virginia has held this distinction.  Last month, for the fourth straight year, CNBC ranked Virginia one of the top two states in the nation for business.  In May, the U.S. Chamber of Commerce ranked Virginia 1st for cost-of-living adjusted median family income and 2nd for overall growth.   These rankings matter. They tell employers big and small, domestic and foreign, that if they want to grow and to prosper they need to be in Virginia. Truly, the Commonwealth is “Open for Business.”

Looking ahead, here in Virginia, key economic indicators are expected to grow at a modest pace after the on-target performance in fiscal year 2010.  In the official economic outlook for Virginia, employment is expected to increase only 1.1 percent in fiscal year 2011.  Wages and salaries are expected to increase 3.0 percent.  While this is positive, we must be aggressive in prudently managing our resources and apply our efforts to creating jobs to first sustain and then increase the numbers.  I will meet with the Governor’s Advisory Council on Revenue Estimates and the Joint Advisory Board of Economists in the upcoming months to determine if any adjustments to our revenue projections for FY 2011 and 2012 are needed.

We know this economy will continue to be tough and uncertain. Many days our path seems to consist of a few steps forward, followed by several more back. Job losses have declined and the economy is beginning to create new jobs, but consumer confidence remains low and rural and inner city job opportunities are insufficient, particularly in Southern Virginia. The stock market has recovered from the lows of March 2009, but last week brought a string of negative days and a retrenchment to early summer numbers.  Housing prices are starting to stabilize and sales have shown signs of recovering, but housing starts are at a historically low level.  The benchmark barometer of the state of the national economy, the Gross Domestic Product (GDP), has increased for four consecutive quarters, but our trade deficit is near a two-year high. Just this morning, the Department of Labor reported that weekly jobless claims reached a nine-month high.

This uncertainty is exacerbated by an increased number of unfunded federal mandates accompanied by a finite supply of conditional federal stimulus and Medicaid funds. The level of Medicaid spending in the state is unsustainable, having grown 1600% in 27 years, and now consuming 20% of the budget and growing. We have unmet needs in transportation and higher education, and more investments in economic development tools are needed. All of this has a direct impact on our future budgeting and financial health.

Just last week, U.S. Secretary of Defense Robert Gates announced a proposal to close the United States Joint Forces Command in Norfolk and Suffolk.  The Joint Forces Command continues to serve as a major employer of Virginians by directly employing nearly 5,000 civilians and service members.  This decision will cost good quality, high paying jobs for thousands of Virginians, and I believe is a short-sighted action which ignores the need to maintain our joint interoperability capacity which is critical for American superiority in modern warfare.

Virginia teamwork was evident in the bipartisan state and congressional cooperation on this issue from the moment the announcement was made. I have signed an executive order creating a Commission chaired by former Congressmen Tom Davis and Owen Pickett to strengthen and protect defense and national security infrastructure in Virginia.

In the remarks I made to you last January I also said this:

“The inherent dignity of a good day’s work in a worthwhile pursuit strengthens the soul, supports the family, and reduces dependence on government.”

And every Virginian deserves the opportunity of a good job, with good pay, in the community they call home. It’s good for our Commonwealth, and it ultimately is what will return Virginia to economic prosperity in the years ahead.

In the toughest economy since the Great Depression, with our national deficit at $1.6 trillion for the year and our national debt exploding to over $13 trillion, Virginians and Americans are looking at how things are done in the Commonwealth, and they see that there is another way forward. We should not hesitate to tell the story of Virginia’s balanced budget and spending restraint, and to encourage our federal government to learn from our bipartisan effort.

In this complicated, interconnected world it can often appear that the future is out of our hands. It is not. The steps we take in Richmond will determine the path Virginia takes coming out of this economic downturn. When we look back on this difficult period in our history, we will want people to know that we didn’t look to the next day; we looked to the next generation.

My goal is that we continue to put in place the policies that encourage job creation, investment, innovation, education, ingenuity, and good citizenship, and that is why Virginia will continue to help lead the nation in our economic recovery.

Thank you for your service to the people of Virginia.

They’ve been making the rounds, talking up Virginia’s health care challenge, its newly-explained immigration policy and the governor’s plan to privatize liquor stores here.

I stopped McDonnell in the hallway after one of his cable interviews, to ask him about the immigration issue.

The governor said he wants the U.S. Department of Justice to give Virginia state troopers the authority to enforce immigration laws much like agents for Immigration and Customs Enforcement.

“All we want to do is to make sure that, first and foremost, that people who are here illegally and committing crimes against other Virginia citizens or other immigrants, that those people are properly prosecuted, detained and deported,” McDonnell said.

He told me that he supports Cuccinelli’s opinion that Virginia police officers are allowed to ask about a person’s immigration status.

But, McDonnell said, the Commonwealth’s law is different from the controversial measure in Arizona, which required officers to ask about a person’s immigration status.

“There is a difference in the law,” McDonnell told me. “We have a little bit of a different legal position.”

This week, the Virginia chapter of the ACLU sent a letter to every police chief in the state, urging them to ignore Cuccinelli’s opinion and to avoid asking about immigration status.

That letter is here.

Throughout the coming days and weeks, I’ll be incorporating some of the tools I picked-up there into my blog.

Stay tuned…

The governor’s office announced the tour Thursday. They’re calling the meetings “Virginia Speaks: A Conversation About Jobs, Government Reform and Our Future.”

Among other things, the series will be an opportunity for McDonnell to pitch his controversial plan to privatize the state’s liquor stores directly to voters.

The schedule is after the jump. The closest town halls to Charlottesville are events in Harrisonburg and Fredericksburg.

August 4, 2010 — 7:00pm-8:30pm

• Roanoke
  Roanoke County Administration Center
  Board of Supervisors Board Room
  5204 Bernard Drive
  Roanoke

August 9, 2010 —7:00pm-8:30pm

• Norfolk
  Old Dominion University
  Webb University Center – Hampton/Newport News Room
  4201 Hampton Blvd.
  Norfolk

August 19, 2010 — 7:00pm-8:30pm

• Chester
  Cultural Center of India
  6641 Ironbridge Parkway
  Chester

August 24, 2010 — 7:00pm-8:30pm

• Fredericksburg
  University of Mary Washington
  Lee Hall – Room 412
  1301 College Avenue
  Fredericksburg

August 25, 2010 —7:00pm-8:30pm

• Fairfax
  Northern Virginia Technology Council Auditorium
  2214 Rock Hill Road, Suite 300
  Herndon

August 26, 2010 —7:00pm-8:30pm

• Harrisonburg
  James Madison University
  East Campus Dining Hall – Montpelier Room
  800 S. Main Street
  Harrisonburg

August 30, 2010 — 7:00pm-8:30pm

• Danville
  Institute for Advanced Learning and Research
  Great Hall
  150 Slayton Ave.
  Danville
  ***Partnering with the Sorensen Southside Public Leadership Series***

August 31, 2010 — 7:00pm-8:30pm

• Bristol
  Bristol Public Library
  J. Henry Kegley Meeting Room
  701 Goode Street
  Bristol

The Commonwealth surely has buildings, parking lots and event undeveloped property that isn’t being used effectively, members thought.

There’s one small problem.

No one — not the governor, not the legislature and not the state’s Department of General Services — maintains a complete list of Virginia’s real property assets.

Richard Sliwoski, the director of DGS, told me the state owns 13, 548 buildings, valued at $24.6 billion. Those numbers come from data required by Virginia’s insurance carrier, so officials are confident that they’re accurate.

The question mark is how much undeveloped property the state owns. No one seems to know.

State agencies were supposed to complete land use plans that tally up each department’s property assets. In many cases, those reports haven’t been written in years. The ones that have never made it to DGS.

Sliwoski says his agency is committed to tracking down accurate numbers for how much property the state owns, where it is and how much it’s worth.

“It is the taxpayers’ property,” he said. “They’ve entrusted it to us. They should know that we know what we have and we’re maximizing the use for it.”

The governor’s office has ordered all state agencies to submit the information to DGS by late summer.

Malek played a role in a Nixon administration effort to round up Jews working for the federal government. He has apologized for his actions, but that didn’t quell criticism from Democrats. They say the incident makes Malek a poor choice to serve as the head of a panel tasked with making state government smaller.

Democrats also are upset because Malek personally paid a six-figure fine to the Securities and Exchange Commission stemming from a pension fraud case in Connecticut earlier this decade.

Gov. Bob McDonnell (R) stood by his man Friday. Here’s part of what the governor had to say to us outside the commission meeting:

Malek again apologized for his role in the Nixon “Jew counting” flap. He was joined by House Speaker Bill Howell (R-Stafford), who defended Malek:

Democrats hit on the Malek issue again Monday with a DPV-sponsored conference call, though it’s likely McDonnell will continue to dismiss the criticism as partisan politics.

The governor, accompanied by Chief of Staff Martin Kent, met with the Senate conferees for about 25 minutes behind closed doors at the Senate Finance Committee offices.

Asked if he thought negotiators would strike a budget deal on time, McDonnell simply said, “They’re working hard at it.”

The governor then stepped onto an elevator that would take him to a similar meeting with House negotiators.

Conferees met until about 10 p.m. Thursday, working in small groups to blend two competing budgets into one.

For the first time, negotiators talked in-depth about K-12 education funding, making incremental progress toward narrowing a nearly $600 million gap between the House and Senate plans.

If the General Assembly is to adjourn by Saturday night as scheduled, negotiators likely would need to strike a budget agreement by mid-day Friday.

Here’s the clip:

Last Friday morning, House and Senate budget negotiators were effusive in their praise for each other, saying they were “encouraged” and “optimistic” about the tone and tenor of talks thus far.

By late that afternoon, delegates were beyond irritated — having learned that senators would not offer a counter-proposal to a long list of House concessions until Sunday.

Del. Lacey Putney, I-Bedford, said he didn’t want to “get into a urinating match with a polecat,” but said he was miffed that the Senate conferees decided not to meet at all over the weekend.

The House conferees offered:

-To agree to $76 million in new or increased fees. Their original position was no fees at all. The Senate wants $326 million.

-To leave $100 million as an unappropriated balance — a rainy day fund of sorts for 2012. Delegates initially asked for $165 million. Senators don’t allow for any surplus.

-To recalculate some of the proposed changes to the Virginia Retirement System, which would effectively reduce the amount lawmakers would pull from the fund to help balance the budget.

Senators showed up about an hour late for their joint meeting with House conferees Sunday, and things went downhill from there.

“I’m trying to see what we got,” said Del. Kirk Cox, R-Colonial Heights, the Appropriations Committee vice chairman, to which another lawmaker added, “Not much!”

The Senate negotiators accepted the House offer to increase fees, but held their position on the remaining $250 million, arguing that that money would help pay for teachers and public safety.

“How are you going to get enough money unless you use nearly every damn one of those fees?” asked Sen. Dick Saslaw, D-Fairfax, the chamber’s majority leader.

House conferees said they felt like they were getting the raw end of the deal.

“Where’s the compromise in the fees? Tell me where the compromise is,” said Del. Steve Landes, R-Augusta, a newly-appointed conferee.

“A number of your compromises weren’t really,” shot back veteran negotiator Sen. Janet Howell, D-Fairfax.

Howell maintained that because the House would not accept an insurance rate increase — which funds public safety — law enforcement would take an enormous hit.

“It’s missing. It’s not there — $66 million is not there. You cut it out,” Howell said, pointing over a box of Goldfish crackers and across the table to delegates.

During the nearly hour-long session, lawmakers hastily flipped through dozens of pages of charts. At one point, that was the only sound to be heard, save a few discontented grunts and sighs from a couple negotiators.

Senators offered to come down on their number of furloughs for state employees — from three a year to two anually — but the House held its position, squarely against furloughs.

Delegates believe the plan would cause too many complications for state agencies, with little cost savings.

For the first time Sunday, the two sides also talked about education funding — perhaps the biggest difference between the two spending plans.

The House budget calls for about $630 million in cuts to K-12 over the two year spending cycle. The Senate budget cuts about $130 million.

Senate Finance Committee Chairman Chuck Colgan, D-Prince William, called the issue “the gorilla.”

“You’re not going to get to your figure on K-12,” Cox told senators.

Senators believe public schools have taken enough of a hit and should be spared from cuts local superintendents call devastating.

“Everything you all do is on the backs of the schools,” said Sen. Edd Houck, D-Spotsylvania.

The Senate did acquiesece to a House proposal that would delay new school bus purchases — saving just shy of $10 million a year.

But that did little to satisfy delegates.

“We’d really like to make some progress here,” Cox said.

There’s always Monday.

Nonetheless, Clifford the big red dog — of PBS and storybook fame — ended up in the state Senate’s dog house today for breaking the rules.

Clifford (actually a PBS volunteer in a mascot-like suit) is at the Capitol lobbying against deep funding cuts to public broadcasting. He gave out hugs to lawmakers before the floor session.

He was supposed to make an appearance in the House and Senate galleries to wave to lawmakers at the start of their legislative day.

But, alas, the rules here — including the one that bans hats in the Senate — apply to everyone. Even costumed dogs.

So the Senate told Clifford to scram…at least down the hall to the House of Delegates, which didn’t seem to mind the big red head.

It’s known as “Budget Sunday” around here — an afternoon filled with stacks of briefing papers, hundreds of pages that contain the fate (or at least an initial indication of one) for localities and services that receive state money.

But with the clock ticking, there’s growing concern in Capitol Square about what might be in those budget proposals.

“There a lot of difference of opinion about how do we address this $2 billion problem,” said state Sen. Edd Houck (D-Spotsylvania) in an interview last week.

The “second two billion,” as it’s commonly called here, is the budget shortfall that remains after former Gov. Tim Kaine’s proposed cuts.

Before he left office Kaine, a Democrat, used reductions to eliminate about half of the state’s $4.2 billion deficit. He recommended lawmakers use a tax increase to fill the other half.

But with Gov. Bob McDonnell (R) promising to veto any budget bill that contains a tax increase, Senate Democrats are split about what to do next.

Houck said it is possible that the Senate Finance Committee could fail to come up with a budget plan by the Sunday deadline.

The gist is this: some Senators believe a tax increase is the only way to avoid unpalatable cuts to already austere programs and services; others believe it is futile to include a tax increase that the governor certainly will veto.

NO FORMAL PROPOSALS

Complicating the negotiations is the fact that McDonnell did not offer formal budget amendments at the start of the legislative session.

Every governor in modern Virginia history has done so, but the governor has said he prefers to offer private guidance to lawmakers, instead.

The move infuriated Democrats.

Senators have taken repeated shots at McDonnnell during floor speeches. The Democratic Party of Virginia launched a new Web site, slamming the governor’s budget plan.

“There’s little or no public dialogue because no one knows specifically what we’re talking about,” Houck told me.

The state GOP fired back with its own video, and House Republican lawmakers say McDonnell has been incredibly helpful to them.

“I think he is communicating and is doing a good job of letting us know what his priorities are,” said Del. Steve Landes (R-Augusta).

Landes said the House Appropriations Committee is on track to report a budget on time.

He said the committee chairman, Del. Lacey Putney (I-Bedford) told the governor that formal budget amendments were unnecessary.

“We’re going to be prepared to do the people’s business,” Landes said.

PRIVATE MEETINGS

McDonnell’s budget chief — Finance Secretary Ric Brown — met privately with senators last week, outlining areas in which McDonnell recommeded cuts.

The list included $700 million in reductions to public education  and a $700 million hit to state employee compensation — including the Virginia Retirement System.

Depending on who you ask, the list was either very precise or very generic.

“Those were less than specific,” Houck said. “So we’re still waiting for the governor to send down something specific.”

Stacey Johnson, McDonnell’s press secretary, declined to comment on the private meeting and would not provide a copy of the recommendations Brown conveyed to lawmakers.

Sen. Chuck Colgan (D-Prince William), who chairs the Finance Committee, said he believes McDonnell will release public budget recommendations.

“That’ll come,” Colgan said. “We’re going to get them.”

But most Democrats disagree.

“I don’t think Chuck is right on this one,” one state Democrat told me.

LONG ROAD AHEAD

Regardless of what McDonnell offers — or does not offer — this week, the budget process is far from finished.

The key thing to watch this weekend will be the major differences in the House and Senate budgets, especially when it comes to cuts to law enforcement, K-12 education and the mentally disabled.

Those sticking points will spell out just how much reconciling must happen before lawmakers can agree on one budget — and whether they can do it by March 13, when the General Assembly is scheduled to adjourn.

I’ll have in-depth analysis of those plans after they’re released.

Throughout the fall campaign, I blogged regularly and dilgently.

That hasn’t been the case during this legislative session because, above all, my job is to put stories on television. All too often, posting reports here takes a back seat to the on-air product.

It is a fact of life, but one for which I apologize.

Throughout the remainder of the session, my goal is to post one long-form, analysis story every week.

For immediate updates, including “headlines” and breaking stories — such as floor or committee votes — follow me on Twitter: @AdamRhew

And you can always check the station’s site — www.nbc29.com — for links to my on-air stories each day.

I hope to get back to more freqent posts after the legislature adjourns.

Thanks for reading!

Adam

McDonnell delivered the address from the floor of the House of Delegates chamber, surrounded by supporters — including an ethnically diverse backdrop of smiling friends.

As expected, Republicans loved the speech. Democrats didn’t.

Here are a few takeaways:

*More than anything else, I noticed the extent to which McDonnell repeated whole sentences from his Inaugural address and his speech to a joint session of the General Assembly last week:

All Americans agree, that a young person needs a world-class education to compete in the global economy. As a kid my dad told me, “Son, to get a good job, you need a good education.” That’s even more true today.

and

A child’s educational opportunity should be determined by her intellect and work ethic, not by her zip code.

It’s not necessarily a bad thing. But it was certainly noticeable.

*McDonnell looked comfortable in the House chamber. After all, he did serve there for 14 years. The live audience seemed to help, and it certainly prevented another Bobby Jindal moment. Or another Tim Kaine moment, for that matter.

*A lot of the national commentators immediately noticed the incredibly diverse audience behind McDonnell on the dais. Brian Williams noted that they were probably told to “focus on a spot on the back of his head and smile.”  A number of people who wrote to me on Twitter said the hyper-diversity made the atmosphere feel contrived.

The diversity was noticeable, though I’m not sure how much you can fault a politician for that. One note — the folks up there were McDonnell allies, including Cabinet secretaries. So it’s not as if he went out to downtown Richmond to hand-pick a diverse crowd of people for his backdrop.  (I’ve covered political rallies where staffers literally went through the masses, pulling minorities up to the stage to stand behind the candidate.)

*McDonnell’s performance will once again ratchet up talk of his political future. He’s already  being bantered about as a possible 2012 veep pick. This speech will only increase that gossip. It’s still a long time before we can honestly talk about 2012 running mates. Plenty can happen — both good and bad — to affect McDonnell’s political fate.

*Perhaps the biggest winners of the night were McDonnell’s sons, Sean and Bobby, who made it onto ESPN’s SportsCenter, thanks to the joke dad cracked about finishing the speech on time. It could be the defining moment for an 18-year-old boy.

All kidding aside, what did you think of McDonnell’s speech?

McDonnell, speaking to reporters inside the General Assembly Building, said he would also discuss some of the “philosophical differences” between Republicans and Demcrats.

“I’ll do it in a way that I hope is uplifting and positive and puts the best foot forward for our Republican team,” he said.

McDonnell will deliver the address from the floor of the House of Delegates, in front of a live audience — an interesting departure from normal protocol.

You can watch the State of the Union Address and McDonnell’s response live on NBC29.

State Sen. Jill Holtzman Vogel (R-Fauquier) said she’s concerned her bipartisan redistricting bill could run into hurdles in the House of Delegates, which killed the measure last year.

“As a matter of fundamental fairness, Virginians deserve it,” Vogel said at a press conference Monday.

She was flanked by a phalanx of legislators.

Conspicuously absent, though, were House Republicans. None attended.

“Irrespective of where the [House Republican] leadership is, there are people on the House side, both Republicans and Democrats, who really understand and believe it’s the right thing to do,” Vogel said.

Lawmakers noted that Gov. Bob McDonnell (R) endorsed the idea on the campaign trail, as did his opponent, Democrat Creigh Deeds, who has pushed the idea in the state Senate for years.

“It really is very important that we have a signal from the governor to say ‘This bill or that bill is the one that meets what I was talking about when I was campaigning,’” said Del. Ken Plum (D-Fairfax), the House Democratic Caucus chairman.

I asked McDonnell about that point in the hallway of the General Assembly Building, where the governor was meeting with military veterans.

“The concept of having more citizen input…is one that I support,” McDonnell said. “But what shape that takes place is going to be up to the legislature to how exactly to do that.”

“I hope to see some results this session,” he said.

Additionally, the foundation will host a benefit dinner in February with all proceeds going to Doctors Without Borders.

Last week, freshmen Dels. Luke Torian (D-Prince William) and Ron Villanueva (R-Virginia Beach) challenged their colleagues to personally donate $100 each to Haiti relief efforts.

They’re collecting the money until Wednesday, but so far have received about $1,000.

At issue is the case of Jens Soering, convicted of the 1985 double murders of Derek and Nancy Haysom in Bedford County.

The German national received two life sentences for viciously stabbing the Haysoms.

Soering was dating the Haysoms’ daughter, Elizabeth, at the time. They were U.Va. students when the slayings occurred. Elizabeth Haysom was convicted for conspiracy and is serving a 90-year sentence.

Shortly before his term ended, then-Gov. Tim Kaine (D) quietly gave the feds consent for Soering to be transferred back to Germany.

The governor’s office never publicized the move and never offered a defense to reporters.

When news of the move hit Republicans, they hit the roof.

Which brings us to today’s motion.

Bell — a former prosecutor — spoke on the House floor, asking lawmakers to join his plea to keep Soering in Virginia.

“This is a grotesque miscarriage of justice,” Bell said. “If there’s anybody who shouldn’t be released, it’s this man.”

Bell said Soering’s powerful family in Germany played a role in Kaine’s decision.

“Only one person got this special treatment,” the delegate said. “It’s entirely because of his special connections and his wealth.”

He urged lawmakers from both sides of the aisle to join in the petition.

“[Soering] is trying to make a game of this,” Bell said. “Please do not let him win.”

Del. David Englin (D-Arlington) agreed.

“It does make a mockery of the system,” he said. “This individual should never see the light of day.”

At the end of Friday’s floor session, Bell had 50 colleagues sign his letter.

Gov. Bob McDonnell (R) has reversed Kaine’s decision, and informed the U.S. Justice Department that Virginia has revoked its consent to transfer.

A decision on the matter could come in the next few weeks.

McDonnell’s office made the announcement Thursday, after word leaked to the national press.

The governor is viewed as a rising star in his party.

McDonnell is not the first Virginian to deliver a SOTU response. Gov. Tim Kaine (D) spoke in 2006. Sen. Jim Webb (D) responded in 2007.

Kaine’s speech was panned; Webb’s was praised.

Indeed, the national spotlight could be cruel or kind to McDonnell. We hope to have more details about his address in the coming days.

Stay tuned…

After about 45 minutes of spirited debate, lawmakers unanimously voted the plan down.

Republicans forced the vote on the House floor, saying it was essential to properly frame budget negotiations.

Democrats said it ammounted to an effort to put them in a political pickle.

“We all know why this bill is here,” said Minority Leader Ward Armstrong (D-Henry). “It’s here to embarass us; it’s here to embarass [former Democratic Gov.] Tim Kaine.”

Republicans denied that charge.

“I’m sorry if some of you are embarassed,” said Majority Leader Morgan Griffith (R-Salem). “It’s real easy not to be embarassed: you vote no and you just say we voted no. What’s so embarassing about taking a vote?”

The heated debate sets the tone for the remainder of the session — and for budget talks which were already expected to be tense.

Democrats bailed on the bill because they said there was no point in voting for a measure that’s dead on arrival.

“We will not walk the plank when that goes nowhere and we have been told in no uncertain terms that this bill will be vetoed,” said Del. Vivian Watts (D-Fairfax).

The stops were shuttered last summer because of budget troubles.

McDonnell made a brief appeal to the CTB, which made a late addition to its agenda to accommodate the vote.

The stops will be phased in, starting with four along Interstate 81 to be open by Feb. 17. All rest areas will be operational by April 15.

Virginia will pay $3 million to operate the areas between now and the end of June. Starting with the new fiscal year, McDonnell hopes to secure public-private financing, non-violent inmate labor and other funding mechanisms.

Gov. Bob McDonnell (R) conveyed his support for the White House’s ”Race to the Top” education program in a phone call  this afternoon with Education Secretary Arne Duncan.

The conversation came hours after Duncan and President Barack Obama stopped at a Falls Church school to pitch the program — without inviting McDonnell to attend.

NBC29 was first to report that McDonnell did not receive an invite.

In a statement, the governor said he promised to do anything he could to help promote Mr. Obama’s education initiatives.

“The president and I are of different parties, but when it comes to expanding positive educational opportunities for our young people we are of like minds,” McDonnell said in the statement.

The full release from McDonnell’s office is after the jump.

Statement of Governor Bob McDonnell on President’s Visit to the Commonwealth
Governor Has Lengthy Conversation with Education Secretary Arne Duncan Following Event
Pledges Partnership in Effort to Expand High-Quality Charter Schools; Implement Education Reforms
Virginia’s Race to the Top Application Submitted January 14th; Seeks $350 Million from Federal Grant Program
 
 
RICHMOND- Virginia Governor Bob McDonnell released the following statement this evening regarding the visit of President Barack Obama and United States Secretary of Education Arne Duncan to the Commonwealth earlier today. McDonnell has pledged the full support of his administration in the President’s effort to expand the number of high-quality charter schools in the United States. McDonnell has previously noted that the Commonwealth’s application for the President’s $4.35 billion Race to the Top grant program was submitted last Thursday, a joint effort of the outgoing Kaine Administration and the McDonnell transition office.  The Commonwealth requested $350 million in federal funding to promote charter schools. 
 “It is always an honor to have the President in the Commonwealth. The President and I are of different parties, but when it comes to expanding positive educational opportunities for our young people we are of like minds. The President and Secretary of Education Arne Duncan, who joined him today, are committed to dramatically increasing the number of charter schools in the nation and enacting education reform. Virginia is the perfect state to lead this effort. Twelve years after we passed our state law allowing for charter schools in the Commonwealth, only three are in operation. A fourth, Patrick Henry Charter School, will open this spring in Richmond. It was great to welcome a potential kindergartner in the school’s inaugural class, Everett, age four, to my Address to the Joint Houses of the General Assembly last night.
           I spoke at length by phone today with Secretary Duncan regarding the Commonwealth’s support for education reform to give parents and young people greater options in our public education system.  We discussed his visit to Virginia and agreed to work together to create more high-quality charter schools.
Virginia Secretary of Education Gerard Robinson and I are committed to putting Virginia in the vanguard of the national charter school movement. We are equally committed to working with the Administration to establish means by which we can better reward our great teachers for their service, and to identify and implement additional educational reforms that will help every student, in every community, get the education they need to compete in our global economy. The education of our children is not a partisan issue. We all agree that no child should attend an underperforming school and no young person should have their opportunities determined by their birthplace or zip code.”

A House committee this afternoon voted to send former Gov. Tim Kaine’s (D) tax increase proposal to the full body — forcing every lawmaker to say ‘aye’ or ‘no’ to the proposal.

The 13-2 vote by the House Rules Committee was expected; Minority Leader Ward Armstrong (D-Henry) and House Democratic Caucus Chair Ken Plum (D-Fairfax) voted no.

The proposal would eliminate the state’s car tax relief — which runs the Commonwealth $950 million a year — and would replace it with an increase to the state’s income tax.

Del. Bob Brink (D-Arlington) is carrying the bill for the former governor.

Lawmakers will now debate the measure on the House floor, perhaps as early as this week.

Virginia Democrats raised questions about Gov. Bob McDonnell’s approach to the state spending plan, during a taped response to his first address to a joint session of the legislature.

After the jump, you can find the full text of the response, delivered by Senate Majority Leader Dick Saslaw (D-Fairfax) and state Sen. Mamie Locke (D-Hampton).

“Good evening, I am Dick Saslaw, Virginia State Senate Majority Leader
“And I am Mamie Locke, Virginia State Senator from Hampton.
“Thank you for your time this evening, and for the opportunity to tell you how Democrats view the state of our Commonwealth. We would first like to join all Virginians in commemorating today as Martin Luther King, Jr. Day. Dr. King dedicated his life to delivering the “more perfect union” our founders promised, and his words and deeds still inspire today.
“Earlier you heard from our new Governor, Bob McDonnell. We congratulate Governor McDonnell on his election and look forward to working with him to address the challenges facing Virginia. We will work with the Governor to increase employment opportunities, ensure the best education possible for our children, and find solutions to our transportation crisis. We also pledge to stand firm when we believe the best interests of the state are being compromised. We will, at all times, conduct ourselves in a manner that makes Virginians proud.
ACHIEVEMENTS
“Our two previous Democratic Governors, Mark Warner and Tim Kaine, worked to position the Commonwealth for sustained success. Our combined efforts have earned Virginia the title of “Best State for Business”; our investments in early childhood education made Virginia the state where a child is most likely to have a successful life and our adherence to Virginia’s traditionally sound budgeting and fiscal principles earned us the title of “Best Managed State.” We are extremely proud to have contributed to these tremendous achievements.
CHALLENGES“We cannot rest on our laurels when so many Virginia families and businesses are struggling. Our transportation program remains grossly underfunded. Without adequate state funding for our K-12 schools and our world class colleges and universities, higher education gets further out of reach for all Virginians. This limits our ability to compete in the global economy. We also face new challenges brought on by the worldwide economic slowdown that began nearly three years ago. An unacceptable number of Virginians are out of work which is why creating and retaining jobs in all parts of the Commonwealth remains our top priority.
BUDGET
“Virginia has certainly felt the effects of the current recession. Since 2007 we have cut $7 billion in spending from the state’s budget without increasing taxes. Unlike the Federal government we must balance our budget annually. Strategic cuts have been made to minimize the impact on critical state services. Now we have reached the point where additional cuts can and will cause the loss of both jobs and services.
“One month ago, Governor Kaine proposed a balanced budget that includes significant budget cuts. Governor McDonnell has declared the entire plan dead on arrival. Please understand what that declaration means. By rejecting Kaine’s plan, Governor McDonnell is forcing an additional $2 billion in cuts. Cuts will now total $4.3 billion instead of $2.3 billion. McDonnell’s cuts will mean the elimination of more critical services and thousands of layoffs to public employees, including our teachers and public safety professionals. We await Governor McDonnell’s detailed plan on how he would make his additional $2 billion in cuts.“And now, I’d like to introduce again, Senator Mamie Locke.
SENATOR LOCKE:
“Thank you Senator Saslaw. I’d like to tell you a little more about the priorities of the Virginia Democrats, as well as what you can expect from us, and what we expect from our new Governor.
EDUCATION
“We have done all we can to protect funding for K-12 education, but it is no longer possible to place any portion of the budget off limits. Public education remains a top priority for Democrats. We also know that education means jobs. The previously proposed cuts to education will have a significant impact, but Governor McDonnell’s course of action will double the pain. Estimates indicate the level of cuts chosen by the Governor could result in 23,000 layoffs in public education across the state. We intend to maintain Virginia’s leadership status in public education. We ask Governor McDonnell to join us in opposing permanent cuts to our public schools and far reaching job losses that will follow.
TRANSPORTATION
“Virginia must find a way to ensure an adequate and sustainable transportation program. Two of our most economically vibrant regions, Northern Virginia and Hampton Roads, are in danger of being choked off by crippling congestion. We are at a competitive disadvantage by pitching a sub-par transportation network to potential employers. There are also serious public safety concerns. Hampton Roads lacks the capacity to evacuate hundreds of thousands of people if threatened by a hurricane, and nearly 2,000 bridges across the Commonwealth are in need of repair or replacement.
“The Senate has shown that we are serious about fixing our transportation problems. One thing we will not do is build roads on the backs of school children. We look forward to working with Governor McDonnell as he leads his fellow Republicans to address this problem that should have been fixed long ago.
PUBLIC SAFETY
“Finally, ensuring public safety is an irrefutable responsibility of government and we have the utmost respect for the men and women that put themselves in harm’s way every day to maintain our safety and security. Recognizing again that all portions of the budget will bear some burden, we will work to prevent disproportional and potentially crippling cuts to public safety programs. Our public safety officials, including sheriffs, sheriff’s deputies, local and state law enforcement officers, deserve more than our respect, they deserve our support.
COMMONWEALTH OF…
“Governor McDonnell chose as his inauguration theme, “A Commonwealth of Opportunity,” and we will work with him, as well as our Republican and Democratic colleagues to make sure that Virginia is a place of limitless opportunity. We ask Governor McDonnell to join us as we create a Commonwealth of Prosperity that remains the best state for business and a magnet for economic development. We ask him to join us as we create a Commonwealth of Innovation where our limited resources are used in creative ways that deliver results for all Virginians. And we ask him to make ours a Commonwealth of Compassion where, even in challenging times, we care for the most vulnerable among us— the young, the old, and the ill.
CONCLUSION
“We all know Virginia faces significant challenges, but in our 400 year history we have faced worse and come out stronger. As we work through this challenging legislative session, we will never forget what it means to be a Virginia Democrat. A Virginia Democrat focuses on results, not process, places pragmatism above partisanship, and values reality above ideology.
“We are not in Richmond for personal achievement, nor to embark on ideological crusades, nor go to battle against perceived foes. You have sent us here with an expectation that we will maintain the progress made in recent years, and continue to move the Commonwealth forward even in difficult times, and that is what we will do.
“Thank you again for letting us share our perspective with you. Good night.”

Gov. Bob McDonnell (R) asked lawmakers Monday for more money to go toward job creation and economic development, while at the same time refusing to allow a tax increase to balance the budget.

After the jump, McDonnell’s speech as prepared for delivery.

 
Address to the Joint Houses
Governor Bob McDonnell
January 18, 2010
Richmond
 
 
Thank you. Thank you.
Mr. Speaker. Mr. President.
Mr. Chief Justice and Justices of the Supreme Court.
Ladies and Gentlemen of the General Assembly
My fellow Virginians
It is an honor to return to this historic chamber this evening to share with you some thoughts about the challenges and opportunities before us. 
And I want to thank you for inviting me to address you for the second time in 48 hours…..I appreciate you wanting to hear from me so often, but I don’t know if we can keep up this pace!
I enjoyed my 14 years serving the people of Virginia Beach in this House as their delegate.   I’ve been looking forward to this moment for a long time. This will be the first time that I’ve spoken in the House of Delegates that Delegate Armstrong is powerless to interrupt me!
Tonight I thank our clerks, Bruce and Susan, for giving me the best seat I’ve ever had!
I extend my sincere appreciation tonight to Governor Tim Kaine for his service to Virginia.  His help during the hectic two months of transition has helped prepare me to be ready to govern today.
 
Before we begin to discuss our Commonwealth, I want to direct our thoughts and prayers to another country. We grieve for the suffering people of Haiti who have lost loved ones, property and dreams.  Please join me in a moment of silence for all those who were lost in last week’s devastating earthquake, including University of Virginia graduate student Stephanie Jean-Charles.
Thank you. 
The people of Virginia are responding to the tragic events in Haiti with an outpouring of concern and generosity, and I encourage all our citizens to donate what they can to the Red Cross and the other relief organizations that are at this minute providing food, water, medical care and shelter to the people of Haiti.  I especially want to thank our state employees who are already generously contributing to this relief effort.
Never as a middle class kid growing up in Fairfax County did I dream I would have the honor I received on November third.  To serve as the 71st Governor of the Commonwealth of Virginia is to follow in the footsteps of giants… Henry, Jefferson, Randolph and others.
But many who have inspired us were not Governors or even public officials at all.  Today we honor a leader who was not a native Virginian nor a public official, but who forever changed the lives of Virginians and Americans for the better – Dr. Martin Luther King.  As we work to help the people we represent make it through a time of unprecedented challenges, I am reminded that Dr. King said “The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”
Together we face challenges, and the choices we make this session will come after much reflection and debate.  If we can show leadership and agree to cooperate we will move Virginia through these difficult times. I ask that you make decisions based not on which house or political party or branch of government wins…..but whether or not Virginia wins.
Much of the marvelous story of America was written in Virginia.
And much of her future will be written here as well.
 “With challenge comes opportunity.”  If that is true – we have lots of opportunity before us.
I pledge to work with you to create “A Commonwealth of Opportunity” for all Virginians.
As the early colonists, the founding fathers, and the civil rights leaders, the technology entrepreneurs seized the opportunities before them, so too will we seize ours.
I want to see opportunity flourishing in the successful start-up of a small business in Norfolk… in the farmer able to keep working his family’s land in Scott County… in the first-time home buyer receiving her new keys in Fredericksburg.
I want to see opportunity at work in the new technologies and systems that Virginians invent in Loudoun and Fairfax Counties.
I want to see opportunity alive in eager young minds, thrilled to discover the miracles of science or unlock the mysteries of history – young people who embrace learning and earning, and then living and giving.
And the steps toward those positive outcomes will take place right here, with you, in the House and Senate chambers of the oldest continuous legislative body in the Western Hemisphere.
Many of you are longtime friends and allies, some are “occasional” adversaries, but all are respected colleagues.  You all share with me a common love of Virginia and the ideals she represents.  For the 20 of you who are newly elected, I commend you for answering the call to public service.
Over the years, I have seen us work across party lines to produce results that matter.  I recall a time, for example, when welfare reform and abolition of parole seemed like hopelessly elusive goals.  Here on this floor we debated those  issues.  Out of our contests and collaboration came great good for Virginia, and with welfare reform, a model for the nation. 
Working together, we have led the nation with business-friendly laws and job-creating tax and regulatory policies that have made Virginia one of America’s most prosperous states.  We have led the nation in managing prudently and in governing innovatively.  And from education standards to sentencing reform, we have shown that transformational leadership for America often begins here, where America itself began.
Now, we must agree to to put in place policies that will unleash the innovation and ingenuity of the people of Virginia, opening the way for a new era of prosperity and progress.
It starts with policies to promote job creation and economic development.
The inherent dignity of a good day’s work in a worthwhile pursuit strengthens the soul, supports the family, and reduces dependence on government.
Immediately following my Inauguration on Saturday, I signed Executive Order #1 on the Capitol steps.
This Executive Order established a statewide commission dedicated to creating jobs and promoting free enterprise and opportunity.
It was the first Executive Order of my Administration, because it must be the first order of business for all of us.
Unemployment has doubled in 5 years. We all know family members, friends, neighbors who have lost their jobs.  This has made it tremendously difficult on many families trying to meet the basic needs for their children.  I know there has been overwhelming support for the Virginia Federation of Food Banks and the work they are doing – Governor Kaine ensured additional funding for their efforts and I am committed to maintaining it.
Yes, we face a difficult budget cycle. The budget that I have inherited is dire, and it is unbalanced. We begin with nearly a billion dollar annual shortfall based on tax hike proposals that both parties have rejected.  More spending cuts must be made.  But even in the toughest of times – even now – we must have the vision and the foresight to invest in our future.
Our Jobs and Opportunity agenda consists of policies that make those investments.
First, I will ask you to significantly increase the amount of money in our successful job-creating Governor’s Opportunity Fund. Delegate Armstrong, I’m glad to support your bill to rename it the Commonwealth Economic Development Fund, since we are all in this together to attract business.
There is a competition underway among the states and the nations. From Raleigh to Singapore; Tallahassee to Shanghai, governments are pursuing bold initiatives to attract new job-creating businesses to their borders. We must compete more vigorously to be successful. Growing the tax base through business development is the key to Virginia’s economic recovery.
Let’s start now by doubling the amount of the Fund for Fiscal Year 2011.  We have fallen behind many neighboring states in the tax and regulatory incentives we offer, which cannot last.
Provide us the tools, we will get results.
I have assembled a very talented team to focus on economic development, with Lieutenant Governor Bill Bolling as a Cabinet level Chief Job Creation Officer, and extraordinarily successful businessmen and entrepreneurs Jim Cheng as Secretary of Commerce and Trade, and Bob Sledd as Senior Economic Advisor.
New funding is much needed to incentivize rural economic development.
It is imperative that we focus on bringing new jobs to rural areas of our state that have been wracked by double-digit unemployment.
In mid-December I joined Lieutenant Governor Bolling, Bob Sledd, and Delegates Armstrong, Marshall, and Merricks, and Senator Reynolds, at the annual lunch for the Martinsville-Henry Chamber of Commerce.
The message in the room was clear: If we will give them the resources, they will build the local economy. I agree.
The business of creating jobs is not a partisan one.  That is why Republicans and Democrats will be carrying important components of my job creation package that will have immediate positive impact.  I will also add a deputy secretary of Commerce and Trade to focus on rural economic development, and honor the pledge for the Lieutenant Governor or me to visit our high unemployment rural areas every 30 days to find solutions to their challenges.
We will also target new Opportunity Fund dollars to the bio-tech industry. This is an industry of high-paying jobs in a fast-growing career field. Smart states look at this sector for future economic development. We will as well.  Delegate Sam Nixon of Chesterfield is teaming up with Senator Mark Herring from Loudoun County to push my commitment to grant an income tax exemption for qualified investments by technology and science startup businesses.
And I will seek an important change in how the money in the Opportunity Fund is utilized. Currently funding is available to companies based on job creation and capital investment. We should broaden the use of the Fund for companies that significantly increase local and state tax revenue – allowing for even more investment in education, workforce development and job creation.
I will be asking you to approve an additional $5 million for an industrial mega-site fund for this fiscal year. When a major business is considering a move to Virginia we must be able to meet the executives at the airport, drive them to a site ready for their project and show them that the only thing missing is them. Virginia is ready for their business – right now.
And we must incentivize businesses to create jobs for Virginians. I ask you to reduce the eligibility threshold for the $1000 per job tax credit down to every business that creates 50 jobs, or 25 jobs in jurisdictions experiencing a higher than average unemployment rate.
There is an old adage in business that says you have to spend money to make money. Investment in job creation and economic development today creates new tax revenue tomorrow. I will identify the offsetting savings to balance these new job creation investments in budget amendments I will submit shortly.
 On the campaign trail, I met small business owners from Alexandria to Abingdon. These are the innovators responsible for 70% of the new jobs created in our state.
One after another they told me familiar tales of paperwork, bureaucracy and slow turnarounds stifling their efforts. That is unacceptable. Any impediment to job creation and economic development is an impediment to the future of Virginia. And they must be removed.
Together, let’s make Virginia the easiest state in America in which to open a business. One way we can do this: allow  currently licensed businesses in Virginia to operate any new business venture under the license they already have while waiting for a new license to be processed.
I will also direct the Department of Professional and Occupational Regulation and other licensing agencies to ensure that new businesses can get licensing processes and approvals complete in 48 hours or less. We will also greatly enhance the effectiveness of our one-stop business startup centers.
And if you served our nation in the military and now want to serve our Commonwealth by opening a business and creating jobs for our citizens, we should serve you. We will waive administrative and licensing fees for veterans starting a small business who have been taking care of their families, facing medical challenges – all while serving our country here and overseas. 
In a tough economy, a smart investor looks for the best opportunities in which to maximize limited resources. So too must smart states.
Tourism returns five dollars to the Commonwealth for every one we put in. I’ve seen the commercials for Michigan on TV here. It’s time we put some Virginia commercials on TV sets in Ann Arbor and Lansing.
We have so much to offer.  Beaches, mountains, history. Mt. Vernon. Virginia Beach. Luray Caverns. Yorktown. The birthplace of our nation.
Next year, America will begin commemorating the 150th Anniversary of the Civil War. No state bore the brunt of that seminal event in American history more than Virginia. This is the state of Manassas and Chancellorsville; Petersburg and Appomattox.
In 2013, the nation will celebrate the 150th anniversary of Lincoln’s signing of the Emancipation Proclamation.  I am working with Senator Marsh and Delegates McClellan and Alexander to continue the good work from last year’s 200th anniversary commemoration of Lincoln’s birthday, through the Sesquicentennial and the anniversary of Emancipation. The world will come here to remember and reflect upon the lessons learned from this pivotal period in our history.
And while these tourists are here, they should stay awhile, spend lots of money, and help put more Virginians to work.
I propose an increase in funding of the Virginia Tourism Corporation by $3.6 million in each of the next two years. I want the funding of the Virginia Tourism Corporation to double by the time I leave office in 2014.
Another smart investment we can make is in film production.
This year the movie “Secretariat” will hit theaters.
A movie about a horse from Virginia. With a director from Virginia. Filmed in Kentucky and Louisiana.
Not landing that production here meant an estimated loss of $30 million in economic impact. That is a failure.
It’s not hard to see why we struggle to attract film production. South Carolina offers a cash rebate for movie makers funded at $10 million annually, and just north of us Maryland offers $1 million. We have $200,000 per year available in the Governor’s Motion Picture Opportunity Fund. We simply cannot compete.
I ask you to increase funding for the Motion Picture Opportunity Fund by $2 million.
Movies made in Virginia equal jobs created for Virginians.
Governor Kaine committed to invest $1.3 million in the Virginia Spaceport.  We can make Wallops Island the top commercial Spaceport in America, and I ask you to keep that money in place so that we can aggressively recruit aerospace companies and promote space tourism initiatives.
One of my favorite stickers reads “Make Mine Virginia Wine.”  The Virginia wine industry is dynamic and growing. They grow grapes and jobs. I’ve seen many of you personally and enthusiastically supporting the industry at legislative receptions! 
We are the 6th largest wine-exporting state.
This summer I visited the Blue Ridge Vineyard in Botetourt.  This beautiful vineyard hosts weddings, attracts tourists, and makes a really good Cabernet. Even better, it employs Virginians.
I will offer legislation to help Virginia’s wine industry, that attracts visitors from across the country, by directing a portion of the wine liter tax to be deposited in the Virginia Wine Promotion Fund. Another industry with tremendous growth potential is energy. I am committed to utilizing all of our vast, God-given natural resources to make Virginia the “Energy Capital of the East Coast.”  We must do our part to promote American energy independence.
We have the opportunity to be the first state on the Eastern Seaboard to sell the leasing rights to explore and drill offshore for oil and natural gas in 2011. The federal moratoria have been lifted. The state that is first will reap an economic bonanza. We can lead or be left out. Four years ago you had the foresight to pass legislation giving us a critical advantage. We cannot now let Washington bureaucracy undermine the clear desires of the people of Virginia.
I have written to Secretary of Interior Ken Salazar, and have let our congressional delegation know that this is a priority for our Commonwealth, consistent with President Obama’s commitment to make our nation more energy secure.  Several studies show that environmentally-safe offshore exploration and production will create thousands of jobs, put hundreds of millions into our depleted state coffers, and spur billions in capital investment in the Old Dominion. There are many unemployed Virginians who are ready to work in the oil and gas production industry.
And we must continue to prepare for the reality of offshore production this session by mandating that 20% of the new tax revenues we generate, and any future royalties we receive, will be invested in renewable energy projects, with the other 80% going to transportation.
We must also promote Virginia’s coal and natural gas industries in Southwest Virginia. As carbon sequestration and coal gasification technologies become cost-efficient, coal production can grow. Nuclear power growth must be incentivized. Virginia has more private sector nuclear industry capability than any other state, and new partnerships between AREVA and the University of Virginia are producing the engineers needed to grow this sector.
To further make Virginia a welcome home for alternative energy, I ask you to pass legislation making the entire Commonwealth a “Green Jobs Zone.” Any business in the state that creates a green energy job over the next 5 years will receive an income tax credit of $500 per position.  “Virginia is for Lovers”….of renewable energy.
 In Southside Virginia, I visited the entrepreneurs at Piedmont bio-products, who are using a creative distillation process to turn hardy sugar cane and switchgrass into a fuel that you can put in an engine or you can drink. It’s not tasty, but it’s another emerging Virginia energy technology. I look forward to working with Delegate Terry Kilgore and the Tobacco Commission to create an energy corridor in Southern and Southwest Virginia.
Of course the investments we make for our future will all take place in the midst of cuts we must make for today.
As unemployment has doubled, and Virginians have been forced to tighten their belts, revenue has declined.
The budget that was waiting for me at 12:01pm on Saturday requires $4 billion in cuts.
Some say taxes must be raised – it’s unavoidable.  Here’s what I say.  I will work with you –Democrats, Republicans and Independents.  We will meet and negotiate; there will be disagreements, and there will be compromises.
Virginians are struggling with the worst economy in generations. We will not turn our economy around by taxing Virginians more. To do so would ignore the indisputable truth that the fiscal fortune of any government is tied to the economic prosperity of its people.
Therefore, if you pass a bill in this recession that raises taxes on the hardworking families of Virginia – I WILL VETO IT.
And if you pass a budget embedded with those same tax increases – I WILL NOT APPROVE IT.
The steps required to close the $4 billion budget deficit that we confront will be difficult.
We will make a start in the Executive office.
I will return a portion of my salary.
Members of my Cabinet and senior staff are taking a pay cut.
My Secretaries will reduce the size of their staffs and budgets.
Every opportunity to save, however small, is one that must be seized.
Budget challenges present legislative opportunities to think outside the box about what’s in the budget and how we develop it.  During my transition I called for reforming Virginia’s budget cycle – an initiative that has received broad bipartisan support, including from my predecessor, Governor Kaine, and many other governors.
During this session, we must take the time to find new ways to deliver government services effectively, while reducing spending.
And it is time that we eliminated, consolidated or privatized programs and agencies that do not work or do not fulfill core government functions.  As I traveled this great Commonwealth over the last year, I didn’t run into anybody who thought selling Jack Daniels whiskey or Grey Goose Vodka was a core function of government. In the future I will present plans to privatize our ABC operations in a fiscally prudent manner.
I offer a frank assessment of what this necessary belt tightening will mean for Virginians in the short term.
It will mean more cuts to certain state agencies. Some state services will be reduced, some possibly consolidated or eliminated. We must do our best to treat our dedicated state employees fairly.
This is not only a short-term reality, but a longer-term necessity.We must act now.
Certainly the national and global economy has had a significant impact on the revenues and the budget in Virginia.  But that is only part of the story.  Ronald Reagan used to say “Government is too big and it spends too much.”  He was talking about the federal government at the time – but it applies to state governments as well.
Since I got elected to this body in 1991, state spending has more than tripled, far beyond the rate of growth in population and inflation. We can do better.
The second Executive Order I signed from the steps of the Capitol on Saturday established the Governor’s Commission on Government Reform and Restructuring. It is time to look for new ideas about how to make government work more efficiently and effectively, and within our means. We will find these new ideas, and we will implement them.  I will work with the leaders at the Council on Virginia’s Future to offer strategic reform initiatives.
I ask those of you sitting in this chamber tonight, our state employees at home watching on television, business and community leaders, members of the media, citizens and taxpayers:  When bold proposals for reform are offered by me and by members of this Assembly to change the ways we do things, do not just tell us all of the reasons change should not or cannot occur.  Instead let’s work together work to implement the bold and sensible changes that will put Virginia on a secure financial footing. 
This will be the philosophy that guides my service as Governor.   And my request and challenge tonight is that you join me in treating this not as a time for painful cutting but as a time for making government limited but effective – efficient and affordable.
My dad told me as a kid that to get a good job, you need a good education. He was right.
Those who rank the states say a young person has a better chance to succeed here in Virginia than elsewhere. Good rankings aren’t enough.  We need good schools and good choices for every young person in our state, because every one has unique gifts from God with dreams and potential.
Joining me tonight is Secretary of Education Gerard Robinson
Gerard’s story demonstrates what can be accomplished with the simple opportunity of a good education.
He grew up in a working-class family in Los Angeles.  No one in the family had gone to college. When he graduated from high school, he was in the bottom rung of his class! He didn’t give up – he enrolled in a community college while working fulltime for three years at a grocery store.  Today, he has a Master’s Degree in Education from Harvard, is finishing his PhD at UVa, and is considered a national expert on education reform. He is joining this Administration with a passion and a mission to ensure that every child in Virginia, in every community, takes advantage of the same opportunities that he did.
No child should attend a school that is not fully accredited. We will work with local school boards and governments to turn them around.
And no child should have her educational attainment determined by her birthplace or zip code, only her work ethic and intelligence. Every child must graduate from high school either career-ready or college-ready.
There are important steps we must take this session to reform and improve education in Virginia.
I ask you to join me in the effort to ensure that over the next four years, 65% of Virginia’s education dollars go to instruction in the classroom, where our children learn.
We must start this session by increasing the state average by 1%, from 61% to 62%.
President Obama and I share a passion for good charter schools. He is committed to expanding them nationwide. I’m committed to helping him.
Charter schools are public schools with greater autonomy, more freedom to innovate, and they offer choices to parents. We have the weakest laws in the nation.
They are not silver bullets, but are  positive alternatives that have been demonstrated to help students, particularly in some of the nation’s underperforming school districts.
Nationally there are 4600 charter schools.
Here in Virginia, 12 years after we passed legislation to allow them, there are only three. That is unacceptable.
That number will increase to four when the Patrick Henry Charter School here in Richmond opens this spring.
Joining us in the gallery tonight is Everett, age 4, and his mom Kristen. Everett has applied to be in the first Kindergarten class at Patrick Henry.
I will introduce legislation this session that will result in the establishment of more charter schools, expand access to virtual schools, and pursue the innovative idea by Delegate, now Mayor Dwight Jones, to create College Laboratory Schools. The work we do to increase the number of high-quality charter schools and innovative education options is not just good for Virginia’s schoolchildren. It’s good for Virginia’s bottom line.
The President’s Race to the Top grant program allocates $4.35 billion to states based on their support for educational reform, in particular charter schools. Just last week, I signed a letter in support of Virginia’s Race to the Top Application developed by Governor Kaine and Superintendent Pat Wright in cooperation with our transition team.  The request was for $350 million.  That is a tremendous amount of money we could apply to the next fiscal year, and put towards put into ensuring educational excellence here in the Commonwealth.
And we will get more science, technology, engineering, math and healthcare taught in our schools.
Of course education doesn’t stop at the 12th grade.
In today’s global economy it just begins there.
A college degree has never been more important. It has also never been more expensive.
Over the past decade college tuition has doubled. The state budget commitment has decreased by 40%. Virginia students and parents are left shouldering the constantly increasing costs.
We must make college more affordable and accessible.
We will do this by committing the Commonwealth to awarding 100,000 more degrees over the next 15 years in our community colleges and four-year universities.  It is an audacious goal, but an important one for our future competiveness.
Virginia’s community colleges occupy the critical intersection between preparation and profession. We should make these underutilized assets of our higher education system the hub of our workforce development efforts, helping citizens get the skills they need to land the job they want in the communities in which they live.
Economic growth is also predicated on a modern and well-maintained transportation system, from our roads to rail to ports.
There are steps we can take right now to improve transportation in Virginia.
Our rest stops and welcome centers are important for safety and tourism.  I’ve asked Secretary Connaughton to schedule a time for the Commonwealth Transportation Board to vote on re-opening the rest stops.  We’ll have those rest stops open within 87 days!
We should raise the speed limit in rural parts of the state to 70 mph on major interstates. In 2006 you voted to raise the speed limit to 70mph on portions of Interstate 85. Let’s do the same on stretches of 95, 64, 77 and 81 in our more sparsely populated regions. Thirty-two states already have 70 mph speed limits; Thirteen have 75mph speed limits.
We should also step back and look at the structure and operations of the Virginia Department of Transportation anew.
We have dedicated employees at VDOT, but it is time to conduct performance audits to determine what works, what doesn’t, and what can be done better for less.  Delegate Glen Oder and Delegate Scott Lingamfelter are advancing legislation that looks at real structural opportunities to identify both cost savings and also performance metrics on congestion relief and mobility.
In the future, I will be asking you to adopt a further series of transportation funding reforms to meet the needs.
Twenty years ago I was a prosecutor in Virginia Beach.
I believe ensuring that the safety of citizens in their homes and their communities is the foremost obligation of government.
Tonight I ask you to join me in saluting the men and women of the Capitol Police, the Virginia Department of State Police, City of Richmond Police, that worked together to ensure that everyone who participated in the Inaugural events were safe.
We will not have “A Commonwealth of Opportunity” if we do not first have a Commonwealth that is secure.
To ensure a secure Commonwealth in which all Virginians can safely live their lives and pursue their dreams I will propose legislation asking you to:
First: protect victims of domestic crime by making our protective order procedures consistent with our neighboring states and helping victims of domestic violence to extend the length of protective orders when there is evidence of an ongoing threat.  I thank Senator Janet Howell for carrying this bill along with Delegate Rob Bell.
Second: Keep up the fight against gangs, which I worked on with many of you as Attorney General, by expanding “Gang-Free School Zones” to “Gang Free Zones”, to better target gang activity wherever it occurs.  Senator Marsh is teaming up with Delegate Jackson Miller on this key initiative. 
Third: Tough sentences are only half of the equation in making Virginia safer.
We must provide real opportunities to prisoners to turn their lives around, and to become responsible and contributing members of society when their sentences have concluded. A failure to do so only leads to more crime, and more victims.
I will work with faith-based and community organizations to create an effective prisoner re-entry program to keep people out of jails and prisons. It’s smart government, and will save money.  I’ve seen firsthand the good that can happen when we do.
Last month I stood in the basement of a local Richmond church at the Christmas Party for the members of the McCovery Program: men who had been incarcerated and struggled with substance abuse.
They had been subject to two forms of confinement:  physical jails and mental addictions.
But on this December night they resolved together they would:
“Accept the challenge of change” and that “Recovery is my responsibility.”
Family members looked on with admiration.
One of those family members was a little 7 month old boy named Xavier, whose father Michael was a program member.
I had first met Michael visiting the Richmond city jail. Now, Michael was free of the bars of imprisonment, accepting the responsibility of seizing the opportunity he had been given to turn his life around…..for him and his son.
Michael is here with us tonight and I congratulate you Michael for what you are doing for yourself and your family and being an example of people turning their lives around.
Every day, Virginians help each other with generous acts of personal charity.  I’ve seen it firsthand recently at The Healing Place in Richmond,
The Food Banks and Boys and Girls Clubs statewide
The USO in Norfolk.
The Carpenter’s Shelter in Alexandria.
The opportunity to serve one another is a call we all must answer. So tonight, I encourage all Virginians to continue to give back, help out, and work together.
Tonight, I have laid out some of my priorities for the year ahead of us.
Four years from tonight we will meet here again and look back on our time working together.
This is what I hope we can say:
That we had the foresight and the courage to invest in Virginia’s future when times were tough.
We helped create tens of thousands of new jobs, reduced our unemployment rate, expanded our tax base, and led the nation in job creation and economic development.
We embraced educational reform and didn’t let old traditions and the status quo stand in the way of expanding opportunity for all children.
We put Virginia in the vanguard of the national charter school movement, rewarded our best teachers, put more money into the classroom, and expanded opportunities in the fields of science, technology, engineering, math and health care.
We put Virginia on a track to become a leader in higher education and made a college education affordable and accessible to all motivated young people.
We vigorously defended the Constitutional rights of our people to life, liberty and property.
We seized the opportunities presented to us by our vast natural resources and made Virginia the “Energy Capital of the East Coast.”
Through prioritization, bonding, technology, public-private partnerships, and ingenuity we built new roads and bridges, expanded rail, improved our port and helped Virginians get to work a little quicker.
We ensured the safety of our citizens and the security of our businesses and communities by investing in public safety.
And we made government more cost effective, user-friendly, simpler and easier to navigate for our citizens.
Our founders created this nation with courage, pledging their lives, fortunes and sacred honor.  Several lost their lives, most lost their fortunes.  But none lost their sacred honor.  We today, 234 years later, should pledge our best effort to build a stronger Virginia, by focusing on results and not credit, cooperation and not division.  I ask for your partnership, your ideas, your talents and your hard-work in the weeks and years ahead.
God bless you and your families for serving the people of Virginia.
And God Bless the Commonwealth of Virginia.

Gov. Bob McDonnell (R) was not invited to a presidential visit to Falls Church on Tuesday at which President Barack Obama was scheduled to talk about his “Race to the Top” schools initiative.

Taylor Thornley, McDonnell’s deputy press secretary, confirmed late Monday night that the governor — inaugurated last weekend — had not received an invitation.

When I asked McDonnell about the event, following his address to a joint session of the General Assembly, he seemed unaware of it.

“I would like to be,” he said, when asked if the White House extended him an invitation.

During his speech to legislators, McDonnell referenced Mr. Obama’s initiative, which was also one of the Republican’s favorite campaign trail talking points.

The “Race to the Top” divides grant money to states based on support for school reform policies. McDonnell said he recently applied for $350 million from the program.

“That is a tremendous amount of money we could apply to the next fiscal year and put towards ensuring educational excellence here in the Commonwealth,” he said to lawmakers Monday night.

Governors and local leaders are often invited to attend presidential events, particularly ones where there is common ground — as there is between Mr. Obama and McDonnell on education issues.

Calls to the White House seeking comment were not immediately returned.

Moments after taking the oath of office, Gov. Bob McDonnell (R) signed two pieces of paper on the lectern — his first two executive orders.

The first creates an economic development commission; the second establishes a panel to look at government reforms.

I’ve posted the full text of both orders after the jump.

EXECUTIVE ORDER ONE
 
Establishing the Chief Job Creation Officer and
the Governor’s Economic Development and Job Creation Commission
 
 
Importance of the Issue
Economic opportunity and free enterprise is the bedrock of a stable and prosperous Commonwealth.  Virginia is home to abundant resources, fiscal responsibility and boundless human potential, and the entrepreneurial spirit is evident throughout this great Commonwealth.  However, in light of the unprecedented economic difficulties facing Virginia families and business, the unacceptable high unemployment rate, and the ever increasing competiveness of the global economy, bold and innovative ideas are necessary for the Commonwealth to address this significant challenge.  The following measures are the first crucial steps to promoting economic recovery and job creation in Virginia. 
 
Chief Job Creation Officer
By virtue of the authority vested in me as Governor under Article V of the Constitution of Virginia and under the laws of the Commonwealth, and subject to my continuing and ultimate authority and responsibility to act in such matters, there is hereby established the position of Chief Job Creation Officer within the Office of the Governor, whose primary responsibilities will be to help coordinate all economic and workforce development and job creation initiatives across the cabinet secretariats and their respective agencies; actively assist with recruiting new industries and job creation opportunities in the Commonwealth; oversee and ensure that all agencies are working together in a coordinated, focused and efficient manner to attract new business, expand existing businesses, and create jobs across the Commonwealth; and all other duties and responsibilities as determined and assigned by the Governor. 
The Chief Job Creation Officer shall serve as and be a member of the Governor’s Cabinet, and shall serve at the pleasure of the Governor for a term coincident with that of the Governor making the appointment or until a successor is appointed.  
 
Governor’s Economic Development and Job Creation Commission
  In furtherance of my commitment to economic development and job creation in the Commonwealth, and by virtue of the authority vested in me as Governor under Article V of the Constitution of Virginia and under the laws of the Commonwealth, including but not limited to Section 2.2-134 of the Code of Virginia, and subject to my continuing and ultimate authority and responsibility to act in such matters, I hereby establish the Governor’s Economic Development and Job Creation Commission (“Commission”) and direct it to begin work immediately.
The Lieutenant Governor, as the Chief Job Creation Officer, shall serve as Co-Chairman of the Commission along with a senior level advisor appointed by the Governor.  The Commission shall include the Secretaries of Commerce and Trade, Agriculture and Forestry, Natural Resources, Transportation, Technology, Finance, Education and Administration, or their designees.  The Commission shall also include up to 50 citizens of Virginia representing a cross segment of industry and business sectors, including small and rural businesses.  All agencies, as deemed necessary by the Chief Job Creation Officer, shall participate and provide assistance as requested.  In addition, I reserve the authority to designate any other such citizens as I deem appropriate to sit on the Commission.
 
The Commission shall have the following responsibilities:
 
1.      Identify impediments to and opportunities for job creation;
2.      Review how other states and foreign countries are attracting jobs and how Virginia could replicate and improve upon those initiatives;
3.      Review the agencies’ role in job creation and make recommendations on how those efforts can be better coordinated to ensure unparalleled efficiency and effectiveness;
4.      Make recommendations on new investments and changes to the tax and regulatory environment in the Commonwealth to maintain and increase the Commonwealth’s standing as the best place to do business in the United State of America; and
5.      Evaluate the current programs and investments designed to develop the workforce and attract and retain businesses in Virginia, and make recommendations on their effectiveness and need for improvement.
6.      Assist the Cabinet and the Virginia Economic Development Partnership to identify and target industries and businesses to recruit to Virginia.
 
The Commission shall be organized into the following subcommittees reflecting key economic development priorities for the Commonwealth:
 
1.      Business recruitment and retention
2.      Economically challenged regions and localities
3.      Energy research, exploration and production
4.      Small business
5.      Tourism and film marketing
6.      Real estate and construction
 
The Commission shall coordinate its efforts with the Office of Education, Virginia’s institutions of higher education and relevant Governor’s commissions and task forces addressing workforce development and training.
 
Staff support for the Commission shall be provided by the Office of the Governor, including staff for the Chief Job Creation Officer, the Office of the Secretary of Commerce and Trade, the various other secretaries and their agencies represented on the Commission, and such other agencies as may be designated by the Chief Job Creation Officer.  All executive branch agencies shall cooperate fully with the Commission and shall render such assistance as may be requested by it. 
 
An estimated 2,000 hours of staff time will be required to support the commission.  Such funding as is necessary for the term of the Commission’s existence shall be provided from sources, including both private and appropriated funds, contributed or appropriated for purposes related to the work of the Commission, as authorized by Section 2.2-135(B) of the Code of Virginia.  Direct expenditures for the Commission’s work are estimated to be $15,000, exclusive of staff support.
The Commission shall provide its first report of recommendations and action items to the Governor no later than October 16, 2010.  The Commission shall thereafter provide periodic supplemental reports setting forth additional recommendations and actions items, and reporting on agency progress implementing the Commission’s recommendations adopted by the Governor.
Pursuant to Section 2.2-135 of the Code of Virginia, the Commission shall remain in effect for a period of one year, unless extended by the issuance of a new executive order for a period not to exceed one additional year.
 
Effective Date of the Executive Order
This Executive Order shall be effective upon its signing and shall remain in full force and effect unless amended or rescinded by further executive order. 
Given under my hand and under the Seal of the Commonwealth of Virginia this 16th day of January, 2010.
 
 
*****
 
 
EXECUTIVE ORDER TWO
 
Establishing the Governor’s Commission on Government Reform and Restructuring
 
 
Importance of the Issue
 
The Commonwealth of Virginia, like the rest of the nation, faces unprecedented budgetary challenges and increasing demands for core public services.  Citizens and businesses residing in Virginia are entitled to a limited and effective state government.  Revenues collected from Virginia taxpayers must be spent in the most efficient manner possible.    It is incumbent on those charged with providing government services to protect the public from harm and theft, educate our citizenry, foster economic opportunity, provide necessary infrastructure, preserve fundamental rights and perform other essential functions in a manner that avoids duplication, delay and unnecessary regulation and bureaucracy.  To ensure that the Commonwealth of Virginia provides the aforementioned core services utilizing the most cost effective methods available, it is necessary to conduct a comprehensive, systematic and ongoing evaluation of the effectiveness and need for the state’s existing agencies, governing bodies, programs, and services.  This comprehensive review will make certain that duplicative, outdated, unnecessary and ineffective services and service delivery methods are eliminated and that state revenues are dedicated to the core functions of government.
 
Governor’s Commission on Government Reform and Restructuring
 
Accordingly, by virtue of the authority vested in me as Governor under Article V of the Constitution of Virginia and under the laws of the Commonwealth, including but not limited to Section 2.2-134 of the Code of Virginia, and subject always to my continuing and ultimate authority and responsibility to act in such matters, I hereby establish the Governor’s Commission on Government Reform and Restructuring (“Commission”).
 
The Commission will conduct a thorough review of Virginia state government:
 
·         Identify opportunities for creating efficiencies in state government, including streamlining,  consolidating, or eliminating redundant  and unnecessary agency services, governing bodies, regulations and programs;
·         Explore innovative ways to deliver state services at the lowest cost and best value to Virginia taxpayers;
·         Seek out means to more effectively and efficiently perform core state functions, including potential privatization of government operations where appropriate, and restore focus on core mission oriented service; and
·         Examine ways for state government to be more transparent, user friendly and accountable to the citizens of the Commonwealth.
 
The Commission will consist of up to 20 citizen members appointed by the Governor and serving at his pleasure.  The Governor shall designate a Chairman and a Vice-Chairman from among the citizen members. Three members of the Virginia House of Delegates and two members of the Virginia Senate shall also be invited to be members. The Secretaries of Administration and Finance, and the Vice-Chair of the Council on Virginia’s Future, shall serve as ex officio, non-voting members of the Commission. 
 
The Commission will submit reports to me of its findings and recommendations no later than July 16, 2010.  The Commission shall submit a final report of its activities and recommendations by December 1, 2010.  I direct all executive branch agencies and institutions to cooperate fully with the work of the Commission. 
 
Staff support as is necessary for the conduct of the Commission’s work during the term of its existence shall be furnished by the Office of the Governor, the Offices of the Governor’s Cabinet Secretaries, the Department of Planning and Budget, and such other executive agencies as the Governor may designate.  An estimated 2,000 hours of staff time will be required to support the commission on an annual basis.  Such funding as is necessary for the term of the Commission’s existence shall be provided from sources, including both private and appropriated funds, contributed or appropriated for purposes related to the work of the Commission, as authorized by Section 2.2-135(B) of the Code of Virginia.  Direct expenditures for the Commission’s work are estimated to be $15,000 annually, exclusive of staff support.
 
Effective Date of the Executive Order
 
This Executive Order shall become effective upon its signing and shall remain in full force and effect until January 16, 2011, unless amended or rescinded by further executive order. 
 
Given under my hand and under the Seal of the Commonwealth of Virginia this 16th day of January, 2010.

Religious broadcaster Pat Robertson — a longtime friend of Gov. Bob McDonnell (R) — attended Saturday’s inauguration, but would not address his controversial comments on the Hatian earthquake.

Robertson sat in the first row of bleachers overlooking the Capitol. Earlier in the day, he refused questions from reporters about the quake.

Earlier this week, Robertson said that Haiti was cursed because of a pact its citizens made with the devil hundreds of years ago.

A spokesman later clarified those comments, saying Robertson never called the earthquake God’s wrath.

McDonnell has said he disagreed with his friend’s comments.

Bob McDonnell became Virginia’s 71st governor Saturday, taking control of a state with serious challenges, including a desperate budget outlook.

McDonnell took the oath of office shortly after noon on the South Portico of the State Capitol in Richmond.

He is the first Republican to hold the office since Jim Gilmore left the Executive Mansion in 2002.

In his inaugural address, McDonnell said he would focus on economic development, job creation and restoring Virginans’ confidence in the state budget.

But he also stressed a need for limited government, a popular theme on the campaign trail.

His full remarks are after the jump.

Thank you.
Mr. Speaker
Lt. Governor Bolling
Attorney General Cuccinelli
Members of the General Assembly
 Distinguished guests from around the world and across the country, family and friends, my fellow Virginians…. 
Good afternoon!
We gather today on the steps of our magnificent and newly renovated State Capitol.
From this hill the land rolls gently down to the James River, the waterway of the Settlers in 1607.
From this place, the sweep of history has moved us forward to today.
This is the cradle of democracy for Virginia and America.
Governor Thomas Jefferson designed this Capitol building.
Governor Patrick Henry came here for the laying of its cornerstone
I am humbled today to follow in their historic footsteps.
The General Assembly first convened in this new building during the first term of America’s first President, Virginia’s George Washington.
Behind me, in the Rotunda, are the busts of the eight Virginians who became President.
It was here that Robert E. Lee, the son of a Virginia Governor, was commissioned as Commander of the Commonwealth’s military forces as a young nation split into war.
It was here, just four years later, that President Abraham Lincoln came to begin the process of reuniting our war-torn nation, walking the streets of still smoldering Richmond.
And it was here, 125 years after Lincoln’s visit that a grandson of slaves, L. Douglas Wilder, took the Oath of Office as the nation’s first African-American Governor.
And it is here, today, that an average middle class kid from Fairfax County, a grandson of Irish immigrants, is given the enormous honor of becoming the 71st Governor of Virginia.
As it turns out, I succeed another descendent of Irish immigrants, Governor Timothy Kaine.
On behalf of the grateful people of Virginia, I thank Governor Kaine for his leadership and service to our Commonwealth.
Today’s Virginia is a thriving and diverse home of nearly 8 million people, with one in ten born outside the United States.
A state of rich history and strong people, we do face many challenges together.
We do not face the challenges of forming a new government or securing a young nation, as did Washington, Jefferson and Henry.
We do not encounter the devastation and destruction of Civil War, as did Lincoln and Lee.
We do not struggle with the injustice of slavery and its legacy of segregation as did Governor Wilder as a young man.
We do not march into bullets and artillery shells, as did the Greatest Generation on the beaches of Normandy and the islands of the Pacific. Two members of that generation, who served in World War II, my father Jack McDonnell and my father-in-law Frank Gardner, join us here today.
 On behalf of a grateful Commonwealth I thank them, and all military members and veterans, for their incredible sacrifice and service to our nation that continues today.
 The actions of those patriots that came before us had a common purpose—to create and expand freedom and opportunity for the generations that came behind them.
The creation of, and desire for, new opportunity has shaped Virginia from its foundation.
It was in seeking the Opportunity of a New World that Captain John Smith and 104 settlers braved the perilous Atlantic to step onto the sands of Cape Henry in April 1607.
It was in securing the Opportunity of a New Nation that Virginia patriots joined together with their fellow colonists in the first fight for freedom and independence, and thus was born a country of ordered liberty that, 234 years later, is the beacon of hope for the world.
It was in seizing the Opportunity of equality and education that a courageous 16 year-old girl named Barbara Johns, memorialized behind this majestic Capitol at the Virginia Civil Rights Memorial, stood up and walked out of Moton High School in Farmville 59 years ago this spring.
New opportunity helped them meet the challenges of their time.
Greater opportunity will help us meet the challenges of ours.
Together we must create jobs and economic opportunities.
Provide new educational opportunities for all Virginians.
And enhance family and community opportunities by easing government burdens on free people.
As Virginians, we believe that government must help foster a society in which all our people can use their God-given talents in liberty to pursue the American Dream.
Where opportunity is absent, we must create it.  Where opportunity is limited, we must expand it.  Where opportunity is unequal, we must make it open to everyone.
Our Administration will be dedicated to building “A Commonwealth of Opportunity” for all Virginians. 
It starts with restoring economic opportunity to Virginians in every corner of our Commonwealth.
Tens of thousands of our family members, friends and neighbors have lost their jobs.
Thousands more worry they could be next.
As we confront the worst economy in generations, the creation of new job opportunities for all our citizens is the obligation of our time, so all Virginians who seek a good job can find meaningful work and the dignity that comes with it.
Virginia has received high rankings over the years for being a business-friendly state.
Those rankings speak well of our past. They do not determine our future.
Competition for jobs is intense among the states, and between nations. States are aggressively positioning themselves to best appeal to job creators and entrepreneurs.
We must make this the best state in which to start and grow a small business.
It is why we will reduce burdensome taxation and regulation that impede job-creation.
And, it is why, even in these tough times, we will have the foresight to invest today in ideas and policies that increase economic prosperity tomorrow.
This economic crisis has touched every Virginian.
Declining home values and diminished retirement accounts have wiped away in just a few months the accumulated savings of many years.
As jobs are lost and consumer confidence remains low, state revenues have declined, and an historic budget shortfall has stretched into the billions. Thus, like so many households and businesses across the Commonwealth, state government needs to devise new ways to operate and find savings.
This austerity won’t be easy, but it is necessary. The circumstances of our time demand that we reconsider and restore the proper role of government.  Without reform the continued growth of government threatens our very prosperity.
We must properly fund the core priorities of government, but– equally important–we must utilize innovation, privatization, and consolidations to deliver government services more effectively.
And as we enact these reforms we must remember this: that government cannot guarantee individual outcomes, but equality of opportunity must be guaranteed for all.All Virginians must have the same fundamental opportunities to work hard, live free and succeed.
Access to a quality education is the foundation of future opportunity.  My Dad stressed to me as a child that to get a good job, you need a good education. It was true then and even more true today.
Virginians are blessed with many great schools with dedicated, professional teachers like my sister Nancy in Amherst, who work tirelessly to mold the minds and character of the next generation.
To compete in this global economy every young Virginian must have the opportunity of a world-class education from pre-school to college.
A child’s future prospects should be as unlimited as his intelligence, integrity and work ethic can take him. No child in Virginia should have her future determined by her place of birth or zip code.
We will work with President Obama to expand high-quality charter schools and institute performance pay to our great teachers.
More money must go to the classroom and less into administration, and new opportunities in science, technology, engineering, math and healthcare must be created through our schools and colleges.
And let us recognize that a high school degree is no longer the finish line in a global economy.  We must create affordable new pathways to earning a college degree and make a commitment to confer 100,000 additional degrees over the next 15 years.  We must make our community colleges national leaders in workforce development and career training. 
These are investments that will pay individual and societal dividends for many years to come.
Barbara Johns was willing to risk everything for the simple opportunity of a good education. Surely, sixty years later, we can work together to provide that opportunity to all Virginia children. 
Our Administration will demand excellence, reward performance, provide choices and celebrate achievement.
God has bestowed upon our Commonwealth an amazing wealth of natural resources. Virginians have the intellectual capital to use these resources to create new jobs, reduce our energy bills, and make our nation more energy independent.
We will make Virginia the “Energy Capital of the East Coast.” By growing the natural gas and coal industries, expanding the use of nuclear power, and promoting new energy technologies like wind, solar and biomass.
And we will champion environmentally-safe offshore energy exploration and production, bringing with it thousands of new jobs, hundreds of millions in new state revenue and billions in new investment.
We must also seize the opportunity to improve our transportation system by getting long overdue projects underway, and utilizing innovative ideas to build the roads, bridges, rail and ports we need.
A better transportation system will create new opportunities for Virginians across the state.
These are policies focused on addressing the real problems our people face, and delivering results.
I’ve had people tell me they fear that America may no longer be the land of opportunity it has always been, and that Virginia’s history in playing a leading role in the life of our nation may be just that—history. I say: They are wrong.Working together–Republicans, Democrats and Independents alike—Virginia will continue to blaze the trail of opportunity and prosperity.
And like the mechanic looking to the owner’s manual to troubleshoot the automobile, we should look to the Founders and their writings for wisdom.
The Founders capstone on the Constitution is the Bill of Rights. No federal mandate nor program crafted by either political party should undermine the central principle of federalism, enshrined in the birth certificate of America by those who pledged their lives, fortunes and sacred honor.
The Founders recognized that the government closest to the people governs best. More often than not, Richmond knows better about the hopes and dreams of the people than Washington. And Galax and Fairfax and Virginia Beach know far better than Richmond.
As we enthusiastically pursue the vision of “A Commonwealth of Opportunity”, I ask all Virginians to continue to seek your own opportunities to get involved in the life of our Commonwealth.
Half a century ago President Kennedy challenged the American people to “ask not what your country can do for you – ask what you can do for your country.” Today, I ask all Virginians to rise up to meet this timeless challenge.
We live in the most generous nation on Earth. So many Virginians give sacrificially of their time, talents and treasure, and rightly so. The Scriptures say, “To whom much is given, much will be required.”
Right now, much is required in the nation of Haiti. And I urge all Virginians to donate to the relief efforts underway.
 
Here in our Commonwealth, I urge business owners to look for opportunities to sponsor a little league team, help a charity, and promote corporate responsibility in the communities in which you live and work.
 
I urge all the leaders of our faith communities to expand your selfless work of helping the homeless, feeding the poor, and comforting the broken hearted.
I urge the young people of Virginia to use your talents and energy to fully engage in the future of this Commonwealth.
 I urge Virginians who came here from other lands to contribute your culture, your history and your traditions to our rich tapestry of life.
I urge every Virginian to take every opportunity to thank a man or woman in a law enforcement or military uniform for the preservation of our freedoms.
There is so much each one of us can do to leave this Commonwealth a better place than we found it.
No government program can substitute for the incredible good done through voluntary actions performed freely by caring individuals every day.
And while government can help provide opportunities, it is every person’s responsibility to take advantage of them.
In recent weeks I’ve seen people exercising that responsibility, and changing lives at:
 The Healing Place in Richmond
The Carpenter’s Shelter in Alexandria
Food Banks in Abingdon, Norfolk and Richmond
The Boys and Girls Club in Virginia Beach
The USO in Norfolk
As a Commonwealth, we must do the same…… and we will.
Standing here today, on the steps of our State Capitol, in the inspiring shadows of the shared history behind us, we embrace the limitless future opportunities stretching out far before us…..
And now it is here, in this place, that we pledge to work together to create “A Commonwealth of Opportunity”…..for all Virginians, and to add our steps to Virginia’s journey.
It was George Washington who noted, in his first Inaugural Address, “The propitious smiles of Heaven can never be expected to remain on a nation that disregards the eternal rules of order and right which Heaven itself has ordained.”It is right to help one another. It is right to work together to get results and solve problems.It is right to provide opportunities for all.Let us heed the words of the Father of our Country, employ these eternal rules of order and right, and get to work for the good of the people of Virginia.Thank you and God Bless the Commonwealth of Virginia.