Mister Speaker, Madame President, former governors, distinguished justices of the courts, representatives of our congressional delegation, members of the Hawaii State Legislature, other elected officials, honored guests, family and friends, 

Aloha.

I am honored to be here today to deliver my first State of the State address. It is, of course, a homecoming of sorts with so many familiar faces and friends. Yet there is one major difference since I last sat among you: 

I am a year older with a few more grey hairs.

To say that the last month has been an eye opener would be an understatement, as all the former governors here will understand. But it’s not so much about being overwhelmed as it is about being invigorated and challenged. And we have a mountain of challenges to climb.

And so I hope we can climb it together–because as I said at my inauguration: Alone, it is a daunting and overwhelming task.

But I have always been an optimist and a believer in people and the power they hold within them. That’s why I’ve always looked to others for help with answers; why I’ve always sought to harness the power of collaboration.

When I met with my cabinet during a retreat recently I asked them, what does Hawaii mean to them? What drove them? What directed their actions? While there were many different answers and perspectives, one word kept coming up over and over again:

Home.  

It’s a sentiment I intimately understand.

After I graduated from the University of Hawaii, I was fortunate enough to be offered a number of jobs. But only one was located in Hawaii and that’s the one I accepted. To this day, I know it was the right choice because this is my home. 

For me, that one word brings everything into focus and gives purpose and direction to everything we do. And what is it we really do here at the Capitol?

It’s quite simple: We are building a home for our kupuna, ourselves and our children.

We build schools, hospitals, community centers, and places to work and play. And we safeguard the things that are important to us: our families, our freedoms, our environment and our future–because this is our home.

As any carpenter knows, building a good home takes time, money and skill. And he or she will also tell you no matter what kind of house you build, you begin at the beginning–with a strong foundation. 

That’s what I find myself doing as your new governor: building a solid foundation for this administration, for the work ahead and for the people of Hawaii. 

FINANCE

In addition, home building begins with sound and long-term financing. It means working both the income and spending sides of the ledger. I recently submitted a preliminary budget that maintains state programs at current spending levels based on two sobering realities:  

First, we have fully committed our current funds to existing programs and services, and

Second, we are spending more than we take in.

While we work to correct that imbalance, we need to focus our available resources on strategic investments that grow our economy and strengthen our social safety net. In other words, we need to use the funds we have more efficiently and leverage it whenever possible.

Income

For example, we can be more aggressive in seeking federal funds in a wide array of areas. 

Federal officials tell me there is significant money–about $940 million–available to the state for the right projects, proposed for the right reasons and at the right time.

That’s why I’m pleased to announce the appointment of Elizabeth Kim as a Special Advisor to the Governor. Elizabeth’s impressive experience in Washington D.C. will help the state tremendously in securing more federal dollars. We all know Elizabeth’s story: a bright and talented person from Hawaii who wants to come home, but can’t find the opportunity to do so.

I am committed to creating more opportunities, not just for Elizabeth, but for all of our children   to return home to fulfill their dreams and contribute to Hawaii.

We also need to do a better job of collecting taxes already on the books. 

The tax department, headed by Maria Zielinski, is preparing to implement a Tax System Modernization program this year. The upgrade will better secure tax information and increase tax revenues through its efficiencies. 

While the project is expected to take several years, we should see a sizable increase in tax collections after the first two years. Moreover, the effort is projected to eventually pay for itself through these increased revenues.

Taxpayers will also benefit by being able to file their returns electronically, having access to online account information, and getting faster payments and refunds.

Spending

On the spending side, I believe we can do a number of things which center around a single change in mindset: Making government more efficient. I cannot stress how important I believe this one factor is.

I recently met with Mike Buskey, President of GameStop, a multimillion dollar, video-game retailer. The company operates almost 6,500 stores throughout the world and is a major player in the electronics sector.

He said, if the rate of change inside a company does not exceed the rate of change outside the company, it will result in devastating losses to its shareholders, even bankruptcy. It made me wonder about the number of people who would be affected, if change within our state government failed to exceed the rate of change in the world? 

That truly would be devastating, resulting in government unable to meet the needs of its people. 

But what about the opposite scenario?

I remember when I was in the Senate, we committed to going paperless and eliminating millions of unnecessary sheets of paper and its related costs. It was not an easy transition and it was tough to change the way we always did things for decades. But we did. 

As a result, the Senate generated more than $1.2 million in savings over two years. In the process, we saved nearly 8 million sheets of paper or the equivalent of 800 trees each year.

Can you imagine what we could do, if all of state government looked for these kinds of opportunities?

"For example, I am told that the state goes through about 1 million pages a month. That’s about 12 million pages a year. A little effort could go a long way to alter that. A change in mindset could take us so much further. We must reduce the amount of paper we use every day."

I am committed to transforming the culture of government to embrace and accelerate change. We need to invest in our employees and ask them what changes can be made to improve service and reduce costs. And we need to support them when we make those changes.

Leveraging our dollars and maximizing our investments also go a long way in creating savings. 

I recently attended the ground breaking for Kapolei Lofts, a public-private partnership with the State, the City and a private developer. This rental housing project will provide nearly 500 much needed homes on Oahu, including 300 units that will remain affordable for the next 30 years. 

The state provided an interim loan of $5 million and is a good example of how low-cost government investment tools can be used to create affordable homes for working families.

DIRECTING GROWTH

While we’re talking about building homes, let me bring up a related subject. Honolulu’s rail system is often viewed as a response to the growth of our suburban neighborhoods. While that is true today, it doesn’t have to be that way in the future.

Rail can be the driver to help us build future communities on Oahu–to sensibly direct growth, protect open space and agriculture, stimulate business, reinvigorate older neighborhoods, and build affordable homes. In fact, the state is the largest owner of parcels along the transit route. 

Consequently, I will be filling a position in the Office of Planning to help us assess and evaluate those parcels specifically to build affordable homes.

Because that is one of this administration’s main goals. 

We are also adding $100 million to the rental assistance revolving fund that can be leveraged with private money and state owned lands along the transit route to provide rental homes for working families. In addition, we are providing $25.3 million to construct a long-term care facility for veterans. Those funds will be matched with $37.4 million from the federal government. 

We can also generate additional federal dollars by identifying defense interests along the transit route and seeing if our plans can mesh with the military’s to create a win-win situation. In these ways, federal funds can be tapped not just for our transportation needs but for community building.

And let me make one thing clear: This governor wants rail to succeed and I’m committed to it. Having said that, let’s also make sure we do things the right way for the right reasons, including cost containment, before we ask for more money. 

HEALTH

Ask anyone who suffers from long-term illnesses. Nothing matters if you don’t have your health. Fully enjoying home and family presupposes good health. Lucky you live Hawaii for so many reasons, including one of the healthiest lifestyles and the longest life expectancies in the nation.

Hawaii’s Prepaid Healthcare Act has had a lot to do with those outcomes. In addition, it has brought us closest to achieving universal healthcare among all states. With the passage of the Affordable Care Act and the launching of Hawaii’s Health Connector, we can close that gap.  But we’ve got work to do. 

I will not minimize the disappointments we’ve all felt with the Health Connector. But I will not dwell on them either. 

That’s why we’re working closely with all stakeholders to ensure that we move toward a sustainable exchange, one that meets the requirements of the Affordable Care Act without endangering Hawaii’s Prepaid Healthcare.   

Despite the negative headlines, we are not that far away. Universal healthcare is within our grasp in Hawaii. And if we work together and focus on execution, I have every confidence we can achieve this.

Public Hospitals

We enjoy many benefits of being an island state cradled in the middle of the Pacific. But there are also disadvantages. Unlike other states, good healthcare is not easily distributed throughout the islands. Our families and doctors cannot simply drive to another hospital if one is busy or does not have the services they need.

We have some wonderful private hospitals, but not everyone has access to them. That’s why our public hospitals play such an important role in Hawaii–a greater one than in most other states. That’s especially true on our neighbor islands where they’re often the only provider of acute care.

Public-private partnerships offer great potential, but only if they are shaped in the right way. But no matter our direction, changing how we operate our hospitals to meet changing needs will be key to any long-term solution. 

ENERGY

A home also needs a sustainable and reliable source of energy. Importing fossil fuel remains one of our greatest weaknesses and we simply must move to reduce our dependence on it. We have the locally generated resources that can allow us to be self-sufficient. We just need to move in concert toward that goal. 

As our largest provider of energy, Hawaiian Electric will have a lot to do with our success or failure. That’s why, as discussions with NextEra proceed, I am asking Randy Iwase, the new head of the Public Utilities Commission, to be actively involved in those talks.

In addition, we will be restructuring and staffing the PUC to give it the expertise and resources needed to deal with its due diligence. I will also be assigning a special counsel to protect the public’s interest for the short and long term.

A STRONG SUPPORT NETWORK

The home we build in Hawaii needs a strong support network in so many areas. 

Business

We need to support business and industry so that they can grow our economy and create jobs. That includes our visitor industry, which has had three straight record setting years in arrivals and spending, totaling about $15 billion and supporting 175,000 jobs statewide. 

It also includes the thousands of small businesses that make up the core of our economic engine–those ma and pa stores whose predecessors include success stories like Foodland, City Mill and the ABC Stores.

We need to nurture an "innovation economy," in which entrepreneurs use technology to develop new processes and products from existing ones, like smart phone makers who have taken their products far beyond the original concept of a mobile phone and created entire new markets.

It’s a whole new economic paradigm which we need to support with modern infrastructure, whether it’s expanding our broadband network or building innovation parks. That’s why we are providing $10 million for the HI Growth initiative to support innovation. 

Agriculture

We need to support agriculture and help our local farmers dramatically increase the amount of food we grow locally. Hawaii grows about 10 to 15 percent of the total foods residents consume. If we are to become a sustainable society, we must increase those numbers.

The cost of importing foods adds up to more than $3 billion leaving the state annually. If we replace just 10 percent of imports with locally grown food, it would generate $188 million in total sales, $94 million for farmers, $47 million in wages, $6 million in new taxes and 2,300 jobs.

To do that, we need to preserve farm lands, develop agricultural parks, combat invasive species, and reassess the areas that determine whether a local farmer can survive.

We will be meeting with farmers from each island to hear what they need to make Hawaii more self-sufficient. And I’ve asked Agriculture Director Scott Enright to spearhead this effort.

In the meantime, we are adding $5 million to the agriculture loan program and expanding use of the fund to include biosecurity and food safety needs.  

Military

We need to support our military whose courage and commitment to our nation’s security keeps Hawaii and the rest of the country safe and strong. From our strategic location in the Pacific comes a responsibility that we cannot shirk.

Moreover, the military plays a significant part in our economy, spending more than $6.5 billion annually with a total economic impact of $14.7 billion. It is the second largest sector of our economy supporting more than 101,000 jobs. 

Even with the Pentagon’s new focus on the Pacific, there is no guarantee that we can protect the military’s presence in the islands simply because of our geographic location. We will need to be proactive and aggressive in our efforts to support our troops here. And I am prepared to do just that. 

Native Hawaiians

We need to fulfill our obligations to our host culture whose sense of aloha influences everything we do. As we speak, the H?k?le?a and its sister ship are sailing across the oceans to call for a more sustainable world.

Their voyage banner, M?lama Honua, means "to care for our earth."  Living on an island, we know better than most that the limited resources of this planet must be protected if we are to thrive as a species. That is the lesson offered by our host culture. It is their gift to all of us.

I am pleased that Nainoa Thompson is with us today and would like recognize him for the many contributions he has made to the Polynesian Voyaging Society and the people of Hawaii.

University of Hawaii

We also need a strong university system to help educate our future leaders and citizens and create a place where innovation, original thinking and technology flourishes–a university system not just engaged in the community but leading it into the future. 

In that regard its goals must be clear; its planning must be precise; its actions must be forthright. I challenge our university leaders to focus on execution, accountability and delivery in all that they do. 

EDUCATION

We all know that education is the key that opens the door to success. It has the power to lift a family out of poverty and despair. It has the power to turn dreams into reality. And it has the potential to do so much more for our own children. 

But before education can transform them, we must transform our school system.

Waipahu High School is a wonderful example of a high performance school with strong leadership from the principal who seeks to empower students, teachers and the community; high expectations for students; and hard-working teachers and staff committed to innovative and creative academies to help students learn.

Together, they’ve generated amazing results including: increasing reading and math performances, graduation rates, the number of students going to college and satisfaction levels from all stakeholders. 

With us today is Waipahu principal Keith Hayashi. I would like Keith to stand and be recognized.

We have many excellent, high performing schools in our communities.  The question is how do we unleash them? I know that the best way to improve student learning is to empower schools and give those closest to our children the authority and resources to take action. 

As Governor, I will appoint members to the Board of Education who embrace school empowerment of our principals and teachers as the key to ensure student success. I challenge the leaders of public education to stop issuing mandates from the state office and to focus on empowering schools and delivering resources to the school level.

In the current budget, we are requesting an increase for the Department of Education’s Weighted Student Formula. This will allow principals to decide how to spend this portion of the DOE’s budget and how to best meet the needs of their students.

And it will give our children greater educational opportunities.

Ko Ka kou Home

My Mom grew up in Kahuku. At the time schools there only went to the eighth grade. And so her parents knew that if she was to have any kind of future she had to go away for high school. Somehow they scraped up enough money to send her to Denver Colorado to continue her schooling. After graduation she went on to become a nurse.

Eventually, she came back home to work and, with my father, raised six children, including a future grateful governor. 

The point is my grandparents understood the value of education and were willing to sacrifice for it. So did my parents. When we became parents, ourselves, my wife and I did the same for our children. They are presently away at school pursuing their own hopes and dreams. But I know they too want to come home after college.

The story is the same for so many families in Hawaii. It’s repeated over and over again, generation after generation. 

I know what it’s like to scrimp and save to buy a home and pay for tuition. I know what it’s like to struggle to make ends meet.

The sacrifices are the same, because the dreams are the same: to build a better life–and build it, not anywhere else, but here in the islands–because it is home.

And so, again, I ask all of you to remember why we’re here and why we do what we do: 

Ko ka kou home. This is our home.

Let that be your focus. Let that direct your actions and drive your determination. Let the end, not justify the means, but allow us to work through them.

If we do that I think we will find ourselves in agreement more often than not. 

And so I thank you–each and every one of you–for the sacrifices that you will make during this session and throughout the year.

And I look forward to working and collaborating with you. 

Mahalo and aloha.