2009 STATE OF THE TERRITORY ADDRESS
BY GOVERNOR JOHN P. de Jongh

Earle B. Ottley Legislative Hall
Capitol Building, St. Thomas

GOVERNOR de Jongh: Members of the clergy, Senate President Donastorg, Honorable Senators, Lt. Governor Francis, members of the Judiciary, members of the Cabinet and other agency heads, Mrs. Francis, my wife Cecile, other distinguished guests, ladies and gentlemen, my fellow Virgin Islanders. 

I stand here tonight during a great and challenging moment in our history. last week, we all heard the words of our new President, as he spoke to us of the challenges we face, and of our shared hopes and aspirations for our country's future. He did not mince words about the difficult times that lie ahead, and has already demonstrated through his actions and his steadfastness of purpose, how, working together as a nation, we shall pull through these difficult times and achieve an ever-greater future for our people. 

As I stand before you tonight, I must report that the State of our Territory, like the state of our Nation, and much of our world, matches the state of mind of our Nation's new leader. For all of us, the people of the Virgin Islands, share a deep concern for our immediate future marked at the same time by a great -no, a greater - determination to take any and all reasonable actions to alleviate the suffering of our people. 

As our President said, and as we must all appreciate, it is time to put our cynicism aside, for we truly no longer have any excuses. We must put aside the stale arguments that have divided and consumed us for so long. We must, as a nation, as a Territory, as communities united in common purpose, move forward. Together. 

Tonight, I address not just the 28th legislature, but each and every resident of these Virgin Islands. For as we all recognize that the state of our Territory is one of concern, we know that we must move forward together if we are to overcome our obstacles. We must be bound in the determination to work together. We must act reasonably. We must act thoughtfully. And, most importantly, we must act promptly. 

But first let us begin tonight by sharing our collective joy in what was a truly historic moment. What greater pride could we imagine than that which we felt as the Nation was transfixed when President Barack Hussein Obama took the oath of office. That day will mark the beginning of the next great chapter in the American story, a story that has told, and will tell, of the progress we are committed to achieving, as we make ours a more perfect union. 

That our Nation's leader is an African American, influenced by many diverse cultures, sworn into office one day after the holiday celebrating the birthday of Dr. Martin Luther King. Jr.. and forty years after Senator Robert F. Kennedy made his principled prediction that one day the highest office of this land would be held by an African American, and that Barack Obama accepted the nomination of the Democratic Party on the anniversary of the day that Or. King spoke the words "I Have a Dream" at the Lincoln Memorial, affirms for me -as I am sure it does for others -the divine power that truly guides our daily actions. 

And I am further proud to state that one part of the Virgin Islands story, a part that needs always to be remembered, is that we have -beginning long before we even became a part of the American family -always fought to establish the right and reality that all men and women are created equal. must be treated equally, and must be provided an equal opportunity to achieve their individual potential. 

Tonight, it is also my duty. a duty tinged with sorrow, to ask that we pay our respects to those that have sacrificed on our behalf. This year we brought home for burial one of our own from service in defense of our freedom. I would ask that we observe a moment of silence and reflection as we remember Staff Sergeant Errol James, who died in Afghanistan, and all those others who have died in service to our country, while we remember as well retired police Sergeant Liston Gumbs, whose heroic action led to his untimely death. 

Thank you. 

We come together here tonight at a time of grave uncertainty and economic distress. One year ago, as I stood before you, I suggested that the U.S. economy was on the verge of a recession. Today, no one any longer doubts that an economic crisis is upon us, and that we are now in the midst of a recession whose hurricane strength force and effect are yet to be fully revealed. its course not yet trackable. 

For us, the hurricane metaphor that is thrown around in the national media for the economic distress that faces the nation is more than a metaphor. We understand hurricanes. As this economic storm worsens, we must re member all that we have learned about enduring hardship and remember the lessons passed on from our parents and grandparents. Prepare for the worst. Hope for the best. Reach out a hand to those hit worse than you. Remain strong and resolute.

Our strength resides in our homes, in our families, in our communities, and in our faith. And however severe the storm, this too shall pass. 

Even as this past year has been one of recession, we are only beginning to feel the worst of the economic downturn. This month, we have three thousand individuals receiving unemployment benefits, layoffs in the private sector are increasing, businesses are closing, and unemployment has only just begun to rise. We each can see this, as our friends and members of our families are laid off, or their work hours are cut back. 

And the effect on our revenues is just beginning to become apparent. We know this as tourism numbers have fallen severely, real estate activity has slowed, construction has been delayed and private sector investment has pulled back. 

Already, hotel occupancy has declined by one-third, while equally alarming is the twenty-five percent decline in average hotel rates. Our retailers are indicating that business is down more than thirty-five percent. 

Cruise passenger spending has been curtailed. The ships may still come, but carrying passengers who themselves, like the rest of us, are living in economically tough times, and will be spending less because they have less to spend. 

But even these numbers are only the beginning of a broader downturn, as, traditionally, recessions on the mainland take time to translate into declines in our tourism industry, and tourism takes time to recover once recession has run its course. Over the next year or more, we are likely to see unemployment rise toward double digits, and economic recovery may not begin for another year. 

The economic downturn has just begun to affect government revenues, and we must all prepare for a period of significant belt-tightening. We have already adjusted our fiscal 2009 and 2010 revenue projections downward, and fully anticipate real declines in personal and corporate income taxes, as well as in gross receipts taxes. 

Nine months ago, I instituted a hiring freeze that has reduced our personnel costs for the year, in anticipation of the revenue shortfalls that we have now experienced. But this is just a first step, and the continuing declines in our revenues will translate into further reductions in spending, and ultimately in services. 

This we all recognize. And I commend the 28~h legislature for your recent action in approving the realigned operating budget. The people of the Territory should recognize and applaud you for meeting on this matter on the very first day after your swearing in. This spirit of cooperation, of working together in common purpose, will be essential in the weeks and months ahead, as the recession deepens and as we make very painful choices. 

let us all be clear, the challenges we face are severe. This fiscal year, we may well face a shortfall in our tax revenues of as much as $146 million -which would be a 17% decline from budgeted levels -if the downturn worsens and if we are not successful in accelerating our collection of real property taxes. And already, over the past twelve months, our General Fund cash balances are down by almost $90 million, or 38%. This is a real and tangible indication of the impact that the recession has already had on our financial position; of the loss of financial strength, of choices, that we have already suffered. 

Even as we meet here, President Obama and the Congress are moving forward with an economic stimulus package in the range of $825 billion, which is important for job creation and sustaining economic activity through this recession. I have submitted to the President a package of projects of the central government and the authorities that totals over $700 million, which can be "shovel ready" and provide jobs across the Territory. 

Some of the funding will be driven by specific formulas that ensure that we get our fair share. Others will be subject to a competitive process. In either case, the ultimate objective is that we put the money to work in our economy sooner rather than later, subject to a process that is open, fair, transparent and accountable. 

Once we have had an opportunity to review the final federal legislation, I will call on this body to support additional local projects that will both create jobs today. and assure that we emerge from this recession stronger and with a more competitive infrastructure for building our economic future. 

This capital investment will not come without a price for each of us. We all know the difficulties created by large public infrastructure projects. Traffic at Mandela Circle or at Redhook, or at the Christiansted By-Pass or the roundabout in Cruz Bay cause delays on the best of days, and test our patience on the worst. These inconveniences, which disrupt our daily routines, strain our planning and traffic management skills. We will continue to make every effort to mitigate the problems caused by these projects, and those that we are planning and must undertake in the near future. 

I do not intend to review each and every aspect of government this evening, even though many of the topics that will not be discussed here are -and continue to be -of considerable importance. Nor do I intend to for this speech to simply be a Year in Review of the many steps forward we have taken together, or the missteps that we have experienced. Instead, I will focus on several areas that I believe are reflective of trends, of approaches, of broader policies and broader achievements. 

A change in approach to leadership throughout our government has brought both new energy and a commitment to the basic premise that we all work in and for One Government. and that government works for one purpose -service to the people of the United States Virgin Islands. 

One Government. This is the unifying standard of our work. From the day I was elected, I have suggested -no, I have demanded -that we must change the way we do business. That the old conflicts and petty infighting among departments and across agencies will be no more. And it is the dedication to this principle that has enabled us to make real strides forward. 

ThiS dedication can be seen in the leadership at the Virgin Islands Water and Power Authority, and in energy management and policy. Moving away from our reliance on oil and bringing down our energy costs requires us to diversify our energy sources to alternatives, renewables and possibly a regional cable interconnection, and to educate our community on ways to reduce demand through conservation and effective demand side management. 

This path includes WAPA and the Virgin Islands Waste Management Authority collaborating to enable the development of new generation facilities that will also allow us to move ahead with the closure of the Anguilla landfill and comply with long-standing federal consent decrees. 

These new generation facilities will lock in substantial reductions in energy costs and diversify WAPA's production on St. Thomas and St. Croix by 40% and 30%, respectively. This will significantly reduce our reliance on imported fossil fuel by the year 2012, consistent with the federal Energy Policy Act of 2005. 

Equally important. these new facilities are the product of true public-private partnerships, and demonstrate the willingness of WAPA to move beyond the old rules to achieve our collective energy goals. 

This path includes the implementation of rebate programs to provide immediate relief to those hardest hit, and support for solar energy initiatives that will move us to the day when our Territory will be powered by the sun. We are drafting new rules and regulations to support distributed power production from wind and solar sources by allowing greater flexibility in net metering. 

The Senate has expressed concern. which I fully share, over the costs paid by our residents for electricity as a result of the sharp increase in the price of fuel oil. Fortunately, the price of oil has declined substantially in the past few months. I also recognize the savings that HOVENSA has provided by supplying fuel at below market prices to WAPA. Nonetheless, I have reviewed the Government's agreement with HOVENSA, with the goal of seeing how the cost of electricity in the Islands can be lowered further. 

In this regard, I have undertaken a detailed assessment of the history, development, and application of the terms of the pricing provisions of the 1998 Extension Agreement with HOVENSA. With this analysis in hand, I have met personally with HOVENSA's leadership to begin work toward the goal of achieving reductions in the cost of fuel oil that they supply to the Authority. We have also begun to explore the potential use of alternative fuels. 

HOVENSA's management recognizes the hardship to our residents caused by high oil prices, and I very much appreciate the sincere concern it has expressed in working with the Territory to reduce energy costs. I am hopeful that we will succeed in this endeavor. 

As to gasoline prices, we will continue to be as aggressive as we have been, to make sure that our motorists get the best available price as quickly as possible. 

And I am proud of our continuing effort across the government, where we have reduced our gasoline consumption by fifteen percent over the past year. 

Across the government. the principle of One Government has been embraced. The Virgin Islands Port Authority and the West Indian Company are working effectively together to address the needs of the Port of Charlotte Amalie and the needs of our cruise industry with a $9 million dredging project. This project will ultimately be funded by increased passenger traffic. But what really made it possible was the improved relations among the Florida Caribbean Cruise Association, W1CO, and the Port Authority, who all now recognize that we share a common economic future. 

And the Department of Agriculture has reached out to other government agencies as it has pursued its vision of developing our local agricultural economy. They have worked successfully with the Department of Justice and the Economic Development Authority to provide $600,000 to the Farmers Cooperative to increase the production and distribution of farm products. 

Agencies and departments that in the past worked at cross-purposes are now aligned in common purpose. And in this regard, I am pleased to report, as I promised last year, agents of the narcotics strike force have been integrated into other departments and agencies. 

I know well that there have been bumps in the road, and there is much yet to be done. Broad changes in policy and performance are not always immediately apparent. And as we address some of the challenges we face, we may appear to take one step back before we can take two steps forward . Sometimes what appears to be no movement is in fact the strengthening of the foundations necessary for progress. 

This is the case in t he area of the Bureau of Corrections, where we have been forced to transfer ninety-eight inmates from St. Croix to prisons in Virginia when it became apparent that security and control were at risk at the Golden Grove facility. I am aware that these are tough prisons, and I regret the hardship that this places on families that may find it difficult to visit their loved ones. But once I visited Golden Grove, I knew I could not leave things as they were. 
In this case, as in others, when people demand a quicker fix, we must remind them that we must do the job right, and actually fix the problems. And once the immediate issues are addressed. we must have a management structure that will assure focused responsibility and accountability over the long-term. 

Equally important is meeting the challenges we continue to face as we build a more effective, customer-focused , and efficient government. This is what is often referred to as changing the culture of government. 

Many have described what we met in government two years ago as a "culture of corruption." Sadly, this was no exaggeration. 

This problem has manifested itself most directly in the conviction of several high-level government officials, and most recently in the actions taken with respect to the abuses at the Schneider Regional Medical Center. 

We have respected the existing legal structure that oversees both of our hospitals. We replaced the Board charged with responsibility for the St. Thomas hospital, and we are working diligently with this new Board to clean up the situation they inherited. Together, we are working to maintain accreditation of the Schneider hospital, and we are working with the Governor Juan F. Luis Hospital to safeguard its status. 

The residue of the wrongdoing that has been uncovered will remain with us for some time. It has damaged us financially, it has undermined our credibility as a community, and it has placed the delivery of health care services under a cloud. 

But the old description is no longer an accurate description of our government - and it is becoming less and less true as time allows our efforts to take hold. Surely there are still pockets of bad practice and wrongdoing that survive. But increasingly these areas are being exposed and corrected. I will not rest until the perception and the reality become one, and the Virgin Islands government is one of transparency, open process, honest dealing and fairness. 

The investigations into past wrongdoing are ongoing. Some have been made public, and others remain confidential. Reports of wrongdoing are pursued, and will be pursued. The people deserve no less, I demand no less. 

From day one, a central goal of our administration has been to rebuild relations with Congress and the Executive departments and agencies that were damaged by years of neglect. Our efforts have been undertaken quietly and consistently, as they must be, built on the principle that we must be treated with fairness by the Federal government, and that Virgin Islanders be treated in all respects as Americans with the full rights of citizenship. 

Working closely with Delegate Christensen, we have made great progress. While our efforts in this regard have born fruit -and will continue to do so in the pending stimulus package -we must fix the inequities that continue in regard to Medicaid and healthcare funding. And we must make clear to the Federal government that issues like border protection and immigration enforcement are federal responsibilities. 

In some areas -most especially in the complex interface between our local Bureau of Internal Revenue and the federal Internal Revenue Service and the U.S. Department of Treasury, there is still much work to be done. 

But even here, while we have made progress on the long-standing issues of income sourcing and residency, the issue of the statute of limitations remains unresolved. We met with key principals in Washington, D.C., and we are implementing a plan for how the audits and other issues will be handled. 

This is also the case with the U.S. Department of Education and the relationship with the Third Party Fiduciary. This relationship has at times been difficult, but all now share a sole objective: improving management and oversight of federal funds in order to benefit our students. 

In the area of housing, and with the U.S. Department of Housing and Urban Development, we took back ownership of the thirty-four acres in Fortuna that had been transferred to HUD thirteen years ago, but were never developed. 

HUD has also agreed to allocate acreage at the former Warren E. Brown site for the relocation of our fire station from Fort Christian, and we have initiated discussion on private homeownership for Williams Delight residents, partnering with HUD to refurbish basketball courts, baseball fields and playgrounds across our housing communities. 

Similarly, we have developed a very close working relationship with the Federal Emergency Management Agency. This has served us well, as illustrated by their agreement to assign a senior official from their Region II office, a Virgin Islander, to revamp our emergency management apparatus. 

And, we have deepened our relationship with the Department of Defense. Not only have U.S. Navy ships returned to the Virgin Islands, but as an acknowledgement of the strength of the relationship we have developed, the Virgin Islands also hosted the annual Adjutants General conference in June, and we are soon to see an expansion in of our role with Caribbean islands as their first point of contact in the event of a disaster. 

Last year, we proudly hosted the Secretary of the Interior, who endorsed the swap of the Estate Grange Alexander Hamilton boyhood home property for National Park land for the construction of a new school on St. John. 

In a truly cross-agency effort, we can point with pride to the success of the Port Authority in regaining eligibility for as much as $10 million in new discretionary funding from the U.S. Department of Transportation for our airports after a five-year hiatus. 

This has only been made possible through the collaborations among the Port Authority, Waste Management and WAPA that have made it possible for us to finally be on track to close the Anguilla landfill, and address the collective concerns of the FAA, EPA and the U.S. Department of Justice. 

Without this collaboration, without this collective effort, we would not have moved past where we found ourselves when I took office, with the FAA threatening to close Henry E. Rohlsen Airport, and the EPA and the U.S. Department of Justice threatening new legal action. 

As we work together over the coming year, we must remain focused on the main goal and objective: To manage our affairs so that we can emerge from this crisis with our communities and our economy intact, indeed more durable and capable of offering ever greater opportunities for our residents. 

This long-term focus demands that we remain steadfast in our commitment to the three essential elements upon which our future must be built: economic development, education, and public safety. 

First and foremost, economic development and job creation remain a priority area of action in the year ahead . Our efforts to date are now bearing fruit, and several important private investment projects continue to move ahead on schedule, even as the larger economy is turning down. 

On St. Croix, these projects include the Island Crossings shopping center and office complex, our first project financed with our newly approved tax increment financing legislation. The Estate Bonne Esperance housing development, the Estate Pearl housing development, and the Robins Bay project are moving forward. And the William & Punch development recently received CZM approval. 

On St. Thomas, the continuing projects include the Estate Donoe affordable housing development, the regional library and record center, and the Raphune Hill Vista. 

On St. John, the Pond Bay Resort and the Calabash Boom housing development remain on track. 
We must not take for granted the confidence and belief in the long-term future of our Territory that these developers and investors show when they link their own economic future with ours. 

Our work with neighborhood organizations and communities is moving forward, in Williams Delight, where we are fixing roads and working with the Virgin Islands Housing Authority on homeownership; in the West End, where we are working to address concerns with the tower and a community center; in Bovoni. where we are meeting with the community to address environmental issues and beautification; in Mon Bijou on neighborhood clean-up; in Garden Street. to increase the police presence and tackle the proliferation of guns. 

Our efforts at community revitalization continue to move ahead, as we support the American Legion to build Bromley Berkley Post 133 in Frederiksted, and continue our partnerships with the Christiansted Restaurant and Retailers Association, the Coral Bay Community Council. the Charlotte Amalie Revitalization Task Force, the Water Island Civic Association and Our Town Frederiksted. 

Initiatives in these areas include restoration of Fort Christian, improving vehicular flow at Veterans Drive and Mandela Circle, rehabilitation of the Ann Heyliger Fish Market, overall revitalization of the corridor between Christiansted By-Pass and Basin Triangle and issuing the request for proposals for Paul E. Joseph Stadium and the LaReine Fish Market. 

On St. John, we are negotiating with the Urban Land Institute on proactive planning strategies and solutions for the many growth challenges confronting the island. This community-based initiative will set in motion a dynamic model that can be replicated throughout the Territory, and will support the efforts we have started in reviewing our zoning categories. 

All of our economic development efforts are being implemented in the context of strong investments in planning, commitments to strong environmental and land use regulation, and support of smart growth strategies. 

I also commend the work of our Department of Tourism for its successful work with the air carriers that service our islands. They have told our story well, bringing to the attention of the airlines our new resort projects, the strength of our cruise industry. and our competitive advantages as a U.S. territory in the Caribbean. We have been able to maintain airlift and expand winter service at the Cyril E. King Airport at a time of upheaval in the airline industry, even as the Department has worked diligently to expand service to St. Croix through special promotions and destination branding. 

Finally, our commitment to building a strong and durable rum industry is moving forward unabated. Last year in my State of the Territory address, I spoke of the pending sale of the parent company of Cruzan Rum by the Swedish government, and how essential it was that we take action to preserve the revenue stream of excise taxes generated by the sale of rum they were manufacturing on St. Croix. This revenue stream is what supports about five hundred million dollars in government bonds that had been previously issued. 

Well, we did act, not just to preserve the position of Cruzan Rum, which has changed ownership not once, but twice, in the past year, but to greatly enhance the position of the Virgin Islands in the world's rum industry. Last year at this time I could not speak publicly about what we were working on. But with the Legislature's approval of the agreement with Diageo, the world's leading premium drinks business, we are on the way to becoming a dramatically bigger and more powerful force in the rum industry. 

We are in the process of approving the plans for the construction of a 20 million proof gallon rum distillery, which will generate about one hundred million dollars a year in new excise tax revenues for the Territory for the next thirty years, funds that are more important now than ever. And, we are working with Beam Global, the new owners of Cruzan Rum, to see how together we can expand their rum production, and to find a permanent solution to the waste treatment issues. 

Taken together, expanding production by Diageo and Beam Global will combine to build our leadership in the rum industry, as our rum industry will become the home to multiple international brands. And we will have ongoing rum revenues exceeding two hundred million dollars annually.

These revenues will provide us with capital investment capacity, and revenues for funding long-term bonds, our pension fund commitments, and our long over-due employee obligations. At the same time, the development of the Diageo distillery at the St. Croix Renaissance Park represents a major step forward in the re-emergence of that property as a cornerstone of the St. Croix economy. 

And perhaps this year, we will see closure to the Innovative bankruptcy saga, and new ownership that will address both the concerns of the long-time workers there, and our need, as a community, for investments in the technology infrastructure that have far too long been ignored. 

Technology is indeed an important element in our economic future. We are now just beginning to see the emergence of the University of the Virgin Islands' Research and Technology Park as a driver of new opportunities, and of our ability to bring our unique fiber assets, corporate tax advantages and regional location to build long-term strategic partnerships. To date, the RT Park has negotiated strategic partnerships that will provide the technology infrastructure to attract companies seeking a competitive advantage in the new economy. 

Taxes are never a popular topic of discussion -neither with taxpayers nor with legislators. But I do think we need to take a few moments to review where we are with respect to real property taxation, especially as our tax receipts in other categories begin to fall as a consequence of the recession. We need to resolve this issue, as now more than ever, our ability to fairly impose and collect real property taxes is essential to all other commitments. 

In this effort, we remain hampered by continuing litigation, but we must reaffirm the core principle that taxes are an obligation of ownership, and that all taxes will be due eventually. All of those who do not pay their fair share place a burden on all the rest of us who do. 

But what we did together in real property tax reform was a very big thing -we lowered taxes for the vast majority of Virgin Islands homeowners. We introduced a system that reflects the shared commitment to promoting home ownership. On St. Croix residential property taxes fell for the vast majority of owners, with the average bill falling by over thirty percent, and by over twenty percent on St. Thomas. That the property owners on St. John have faced the cruel impact of their real estate market that lifted all values to unmanageable levels before this present recession is a problem requiring continuing attention. 

But let us be honest about this -there had been few, if any, adjustments to values on St. John for well over a decade before the court-ordered re-assessments. The lieutenant Governor, who has oversight of the Tax Assessor's office -and by extension the firm that had been contracted to do the re-valuations before we took office -is quite concerned that there were allegations that more factual errors were made on St. John than elsewhere. 

If true, these can and will be corrected. What cannot be done, however, is to ignore the market reality that -even today in a time of economic recession -land on St. John is dramatically more valuable than it is on either St. Thomas or St. Croix. 

Our challenge is to find ways to mitigate this economic reality so that residents can find affordable housing in which to raise their families. That is why my Administration has been supportive of the Reliance Housing project that is building moderate income housing and why we will actively pursue other such developments. 

Meanwhile, we all know that we cannot forgo the 560 or $70 million or more anticipated from real property taxes year after year. We will resolve the law suit -the bills will become due for 2006, 2007 and 2008 -and, regrettably at the worst of times, these taxes will be owed by taxpayers. That is why some far-sighted landowners have already paid their property taxes and others have been setting aside funds against this unavoidable obligation. If you have not been doing so, I urge you to do so now. 

It is my hope that the collection of property taxes due from prior years, as reflected in the realigned budget, will offset the decline in gross receipts and income taxes that we are projecting as the recession works through our economy. But this year and next year will be a challenging time; one that will require all in government to re-examine all that we do and how we do it. 

There will be cutbacks. Funding for some programs will be reduced, and for others it will be eliminated. I recognize the pain this will cause, but the reality is that our revenue growth has ceased and there is no indication that the financial challenges we face will lessen in the next twelve to eighteen months. 

Nothing is off the table. Circumstances will determine how far we must go. But recognize that none of these options will be easy, be it holidays without pay, consolidating smaller schoo ls, laying off of workers or shortening their hours. This we may be forced to do by the economic situation, but all must recognize that matters will be far worse if we are forced once again to face delays in realizing property tax collections. 

In the weeks and months ahead, we will have new economic data that will dictate the extent of the measures that we will be forced to collectively consider. The choices will not be easy -indeed many will be painful. Our challenge will be to assure that the choices we make bring us out of the recession, poised to grow and compete. What we must avoid is what has been done too many times in the past, is to fail to live up to our responsibilities, and to pass our problems off to future generations. 

This will not last forever. The economy will turn around. But many of the reforms required by the recession will, and should be, patterns of better practice for the future. 

The second essential element of our future prosperity is education. 

Improving educational outcomes is slow and painstaking work. but we continue to move forward. We all understand that education is critical to each child's future. and my dedication and commitment to improving our performance is unwavering. 

Our Annual Yearly Performance reports -the AYP numbers -show some progress. There has been a sixteen percent increase in the number of third grade students attaining proficiency in reading over the past three years, while proficiency in mathematics increased by eight percent among third graders, and twelve percent among fifth graders, during the same period. But this is nowhere near enough. 

We have restored full accreditation to the two high schools on St. Thomas and the Educational Complex on St. Croix, and we continue to work diligently to ensure that Central High School moves from "provisional accreditation" to a status of "full accreditation." 

We are undertaking major projects at Central High School, John H. Woodson Junior High School, Addelita Cancryn Junior High School and Charlotte Amalie High School, and have requested additional funding for more schools in the stimulus plan and will also do so with the next bond issuance. 

We are investing more in professional development, and efforts like the Virgin Islands Writing Project that provide peer support and professional growth. And with the support and guidance of the St. Croix Foundation, we sent a team of teachers, principals and parents to the 2008 Model Schools Conference, to build the skills and professional capabilities necessary to take our schools to a higher level. 

We all understand that teachers are the foundation of our educational efforts. And so, in the spirit of Eulalie Rivera and Cecile Moorehead, two matriarchs of our education system, whom we sadly lost recently, I would like to recognize our Teachers of the Year. With us here tonight are Kenneth Selkridge, Teacher of the Year from the District of St. Croix, and Edney Freeman, Teacher of the Year from the District of St. Thomas-St. John, who is also our State Teacher of the Year. 

Please join me in acknowledging their accomplishments, and those of all the teachers they represent by their presence here tonight. 

In the last year, with the Board of Education, we addressed the social promotion policy and began a revision of the grading policy. We have also begun to re-focus our Career & Technical programs so they can offer courses compatible with our economic activity. And we continue to support programs that will expose our students to practical experiences linked to their course work, such as with the marine school on the Roseway. 

However, I can never overstate, as our new President has reiterated, that success in education begins long before and continues long past the time a child spends in school. Education begins with parents who pay attention to what their children do in school, and ask questions so that each child understands the importance of schooling. 

Our children will not learn to read or succeed until the grownups in their lives turn off the TV's, turn off the radios and iPods, turn off the video games, and sit them down at a well-lit table to do their homework. And it is the job of the adults in our children's lives -their coaches, their grandparents, and others in the community who care about them -to check in and make sure that each child is moving forward. That each child understands that his or her education matters. And it is the responsibility of each teacher and guidance counselor to respond promptly and frankly to every parent. 

I believe that it is important that we approach early childhood education with a greater attention to the wide range of factors that affect the growth and development of our children, and their readiness to learn in school. To support our efforts to develop a more systemic approach to early childhood educational readiness, we have developed an important new partnership with the Annie E. Casey Foundation and their cutting edge "leadership in Action Program." 

Under the auspices of the recently established Children and Families Council ¬chaired by the First lady -this program will provide a proven methodology and measurable results in ensuring that all children in the Territory are healthy and prepared to succeed in school. Territorial kindergarten entrance tests and fourth grade reading scores will provide the basis for measuring our progress as we begin to implement this program in a few months. The program's results in other communities have been remarkable, and I look forward to reporting back to you on our own progress. 

And we must redouble our efforts to support the healthy growth of our children. That is why we have worked diligently to renovate a considerable number of our ballparks and playgrounds over the past year, with several more to be done in the near future. Participation in athletics teaches teamwork and cooperation, along with developing physical fitness. And these activities should continue from childhood on. 

And so, I would ask that you finally take up and approve the creation of the new Department of Sports, Parks and Recreation. We owe it to our children to create a more effective, streamlined and well-administered agency, to do more and to do it better. 

There is no reason why this legislation should not be approved and forwarded for my signature. , am sure that if we sit together and review this matter, an agreement acceptable to all will be reached, and that agreement will manifest itself in legislation. 

This we can do, and this we must do, for our young people and adults alike. have delivered this proposed legislation to the President of the legislature this evening, and I urge this body to act without delay. 

Finally, the third essential element of our future prosperity Is public safety. 

We had a slight decline in homicides for calendar 2008, an increase in the number of arrests, and more successful prosecutions putting more criminals in jail. I note that gun confiscations have tripled. However, this is not an area where the improvement in statistics warrants any sense of satisfaction, as there are way too many illegal firearms in, and coming into, our Territory. 

While there is still more work to be done, I am gratified that we continue to receive increased communication and cooperation from the public, which is a sign of growing confidence in the Department's efforts and leadership. The participation, guidance and constructive criticism from members of our Community Integration Teams working with the Department continue to be strong and consistent. 

The Department's work with our youth is expanding, as is reflected by the start and success of our police cadet corps. However, with our youth we recognize the need to step up our presence as gang involvement appears to be growing and anti-social actions in neighborhoods are now being taken into our schools. 

Despite our successful use of auxiliary and retired police officers, we continue to be challenged by manpower shortages. Our recruitment efforts are beginning to take hold as we have broadened our pool of applicants to include off-island candidates, and We have worked with educational facilities to widen the net of those interested locally. More men and women will be joining the force this year. We have repaired and expanded our surveillance camera system on all three islands. And new police vehicles will be on the road in the next month. 

We continue to need help from every neighborhood so that we can find and arrest those who put us at risk with their random gunshots throughout the night and into the early morning hours. We do not manufacture guns in our Territory. We have taken more off the street, but it is a sad reality that the illegal transportation of these guns through our airports and ports continues. In combating this trafficking, we continue to build programs with our federal partners. 

At a broader level, we are seeing effective cooperation among other law enforcement agencies such as FBI, ATF, DEA, US and Local Marshals, as well as with DPNR. Joint operations, special operations and leveraging of resources continue to work to our mutual advantage. Beyond our shores, we have expanded cooperation with and open lines of communication among police departments from one end of the Caribbean to the other. 

And this year, I will make good on my commitment to fully deploy a state-of-the-art emergency 911 communications system. Gone will be the dead zones, dropped calls and calls rerouted to Puerto Rico. This is more than just new hardware and software, it is about hiring additional dispatchers, and providing professional training to our first-responders and all who will man the call centers. 

In support of our broader efforts to improve our emergency management structure, I have this evening delivered to President Donastorg the proposed Virgin Islands Territorial Emergency Management Act. 

Providing affordable access to health care is among the most challenging mandates that we have. Not a day goes by that we do not hear about health care in the national news. President Obama has assured all Americans that they will have access to affordable health care. 

Here at home, we have been working diligently to address the same issue, to ensure that we are maximizing the federal resources available while at the same time providing appropriate stewardship of the $190 million that we now spend from our General Fund to cover our Government health insurance plan, our Department of Health clinics, two other health centers, our two hospitals, and the health services provided by the Department of Human Services. 

We have not turned away from the challenges of uncompensated care, building our nursing resources, and meeting the needs of those in our community by expanding the hours our clinics are open. 

We need to do more to educate our community in the area of wellness and quality lifestyles to address diabetes, hypertension, obesity, heart disease, and cancer. 

Neither will I turn away from the persistent challenges our communities have faced for many years in providing consistent and thorough care to those who suffer from mental illness, and in providing support to their families and caregivers. History will only remember how we treated those who most needed our help. And I will continue my commitments to partner with the many non-governmental organizations that address the needs of the mentally challenged, the homeless and those with special needs. 

We have been coordinating very closely with federal officials to put our Medical Assistance Program back on stable footing. For the first time in more than twenty years, we will complete a comprehensive reviSion of our Medicaid State Plan and be in a position to spend millions of Medicaid dollars that we have been forced to send back to the feds in the past. 

Every year we have repeated the same mantra in Washington -"raise the federal cap on Medicaid." But let me be honest with you tonight We simply cannot expect more federal dollars to flow to us from the new Administration until we can demonstrate our ability to spend what we have, and in compliance with federal regulations. 

To get us to that point, I have secured a technical assistance grant from the Department of the Interior, and next month we will launch an updated survey of the territory's uninsured population. And with assistance from the National Governors Association, we will launch a survey of all uncompensated care costs in the territory. 

Armed with this data and a revised state plan which will allow us to spend the federal dollars we receive, we will be in an even stronger position to advocate for our fair share of Medicaid and SCHIP dollars --and let me assure you that I have already been in contact with the Congressional leadership in the House and Senate on these matters. And with the new ability to spend all the federal health care dollars that come to us, we will be able to change our Medicaid eligibility requirements, expand the services we offer, and provide coverage to a vastly increased number of individuals and families in the community who need it most. 

We have also expressed our concerns and suggestions to the U.S. Department of Veterans Affairs on how best to address the health care needs of our veterans for improved access and resources. 

Fortunately, the good news on the healthcare front doesn't stop there. This past year, we opened the Cardiac Center at the Governor Juan F. Luis Hospital. And the Myrah Keating Smith Community Health Center received private funding to implement telemedicine and connect it to the world-renowned Cleveland Clinic. 

And tonight I am especially delighted to announce that we have secured a three year, three hundred thousand dollar grant from Novo Nordisk, a Danish company and global leader in diabetes research and care, to promote diabetes awareness and prevention in the Territory. The effects of diabetes on our community cannot be overstated -it is the fourth largest cause of death here. I had the opportunity to solidify the partnership with Novo's corporate leadership in Washington, D.C. last week, and we are all especially proud of this new relationship. 

Despite all that has been done, there are several things that have yet to be addressed, and that remain work to be done by this new legislature. 

I would ask that you take up and approve the transfer of the Waste Management Authority into the central government. A copy of this proposed legislation I have delivered to the President of the legislature this evening as well. Now, and for the foreseeable future, the important work of this agency will be underwritten by significant annual funding from the General Fund. 

The solid waste system, in particular, will not be self-supporting from fee revenues for many years, and it is imperative that the work of the Authority be subject to the same legislative oversight and executive accountability as any other department funded from general tax revenues. This I ask that you approve. 

Even as we face tough times, I remain committed to addressing our unfunded pension system, the issue of retroactive pay, and cost of living increases for our retirees. last year, you approved legislation increasing the employer contribution rate to the Government Employees Retirement System, as I requested. However, the comparable increase was not approved for the independent agencies. 

I will say here, as I have said before, the efforts that we make can no longer be discretionary by our authorities. We have established a set of policies to address the massive pension under-funding problem that we face, and these policies must be adhered to across the board. Our commitment is to take the steps necessary to assure retirement security for our government workers and our retirees. 

We did not complete the pension funding prior to this, frankly, because as I said one year ago, I anticipated the economy was due for a fall. And we are fortunate that we made that decision. If we had issued pension bonds one year ago, the GERS would likely have sustained substantial losses in the investment of those funds, and the Government would have realized the worst of all possible outcomes: We would still be obligated to repay all of the bonds we issued, but we would be obligated as well to fund the market losses that would have ensued. 

We must move forward in a planned and thoughtful manner. I look forward to receiving the results of the retroactive pay analysis, from the Retroactive Pay Commission that was created for that purpose, and to receiving their recommendations as to how we should the address that issue. Then, we will move forward with the development and implementation of a plan to address the retroactive pay issue, and move forward on pension funding. 

We must -you and I -work together, in all that we undertake, if we are to uphold the oaths that we have taken. That is our collective obligation as we do our work for the citizens of the Territory, who have sent us here to do the people's business. 

Suffice it to say that we cannot -we will not -surmount all of the extraordinary challenges that we face today if we do not commit ourselves to set aside partisanship and pettiness, cynicism and self-interest, on behalf of the people we serve. 

Our people understand that we face hard times. And they understand that in times of adversity, as in times of emergency, all must pitch in and help. As we saw in the wake of Hurricane Omar last October, Virgin Islanders have shown that they can stand together, and they have shown that they can act bravely to help one another. 

Our people recognize what the President said all must recognize, 'That we have duties to ourselves, our nation and the world, duties that we do not grudgingly accept but rather seize gladly ... " 

And so, it is my great pleasure this evening to commend three brave individuals who saw a duty beyond self and stepped up, putting their own lives in jeopardy, to save others. Jahthwan Barnes and Gary Jarvis, two junior high students at John H. Woodson Jr. Junior High School, escaped from a burning bus, but then, together with teacher Patricia Marcelin, went back into the bus to rescue other students and the driver. 

Please recognize them for their bravery and quick action. Jahthwan, Gary and Ms. Marcelin, please stand up. 

Thank you. 

Before I close, I must comment on one more matter. 

We will soon have the work product of the 51h Constitutional Convention. We have placed a great responsibility upon the delegates to the Convention. If their work is to be deemed worthwhile -if it is to be acceptable and accepted -it must adhere to the principles that have brought us -and brought them -to this task, both as Americans and as Virgin Islanders. We in the Executive and Legislative Branches of our government must, without waste and without extravagance, support them in their important work. 

Theirs is the challenge of living up to the demands of our history. Theirs is the challenge of bringing to their work the strength of Queen Mary and Buddhoe who blazed new trails for our people; the brilliance of Wilmot Blyden to chart the unknown; the intelligence and focus of Earle B. Ottley; the passion of Ruby Rouss; the integrity of Rothchild Francis; and the character of D. Hamilton Jackson to stand up for what is right. 

They must rise to the challenge, to the standard set by our principles and goals, and they must present to the voters of this Territory a document that celebrates and guarantees the liberty for which so many have sacrificed. A document that guarantees as well the equality of opportunity and treatment -that is to say the fundamental justice ¬each of us here is bound to pursue every day we go to work as public officials. 

For just as it is often said that united we stand, divided we fall, so it is true that if the draft Constitution they present to me as Governor and to the people of the Virgin Islands is not of one with our principles, if it is not united in our principles, then surely it will fall, and fail to gain the support of our people. 

But when they meet this challenge, then I will be able to sign the required transmittal letter to our new President, confident in the knowledge that I am standing at the end of a long line of my predecessors -be they naval governors, appointed governors or our six elected governors -who all have worked to bring us closer to the day when the People of the Virgin Islands can affirm that they helped define our rights and status as residents of the United States Virgin Islands. 

There is, however, one right of citizenship that I intend to press directly and without delay on behalf of us all. And that is the right to vote for President. How or when we shall win this right I cannot say, but neither can I wait to act, to use my office to petition Congress and the President to address the yearning of the American citizens of America's Paradise to vote for their President. 

* * * * * * * * * * *

So, as we gather here tonight, at a great and challenging time in our history, I reflect on President Obama's words from his Inaugural Address. It is now clear, if there was any doubt before, that we are a global village. 

For as large as the world community might be -and as diverse our identities of race and religion, of gender and ethnicity -our futures are woven ever more tightly by networks of information and communications, of finance and commerce. 

And within our Territory, our future success -that of ourselves, of our families, of our communities, and of our neighbors -rests with our ability to embrace those things that unite us, and set aside those things that might, in another time, divide us. What a poet wrote many centuries ago rings more true today than ever. No man is an island unto himself, and neither are our islands, islands unto themselves -we all need each other. 

I pray that -years from now -American citizens and historians alike will look back and say that in 2009, a young American president, drawing on the participation and ideas of people from all quarters, and working with the Democratic majority in the Congress and a Republican minority, was able to see and to seize the opportunities that our present crisis presented. 

I pray that we -and they -will look back and say, that our politicians and our citizens followed the lead of this new leader, and that, together, we forged new policies, new understandings, and new programs that brought us not just change, but positive change -not just movement, but progress -not just good times, but prosperity. 

Cynics among us would argue that this could never happen here. But I am not a cynic. I am, and I remain, a person of faith. 

And so it is, with a spirit of determination, and faith in what we might yet create together, that 1 call on each and everyone in this new Senate to imagine a future that is different from the past, and to make the choice to work together, with each other and with me, so that we might weather these turbulent times, and build a strong and bright future together. 

So I close by stating once again my belief that although we find ourselves concerned, that concern is matched by our determination. We know there will be difficult times ahead, but we have faith that we will persevere -that we will prevail. 

The verses of the great hymn of our people call for us to 

Sing a song full of the faith that the dark past has taught us, 
Sing a song full of the hope that the present has brought us. 

We shall do what we can, and we shall do what we must, with a determination fueled by hope and confirmed by faith. We know that there is only one way, and that way is to move forward -Forward Together! 

Thank you. God Bless you and God bless the U.S. Virgin Islands.