Pence Remarks at Indiana Chamber's 12th Annual Indiana Conference on Energy Management, As Prepared for Delivery, August 28, 2012
Thank you all for inviting me to share some thoughts about the future of energy in our state. Thanks to Kevin Brinegar and Vince Griffin for their leadership at the Chamber.
You know, we've come a long way in Indiana in the past eight years. Before we delve into energy policy specifically, I want to talk about the progress we've made and lay the groundwork for the importance of a consistent energy policy for our state.
In 2005 the state had a structural deficit of $820 million. Our universities and local governments, including schools, were owed more than $700 million by the state due to payment delays. Our reserves were functionally non-existent, equaling only 0.2 percent of operating revenue in FY2005. State government agencies and programs were not consistently measuring their results. We had a huge backlog of permits at IDEM, which were inhibiting job growth and capital formation. Finally and not surprisingly given the fiscal mess that Indiana was in, the state had seen its credit rating lowered twice between 2002 and 2004.
Thanks to Governor Daniels' fiscal stewardship, today the state has more than $2 billion in reserves and a structural budget surplus of more than $500 million. He has focused on performance management in state agencies, worked through the permitting backlog, reduced government debt, built our reserves and promoted transparency in government funds. All this is reflected in the fact that today Indiana enjoys a top credit rating.
We have come so far. But I'm here today to say: There is more work to be done.
As we gather today:
255,000 Hoosiers are out of work (Source: Bureau of Labor Statistics)
Nearly 1 million Hoosiers lack the most basic skills needed to find a job (source: Indiana Chamber Vision 2025)
20,000 Hoosier teens leave school each year without earning a high school diploma (source: Indiana Chamber Vision 2025)
22% of Hoosier children live in poverty (Source: Kids Count Data Center, Casey Foundation)
While Indiana has the 25th highest tax burden in the nation, putting it squarely in the middle, new and higher federal taxes threaten to undo all the progress we've made on spending and taxes in the past 8 years.
Although we've made great progress these past eight years, Hoosiers know we've got to do even better.
We want to make Indiana the model state in the Midwest and then in the nation. A state where you can grow a business, find a job, attend a world class school, and raise your family.
PENCE VISION AND GOALS
My vision for Indiana is clear: to make Indiana the state that works.
Where we promote private sector job growth, develop world-class schools, protect taxpayers and support Hoosier families.
That means our focus must be on:
1. Increasing private sector employment
As measured by the Bureau of Labor Statistics and the Indiana Department of Workforce Development
2. Attracting new investment in Indiana, with emphasis on manufacturing, agriculture, life sciences and logistics
As measured by investment (known as "total deals") reported by the Indiana Business Research Center at Indiana University
3. Improving the math and reading skills of elementary students
As measured by I-READ3 and ISTEP+ results from the Indiana Department of Education
4. Increasing graduation rates
As measured by Indiana's non-waiver graduation rate from the Indiana Department of Education
5. Improving the quality of the Hoosier workforce
As measured by the American Community Survey and STATS Indiana
6. Improving the health, safety and well-being of Hoosier families, especially children
As measured by the Kids Count Data Center from the Annie Casey Foundation
With these goals before us, we can take Indiana from good to great. We CAN become the state that works.
Where we create new products, develop new industries, find new cures, develop our home grown energy resources and send our Hoosier products from factory, farm and lab--to every part of the world.
Where Hoosiers are entrepreneurs and engineers, innovators and technicians, dreamers, builders and creators.
Where we believe in the future--and always look forward.
To achieve our vision, we must begin with the end in mind.
On manufacturing floors across Indiana, work begins with the team going over their goals, measurements of success--how many units shipped, how many sold, how much inventory, how much downtime, how many consecutive accident-free days.
This summer I announced our goals for achieving the vision for making Indiana the state that works.
To make Indiana the state that works we must make JOB CREATION JOB ONE, and make it our aim to have more Hoosiers going to work than ever before in our state's history!
PENCE POLICY ANNOUNCEMENTS TO DATE
With those goals in mind, we've pledged to increase career, technical and vocational education opportunities in high schools across the state to ensure that when our students graduate from high school ready to head off to college or start a career.
We've announced our plans to improve the business climate by imposing a moratorium on new regulations until existing regulations can be reviewed.
We've looked to improving the lives of our veterans by making sure that at least 3 percent of state contracts go to veteran-owned businesses.
We've proposed a 10 percent across-the-board income tax cut. And said Indiana will lead the fight against Washington D.C.'s excessive mandates and regulation, and instead focus on finding Hoosier solutions to Hoosier problems.
Sue Ellspermann, my running mate, announced our ideas for growing Indiana's agricultural economy by opening new markets for trade overseas and by supporting the creation of a Food and Agriculture Corridor.
I was joined by executives from Lilly and Ginovus for a recent announcement about building a collaborative partnership among the state, our research universities and private businesses to move innovative research into the marketplace more quickly.
And just last week I announced plans to help our students not just get to college, but get through college by making college more affordable and by ensuring that more of our students complete their two and four year degrees on time so they can enter the workforce without excessive student debt.
All of these policy announcements center around the need to get Indiana's economy moving again, with an attractive business climate, good jobs and the right people to fill those jobs. A comprehensive energy strategy also is critical to Indiana's future economic success.
There is nothing more critical to Hoosier job creation than a reliable, low cost source of power to light our homes, run our computers, work machinery on the manufacturing floor and dry Hoosier grain. Just as we have tackled issues related to life sciences and job training--we must shine a light on the energy opportunities we have in our state and our region.
As you all know, historically, Indiana has enjoyed one of the lowest costs of electricity in the country. Our low cost of power has enabled Indiana to be one of the top manufacturing states in the country, and make this an attractive place to locate a business.
Unfortunately, our position as a low cost energy state is at risk. According to the State Utility Forecasting Group at Purdue University, the cost of electricity will increase 34 percent over the next several years. The increases will come as our economy grows and demands more electricity, as our electric plants age and near the end of their useful life, and as the cost of extending the life of those plants rises in the face of an onslaught of new, more stringent regulations from the Environmental Protection Agency.
The result is a gap between our demand for electricity and our ability to produce it. The State Utility Forecasting Group estimates that our additional demand for power over the next 15 years will equal the equivalent of nine, new coal fired plants. We also will need to upgrade our aging electricity transmission grid to deliver current energy needs as well as additional future demand. Conquering this challenge will require a coordinated effort from a broad range of stakeholders, and leadership from the next governor.
Fortunately, Indiana has the resources to meet our energy challenges.
We have enough coal to last for the next 300 years. We have outstanding wind resources. Our agriculture industry produces corn and soybeans that our 18 biofuel refineries stand ready to process into ethanol and biodiesel. We have biomass and municipal solid waste resources that can power our electrical grid along with coal.
We also have oil and natural gas resources, including the Illinois Basin in southwest Indiana, which has an estimated 214 million barrels of oil and 4.65 trillion cubic feet of natural gas. We have natural gas reserves locked away as shale gas, coal bed methane, biogas, and landfill gas.
The sun and our rivers provide opportunities to generate electricity, and the earth can help heat and cool our buildings.
Not to be left out, we have next-generation nuclear power technology under development right here in Indiana. Known as small modular reactors, this technology is less expensive and easier to deploy than older generations of nuclear power.
I believe the time has long come for nuclear power to be a part of our conversation as we explore strategies for meeting our future energy needs.
In short, Indiana is blessed with significant existing and potential energy resources, and we need to utilize all of them to provide Indiana with a diverse, "all of the above" energy mix. That, too, will require leadership from our next governor.
I hope to have that opportunity, so let me share some of our ideas with you.
First, we would make the Office of Energy Development the state's energy hub, relocating all energy-related positions to that office. OED will become the leading entity on Indiana's energy policy and a significant voice in my administration moving forward.
Second, we will task OED to update Governor Daniels' Homegrown Energy Plan and build a new vision for Indiana's energy future, one that is firmly rooted in our state's traditional sources of energy like coal, natural gas, and oil.
And let me assure you, in a Pence administration we will fully support our traditional sources of energy, seek new ways to promote them and market them, and be a full partner in pushing back against federal mandates that raise the cost of energy and lower the standard of living for the vast majority of Hoosiers.
But I believe our state's energy vision must also include reasonable efforts to diversify Indiana's energy mix and assist in commercializing new energy technologies. To do these things effectively, Indiana's new energy plan must identify barriers to diversification and commercialization and develop strategies to break them down.
Not all of our energy technologies are currently able to compete in the marketplace. Unfortunately, as a nation, we have too often tried to take economically uncompetitive technology and put it in service using mandates, subsidies, and incentives. The result: when the subsidy ends, the market for the technology fades. If there were no need for subsidy and the technology could compete on price, the market for the technology would have a longer life. That is where we need to focus our efforts.
OED will be charged with networking with inventors, entrepreneurs, and investors to move energy technologies out of the laboratory and into the marketplace. We will work with our universities and other research institutions to identify the technologies ready for commercialization -- and eventually house this effort in the new Indiana Applied Research Enterprise (IARE).
I announced the Applied Research Enterprise two weeks ago. This enterprise will focus on speeding up the commercialization of the innovation at our world-class universities. It will help connect entrepreneurs and investors with commercial opportunities. It will be a magnet for the most commercially-minded researchers outside of Indiana. It will start in the life sciences, but we will welcome all players to the game. We will make this state the place to be for those who want to make the most of their discoveries, whether they are in life sciences, energy or other promising sectors of our state's economy.
Diversifying Indiana's energy mix will take time. Innovations in energy technologies need time to evolve, so we must realize that by focusing on diversification through commercialization we are taking the long-term view. In the short-term, we will also work with stakeholders to develop ways to upgrade our electricity generation and transmission infrastructure.
These and other strategies for breaking down barriers to consumer choices will be identified by our new state energy plan. By breaking down the barriers to consumer energy choices, we will diversify our energy mix, keep prices lower, and support Indiana's businesses and families.
We cannot talk about energy without also talking about the environment. The two are intertwined.
While we pursue the responsible utilization of Indiana's natural resources to meet our energy needs, we will also be mindful of the generations that come after us.
Maintaining a healthy environment is not an easy task when your economy relies heavily on manufacturing and agriculture, but, thanks to the hard work of industry stakeholders, interest groups, the Indiana Department of Environmental Management, and the Indiana Department of Natural Resources, we are showing the world that you can build things, grow things, and have a clean, healthy environment. Put simply, in Indiana we are demonstrating that affordable, reliable energy, even from traditional sources, is not incompatible with a healthy, clean environment.
Indiana's air quality is a great example of an effective economy-environment connection. In 2009, all of Indiana's 92 counties met clean air standards for the first time since air standards were first enacted, and, by the end of 2010, Indiana was one of only 20 states to meet all clean air standards.
This is a testament to an enormous effort by all stakeholders. We should be proud of this achievement, and we should use it as we market Indiana to business and families looking for a place to call home.
We must not go backward. Meeting clean air standards is not a one-time event. It will take ongoing effort to keep our air clean, and we must remain diligent.
Abundant, Clean Water
While Indiana has historically enjoyed abundant water resources, increasingly dense population centers, like those in Central and Southwestern Indiana, will challenge water supplies in the future. Areas with challenged water supplies will find their lack of water to be an impediment to economic growth. And this summer's drought has been a tough reminder of the importance of water to our state's economy.
Last spring, the General Assembly directed the Indiana Utility Regulatory Commission (IURC) to begin gathering data regarding water supply and usage.
Once the IURC has collected appropriate data, we will work with stakeholders from across the state to establish a first ever, comprehensive water resource management plan. With this plan, we will be better able to manage our water resources to ensure that Hoosiers have a sufficient quantity of water for business, industry, recreation, and life.
Our emphasis on water is not limited to water quantity. We will also emphasize improving water quality. Indiana's waterways are the cleanest they have been in years due to the effort and commitment of state lawmakers, the agriculture community, industry, and environmental organizations. Strategies have been put in place for continued improvement, but we must be mindful that cleaning our water is a complicated, long-term proposition.
Promoting Hoosiers' Enjoyment of our Natural Resources
Finally, I want my administration to promote Hoosiers' enjoyment of the outdoors and our diverse natural resources.
Our system of state park lodges and inns provides a welcoming gateway to our protected lands, and our campgrounds, fishing ponds, swimming pools, picnic pavilions, and other amenities invite Hoosiers to explore our natural world. To give Hoosiers more opportunities to enjoy our state parks, we will enhance our recreational amenities and investigate adding more lodges, inns and/or campgrounds to our state park system to give all Hoosiers quality access to the Hoosier outdoors.
To design, construct, and operate the new recreational opportunities, we will explore all options, including private developers through a public/private partnership. In the past, our design standards and our procurement process have proven to be an obstacle to such projects. To remove this obstacle, we will review our design standards and our procurement process to balance cost-effectiveness, aesthetic integrity and efficiency in the procurement process.
Finally, we will review the operational efficiency of our state parks. We want to be sure that Hoosiers receive the best service, in the best environment, for the best price, when they are guests at our state parks, whether staying at a lodge, an inn or a campground.
I believe Indiana is on the verge of an era of growth and opportunity like no time in the history of state, and if we meet this moment with the right leaders and the right ideas, Indiana will take her rightful place as the leading the state in the Midwest and one of the fastest growing state economies in America.
Under the Pence Administration, we will preserve, protect and further develop our traditional natural resources. We will bring our brightest researchers and industry leaders together to develop the next generation of energy technology to maintain our status as a low cost energy state. We will demonstrate to the world that you can develop low cost energy without sacrificing environmental health. And we will ensure that Hoosiers can enjoy the blessings of the natural resources we have in this great state.
With some of the lowest energy costs in the Midwest and the nation, we can't afford to let other states, let alone the federal government, assert leadership in the energy area. We have to continue to innovate, and say yes to Hoosier solutions and no to Washington rules and mandates.
If we do that, not only in the energy area, but in taxes, in workforce, and in economic development, I believe we will have more Hoosiers working than ever before, and we will have the fastest-growing economy in the Midwest, if not the nation.
And that will be a state that works for all Hoosiers.