WHEREAS, on March 9, 2011, I issued Executive Order #10, creating the Office of Free Market Health Care.

NOW THEREFORE, I, SCOTT WALKER, Governor of the State of Wisconsin, by the authority vested in me by the Constitution and laws of this State, and specifically Wis. Stat. 14.019, do hereby repeal Executive Order #10, issued on March 9, 2011, and dissolve the Office of Free Market Health Care.

The Honorable, The Legislature:

Pursuant to 2011 Wisconsin Act 46, I am appointing Senator Moulton to the Small Business Regulatory Review Board.

Please feel free to contact me with any questions.

President Ellis appointed Senators Kedzie and King to escort his excellency, the Governor, to the Joint Convention.

6:38 P.M.

The Senate proceeded in a body to the Assembly Chamber to meet in Joint Convention to receive the State of the State Message.

7:00 P.M.

"Speaker Fitzgerald, Speaker Pro Tem Kramer, President Ellis, Majority Leader Fitzgerald, Minority Leader Miller, Minority Leader Barca, members of the Wisconsin Supreme Court, Constitutional Officers, tribal leaders, members of the Cabinet, distinguished guests, members of the Legislature, my wife Tonette and our family and most importantly fellow citizens of the great state of Wisconsin, it is an honor to appear before you tonight.

Next to my wife is the Adjutant General of Wisconsin Major General Don Dunbar. I want to thank him and the more than 10,000 members of our state's National Guard.

With him tonight are the members of the 724th Engineer Battalion. I first spoke with them when they were deployed in Iraq. I greeted them when they returned home and then, I saw many of them again this summer as they responded to the massive damage caused by the wind storms in northwestern Wisconsin.

Their dedication - to their country, their state and, their communities is a prime example of what we all know as the Spirit of Wisconsin. We thank them - and all of the other men and women in uniform: both past and present - for their service.

S673 Before we begin our conversation, let us take a moment to honor a member of our state government family, who couldn't be with us tonight. Representative Tamara Grigsby is fighting a brave battle. Like so many of you, Tonette and I continue to send our thoughts and prayers to Representative Grigsby and her family, and we look forward to seeing her in this chamber again very soon.

Tonight, we come together to discuss the state of our state. To do so, we need to remember where we were as a state prior to a year ago, what we've accomplished over the past year and most importantly where we are headed in the year to come.

When I addressed you in this chamber last January, Wisconsin had suffered through three years of 150,000 of our fellow citizens losing their jobs. The unemployment rate was 7.5%. And after years of tax increases and budget tricks, Wisconsin faced one of the largest budget deficits in the country.

Now, our unemployment rate is down from a year ago. In fact, it's the lowest it's been since 2008.

We are turning things around. We are heading in the right direction.

During the past year, we added thousands of new jobs. And we balanced the state budget. We balanced it -- without raising taxes; without massive layoffs; and without budget tricks; all of which allowed us to put more than $1.2 billion of new state money into Medicaid programs like Badgercare and FamilyCare.

Tonight, I want to share with you how we got here and I want to share our plan for:

• Helping the people of Wisconsin create more jobs,

• Keeping a balanced budget and

• Improving the education of our kids by working together.

When I ran for governor, I talked a great deal about the core principles I call "Brown Bag Common Sense." One of those principles is that people create jobs, not the government.

In the past, however, some thought that the government did create jobs and that's how they justified raising taxes to pay for the unsustainable expansion of government.

That thinking might explain why prior to my taking office the state lost 150,000 private sector jobs.

In contrast, I believe it is the people of this state who create jobs and not the government. With that in mind, I set out to improve the climate for small businesses in Wisconsin.

Last year, we passed some of the most aggressive pro-jobs legislation in the country. And we did it with help from lawmakers in both parties because these aren't Republican or Democrat jobs, they're Wisconsin jobs.

Tonight I'm happy to report that after three years of losing 150,000 jobs Wisconsin actually added thousands of new jobs in 2011. New business formations are up by over 2 percent. And our unemployment rate is down from a year ago.

In fact, Wisconsin's unemployment rate is not only lower than the national average but much better than our neighbors to the south in Illinois.

Most importantly, we improved the climate for job creators here in Wisconsin over the past year.

Today, 94% of our job creators believe Wisconsin is headed in the right direction. That compares to just ten percent who thought the same thing just two years ago. And a majority of these employers say they're going to grow in 2012.

They will join companies like RUUD Lighting in Sturtevant or Uline in Hudson, Collaborative Consulting in Wausau or Shopko in Green Bay, Generac in Whitewater or City Brewing in La Crosse - all of whom announced new jobs during the past year.

They'll join Kestrel Aircraft in Superior. I was just there two weeks ago when they announced they're adding 600 new jobs. The Mayor said it was the largest jobs project in the region since World War II.

But, the inspiring stories don't come just from company owners or plant managers; they come from employees.

Sandy Breth -- who is here with us tonight -- has one of those great stories.

When the economy took a dive a few years ago, she took a pay cut. Not long after that, she lost her job. Today, however, she's working at G3 Industries in Mosinee.

G3 is one of those companies that added jobs in the past year and now has plans to add even more in the future. The owner told me that he's creating more jobs in Wisconsin because he likes the way we are moving our state forward.

Without the positive changes, he told me he would not have had the confidence to grow his business here. Improving the business climate is not only good for business owners; it's good for people like Sandy and her family.

We need more stories like hers in Wisconsin. So our Lieutenant Governor and I held small business round-tables all over the state.

From La Crosse to Green Bay, from Superior to Racine, from Milwaukee to Eau Claire, from Madison to Wausau, we listened. In particular, we heard many business owners say that they have jobs but that they cannot find enough skilled workers to fill them. This is a problem that must be solved.

With that in mind, we introduced our Wisconsin Working jobs plan. In it, we double the number of job fairs, add staff to connect people to employment, make it easier for job seekers to get needed skills and we prepare to do more to promote manufacturing.

In addition, we are specifically targeting our veterans for full employment. It is unacceptable to think that any man or woman who has served our country would return home and not be able to find a job. I made employment of our returning veterans the number one mission of our state Department of Veterans Affairs.

Focusing on veterans is good for employers like Monarch Company in Milwaukee who is looking to add machinists and welders. After a recent visit there they told me they understand the benefits of employing veterans. Our returning service members are good hires because they are well disciplined. On top of that, they can get their training paid for through the Wisconsin GI Bill that we fully restored last year.

To create more jobs, employers told us they also need help cutting through the red tape of government.

Tonight, I'm announcing new members to the Small Business Regulatory Review Board which has the authority to review every rule in all of our state agencies. I will direct our agencies to work with them to remove antiquated and unnecessary regulations that pose a threat to creating new jobs.

S674 Employers also told us that they need a 21st century infrastructure system to drive economic development. After the previous administration raided more than a billion dollars out of the Transportation Fund, I took action to restore our commitment to good roads, freight rail and strong ports. We know that a strong transportation system helps manufacturers and farmers get product to and from market and it keeps good people on the job building that infrastructure.

There is another tremendous opportunity for job growth. We can pass legislation that will streamline the process for safe and environmentally sound mining. The proposed project in northwestern Wisconsin could provide at least 700 jobs at the mine and thousands across the state.

I mentioned this idea several times during the campaign and we've debated it for months. Now it is time for Wisconsin to move forward on a project that is not only about jobs but also about the history of our badger state.

Our heritage in Wisconsin is also built on fiscal restraint. One of the most important parts of our state constitution affirms that "frugality in government leads to freedom and prosperity for our people." That is worth repeating: "frugality in government leads to freedom and prosperity for our people." I believe our founders had it right.

Think about it, when I spoke here last January, Wisconsin faced a $3.6 billion deficit.