Excerpts from Gov. Lingle’s State of the State address yesterday.

The daunting task we face in the months ahead is making some very difficult decisions in order to address our immediate fiscal problems.

I'm an optimist by nature. And as Winston Churchill said, "An optimist sees the opportunity in every difficulty."

So, I come before you today with a clear understanding of the enormity of what we face in the near term, but still enthusiastic about planning for our future together and optimistic about Hawai'i in the 21st century.

Together we will meet both our near-term and long-term obligations by making those decisions necessary to navigate through the turbulence of the current fiscal crisis and achieve our preferred future.

SUCCESS

As we face this historic challenge, it is easy to forget how much success we have enjoyed in recent years.

Since May of 2006 we have built nine new emergency shelters and transitional housing projects that provide safe and clean places to live for many who previously could only find a night's rest in our parks, beaches, doorways or in their cars.

Nearly 2,800 people, including hundreds of children, have received not only safe shelter, but social services and an outpouring of community support to help them transition from homelessness to self-sufficiency.

In an attempt to address a completely different kind of housing need, we're all aware of the success the Department of Hawaiian Home Lands has had.

They've awarded more land to their beneficiaries than at any time in the history of the trust, and we all enjoy seeing families who have waited for decades finally receiving their homesteads.

But there's a much larger DHHL story that will be fully revealed in the years ahead.

Whether it's their pivotal role in the $110 million Kroc Center, development of the future DeBartolo regional mall, kick-starting the infrastructure UH West O'ahu needed in order to move forward, or being the first state department to move its entire O'ahu operation to the Second City of Kapolei, DHHL has chosen to lead.

We now look to them as an important and integral part of our economic recovery, and as an example of how to develop desirable communities.

HAWAI'I'S KEIKI

An important part of that 'ohana is Hawai'i's keiki, especially those who are most vulnerable.

Two remarkable trends have occurred in Hawai'i's child welfare system since 2005.

The first is a 50 percent decline in the number of children in state care, to just 1,500 children, which is the lowest number since 1993.

At the same time, Hawai'i's child re-abuse rate also dropped by half to just 3.1 percent, which is one of the lowest re-abuse rates in the United States.

These positive trends were the result of a fundamental shift in the state's approach to child welfare.

The Department of Human Services previously removed children from the custody of their biological parents at a rate four times higher than the national average, with no improvement in safety outcomes.

Today, DHS, and its community partners, uses a comprehensive assessment system to carefully weigh the risk factors in a child's family environment, and ensure that they receive much-needed social services.

Director Lillian Koller has received national recognition for these and other achievements.

I know Lillian believes that this success would not have been possible without our many outstanding social service agency partners as well as her own committed staff. Mahalo to all of you.

THE ECONOMY

No matter how noteworthy these and other achievements may be, recent reductions in revenue forecasts mean that they and other worthy programs will take a back seat to our more immediate need to balance the budget.

Today's struggling economy has created a deep hole in our budget that we need to dig out of this session.

The Council on Revenues has never in its history lowered its projections by so much in such a short period of time.

Over the past eight months, the Council has reduced its general fund revenue projection by $1.4 billion.

Climbing our way out of this hole won't be easy. It won't be quick. It won't be without pain; but it will be done.

The reality is that we will have to make some unpopular choices that will reduce some services and cause others to be delivered in a different way. Not because we want to, but because we can't afford business as usual.

A number of projects will likely be delayed, curtailed, or possibly eliminated. Not because we want to, but because we can't afford business as usual.

We will have to ask government employees, like those who work in the private sector, to accept some reduction in wages and benefits. Not because we want to, but because we can't afford business as usual.

Some who currently enjoy special tax credits, exemptions and deductions will see them reduced or eliminated. Not because we want to, but because we can't afford business as usual.

ENVIRONMENT

We must make meaningful choices now that address the reality we face today while laying the foundation for a better future.

A key area where we must bring innovation to bear is ending our over-reliance on imported foreign oil.

Oil pollutes the environment, it sucks billions of dollars out of our economy, and leaves us dependent on the goodwill of foreign countries and companies for our very survival.

Last year we entered into a unique partnership with the federal Department of Energy called the Hawai'i Clean Energy Initiative or HCEI.

It established the goal of a 70 percent clean energy economy by 2030.

HCEI experts from government, national labs, our military, utilities, universities and the private sector have recommended specific actions to achieve the 70 percent clean energy goal through indigenous renewable resources and energy conservation.

My administration and legislators will introduce several bills based on these HCEI recommendations.

These changes will significantly increase energy efficiency in our commercial buildings and residences, give consumers more control over their energy costs, transition us to alternative fuel vehicles, such as electric cars, and ban new fossil-fuel power plants in Hawai'i.

As the world's most isolated set of islands and our nation's most oil-dependent state, a clean energy future is no longer simply a desire of environmentalists, it is an absolute necessity for our long-term economic survival.

BUY LOCAL

Another area in which we must decrease our over-reliance on outside sources of supply is the food we eat.

We import 85 percent of everything we consume.

If we replace just 10 percent of the food we currently import, it would create more than $300 million in economic activity, generate $6 million in taxes, and create 2,300 new jobs.

I will be asking state agencies such as schools, prisons and hospitals to take the lead by purchasing locally grown fruits, vegetables, poultry, eggs and meat.

Under new rules, Hawai'i farmers will receive a 15 percent price preference when placing their bids for state purchases.

If we each make an effort to buy more locally produced food we will be contributing to our economic recovery, helping Hawai'i farmers lower their unit costs, and protecting our open spaces.

Agriculture keeps Hawai'i green, it recharges our aquifers and promotes a healthy lifestyle and good nutrition for families.

It also diversifies our economy and supports small businesses and rural communities.

TECHNOLOGY

Another requirement for a strong and innovative economy is an advanced communications infrastructure that will serve as the backbone for connecting us to the global economy.

We need a communications infrastructure that will allow us to achieve competitive advancements in the areas of education, health care diagnosis and treatment, public safety, research and innovation, civic participation, creative media, e-government, and the foundation for overall economic development.

We have been working with the Legislature's Broadband Task Force to craft a bill that recognizes the convergence of technologies that are used to provide voice, data and video services through wireline, wireless, cable and satellite communication.

The bill consolidates regulation and advocacy of communication services under one agency, a new Hawai'i Communications Commission, in order to make attainable the latest communications services at the earliest possible time.

It will be funded from existing fees, and will focus on achieving specific goals, including: creating broadband access on a competitive basis at reduced prices, streamlining the permitting process and providing access to businesses and residents by 2012 at prices and speeds that will make us a world leader and a place that will attract investment, while empowering our residents with enhanced communications capability.

TRAFFIC

Although I have been discussing ideas that will position us well for the future, I think you would agree that the problem that bothers residents the most today is the everyday annoyance of sitting in traffic.

The status quo has become intolerable, so we have joined with legislators in proposing a six-year, multi-island, Highways Modernization Plan to address known traffic problems with proven solutions.

The program combines road building, highway and bridge safety improvements, anti-congestion traffic management, and a pavement maintenance program, in addition to safety legislation and increased public outreach and education.

The bulk of the near-term projects will be started using existing funds and anticipated federal fiscal stimulus funding.

The longer-term projects will be paid for by increases in highway-related taxes and fees that would be triggered at a future date if steady job growth indicates that our economy is growing again.

This innovative recommendation to tie future increases to measurable economic results in order to address a long-festering problem is the kind of creative approach being used by departments and agencies throughout government.

GREEN SPACE

I have challenged every one of our departments to find new and creative ways to improve our quality of life in these tough economic and fiscal times.

The Department of Land and Natural Resources has risen to this challenge, and developed a comprehensive proposal to renew our state parks, small boat harbors and trails as well as the very way we care for these precious places — a true "Recreational Renaissance" that will benefit all residents and visitors.

The heart of the plan is $240 million in capital improvements over five years for both land- and ocean-based recreation.

I want to thank the staff at DLNR, DBEDT and Budget and Finance who developed this creative and comprehensive proposal which creates brand new, non-tax revenues and a better way of managing and caring for our recreational, natural and cultural resources.

I am especially enthused about working with the Legislature on this and other proposals as a colleague rather than an adversary.

I will do more than reach across the aisle; I will walk across the aisle, and my door will always be wide open to you.

CEDED LANDS

Before concluding I want to take a moment to speak about the case pending before the United States Supreme Court involving the issue of ceded lands.

The issue involved in this case is not whether ceded lands should or should not be sold.

Rather the issue involves the fundamental question of whether the State of Hawai'i has clear title to the land transferred to us by the federal government at the time of statehood.

The roots of this case date back to a decision made by former Governor Waihe'e in the 1980s to sell certain ceded lands on Maui and Hawai'i for the construction of affordable housing.

It was a decision he believed was in the best interest of all the people of Hawai'i.

It is a decision that former Governor Cayetano defended in court because he believed it was in the best interest of all the people of Hawai'i to do so.

And it is a decision that we are appealing to the United States Supreme Court because I believe it is in the best interest of all the people of Hawai'i.

Acting in the best interest of all the people is the same standard I applied when supporting the Akaka Bill, fighting to protect federal programs benefiting native Hawaiians, or expediting Hawaiian Homestead leases.

And I will continue to advocate for these issues in the coming years just as passionately as I have in years past.

The people of Hawai'i are counting on us to lead our state through this unprecedented time - and that is exactly what we are going to do.

If we deal decisively with the current crisis while keeping our eyes open to the opportunities that these kinds of challenging times create, then the people of Hawai'i will conclude that we have lived up to our obligation.

Now, let's get to work.