Gov. Dannel P. Malloy delivered his State of the State Address early Wednesday afternoon and discussed changing how the way the state of Connecticut budgets by spending only what the state has, addressing long-term unfunded obligations, prioritizing on the core services government should provide, and holding state agencies accountable.
"We live in changing times," he said at the beginning of his address.
"You don’t have to take my word for it. You hear it from your constituents every day – a visceral feeling that our country and our state are not going back to how things were before the Great Recession," he said.
He said the state of Connecticut needs to limit spending to available resources and that state government needs to reduce the state workforce by more than 1,000 employees through attrition and other means.
Malloy also discussed the pension system, meeting obligations to employees and paying down unfunded liabilities without "falling off that fiscal cliff 15 years from now."
"I have directed Secretary (Ben) Barnes to pull together all stakeholders – including the Treasurer and the Comptroller, SEBAC and the state employees it represents, as well as the Connecticut teachers – to work on this issue together," Malloy said.
The governor said the state needs to prioritize funding for core services and concentrate on the core functions of state government, including protecting the public, ensure a social safety net, build a strong economy, safeguard the environment, provide a public education and administer justice.
He said he looks forward to working on transportation.
"I look forward to continuing our work together to fix our broken transportation system – work that must begin with a constitutional transportation lockbox. I want to thank each of your leaders, Democrat and Republican, for their votes in support of a lockbox this past fall," Malloy said. "Together, let’s get this resolution on the 2016 ballot. Let’s get this done and let's get this done early this session."
Before the speech, Malloy said his State of the State speaks to two audiences -- the people in the building, so to speak, and the general public outside the building.
The governor was expected to discuss the state's corporate tax structure after General Electric's recent decision to move its headquarters out of Connecticut and into Boston.
"Together in a special session last fall, we made changes to our tax code that both parties agreed were necessary to help our business community. Because of our work, employers can continue their strong pace of hiring and invest in the new innovative economy that will drive us into the future," Malloy said.
He mentioned several businesses that have moved to the state to create and retain more than 700 jobs, including bringing in Serta Simmons from Massachusetts and MC Credit Partners from New York.
He also mentioned holding onto United Technologies and Sikorsky and their 24,000 workers, and Electric Boat adding 800 new jobs this year and 4,000 in years to come.
In the State of the State Address, he plans to discuss about $569 million in cuts to the budget for the next fiscal year, which are shown in a document that was circulated to state agency heads and obtained by NBC Connecticut.
Malloy hasn't spoken about too many specifics, but he did say he wants to give more spending control to agency heads and commissioners. Many of the cuts are expected to hit social services and welfare programs the hardest.
The cuts will come from 5.75 percent in new spending reductions across state government amounting to $360.8 million and maintain the $208.7 million in reductions made in recent months during the 2016 fiscal year. Many of those reductions made hit social service and welfare programs the hardest.
Gov. Malloy alluded to changing the way the Connecticut spends taxpayer dollars during an exclusive meeting with NBC Connecticut.
"We've got to live within our means," he said, also stressing the importance of state department managing for results and focus on protecting the "safety net" and protecting children through organizations like the state's Department of Children and Families, the Department of Social Services, Disability Services and the Department of Emergency Services and Public Protection.
Without providing budgetary specifics, the governor said, “We have to change our expectations in government and I think these same services analysis that simply says we’re going to spend the same next year as we did this year even though it’s going to cost us way more money doesn’t work anymore.”
The document also said cuts of up to 9 percent during the next fiscal year should be considered as well.
The governor also proposed using what he referred to as "block" budgeting, wherein agencies would receive lump sums of cash and the executive branch i.e. the governor and the agency head would have discretion over how that money gets spent. Historically, the budget would contain line items for each program and individual expense within an agency. The governor's proposal would be a departure.
Malloy said, between that issue and the current services projections always assuming that the state will spend more, drastic changes are needed to keep the state's fiscal house in order.
“We’ve established a system that simply assumes that you’re always going to spend more money," Malloy said. "Let’s make a break with that system.”
Since the economic downturn of 2008, even though Connecticut has added 80,000 people to employment rolls, Malloy said the state never fully recovered from the recession and that government has to reflect that as well and fix the budget.
"Hey, everybody take a deep breath. Look what happened in 2008, 2009, 2010. We all thought it was going to recover quickly," Malloy said. "It hasn't recovered and now. We're now in 2016 and we better change our assumptions.”
Connecticut, unlike other states, doesn't go by a county system and Malloy didn't indicate any plans to change to that structure.