Gov. Malloy’s State of the State: 5 principles to make economy more sustainable

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HARTFORD -- Governor Dannel Malloy addressed the legislature in his 2016 State of the State address Wednesday afternoon. The speech opens the new session as lawmakers get back to work for the year.

The biggest issue Gov. Malloy addressed is the ballooning state budget deficit. The $500 million deficit is dividing the legislature.

"Connecticut families and businesses alike are adapting to a new economic reality," Gov. Malloy said. "Connecticut is not going back to that pre-recession reality. It just doesn't exist anymore."

Gov. Malloy proposed a scaled back $20 billion spending package in the midst of declining revenues, leading to the state’s non stop deficit issues.

"This budget is based not on how much we want to spend, but how much money we actually have to spend," he said. "This new method will require different decisions to keep government living within its means. It won’t come without sacrifice – it will require the reduction of the state workforce by more than a thousand employees through attrition and other means."

Malloy presented five principles he says will make Connecticut's budget more predictable and the state's economy more sustainable.

  1. Limit spending to available resources
  2. Tackle long-term pension obligations
  3. Define and prioritize government services
  4. Hold state agencies accountable for results
  5. Use transparent bipartisan process

"No budget will be perfect, but I firmly believe that by changing how we come to a budget bill, we can improve the final result," he said. "So this is my challenge to you and to me: Let’s not pass a budget on the final day of this session this year. Let’s get it done early. Let’s do it so that we can spend those final days working on other proposals – both yours and mine."

Hundreds of millions of dollars in cuts will come across the board, and expect some layoffs and changes to the pension system too.  Other big issues lawmakers are facing include dealing with an uptick in opiate and heroin abuse, tax regulations on new businesses like Uber, Tesla and Airbnb, police body cameras, and preventing other big business like General Electric from leaving the state.  That is still a sore subject between Democrats and Republicans.

Malloy called for an analysis of the state’s two largest pension funds by the nation’s foremost experts on the issue. The goal will be to level out the payments and guarantee that obligations are met. If projections hold, the state will be responsible for pension fund payments in 2032 for a single year of $13 billion if the present system is unchanged.

The governor's revised fiscal plan comes amid projections of a $500 million shortfall in the 2016-17 state budget. Larger deficits are predicted in the following two years.

Besides limits on spending,  reprioritizing funding for core state services, reforming the budget process and requiring state agencies to be more cost-effective.

The legislative session will adjourn May 4.