By Edward Krudy
NEW YORK (Reuters) - Connecticut Governor Dannel Malloy delivered a downbeat address on Wednesday, outlining plans to slash government spending and admitting to "a visceral feeling" that there was no going back to the prosperity of pre-recession years.
The short and somber address came on the heels of a presentation by Malloy's top budget official, who called for $570 million of reductions next year on top of millions in cuts and tax hikes in previous years.
"Our national economy, while making progress from the Great Recession, was fundamentally changed," Malloy, a Democrat, said at his annual state of the state address. "A shifting workforce, the rapid rise of technology, and stagnant wage growth have made this recovery tougher for everyone, everywhere."
Connecticut has consistently lagged the national economic recovery and has been hit by job losses in its key financial and high-tech manufacturing industries.
The state has one of the worst funded pension systems in the nation. With required payments set to balloon in the years ahead, the system presents a significant risk to the stability of the budget unless it is reformed.
"Connecticut is not going back to that pre-recession reality," Malloy told the Democrat-dominated legislature. "It just doesn't exist anymore."
Connecticut's woes show how U.S. states have shared unevenly in the recovery since the financial crisis of 2007-2009. Andrew Cuomo, governor of neighboring New York, felt confident enough to tout a $100 billion infrastructure plan in his annual address in January.
Ben Barnes, Malloy's top budget official, said ahead of the address that the replacement of higher-paying jobs with lower- and middle-wage positions had been a "major story" in Connecticut's budget ills.
Barnes proposed across-the-board cuts of 5.75 percent to the operating budgets of state agencies, which could mean the elimination of several thousand jobs.
The state will also propose cancelling the authorized issuance of $385.4 million of general obligation bonds to stay within its debt cap.
At the start of the legislative session, Malloy urged lawmakers to pass an early budget and not wait until the last day of the financial year on June 30. But he said he would not circumvent the budget process to achieve that goal.
The governor proposed overhauling the way the state runs its budget to bring the process more in line with revenue projections, shifting away from a "current services" model. He also said lawmakers should implement a spending cap.
(Reporting by Edward Krudy; Editing by Chizu Nomiyama and Lisa Von Ahn)