Thank you. All right, lets get to work. We have a lot to do. Mr. President , mr. Speaker, Lieutenant Governor, fellow state officials, ladies and gentlemen of the General Assembly and honored members of the judiciary, members of the clergy and all the citizens of our great state. Thank you for the privilege of inviting me into the peoples house. Let me offer my sincere congratulations to those of you taking on new and important leadership roles, as well as those who have been reelected into leadership positions. I also want to congratulate the new members sworn in today. I look forward to working with all of you. Let me note, since we were last year together, we have lost some dear friends, including mary fritz and betty bokis, both of whom served in this house. Our hearts are heavy as we continue to mourn their passing. As always, let us thank connecticuts brave men and women serving around the globe and pray for their safe return. Thank you as well to my dear friend and the best Lieutenant Governor in the country, nancy wineman. [ applause ] finally, i have to find her thanks to my wife kathy, my son daniel and my two other sons, for their love and support. Great to have kathy and daniel here, thank you. [ applause ] the connecticut General Assembly met in special session. You met to take historic action in support of our states economy and our incredible workforce. The legislation you voted to support and that i signed into law protected 8,000 jobs at sicker ski aircraft. [ applause ] equally important, it shored up thousands of more jobs up and down sikorskys supply chain and across every corner of our great state. It nearlily doubled their spending to almost 700 million per year over the next decade and beyond. I want to thank all of you for that all of you who participated in that special session. But i also want to remind you that in recent years, weve secured similar investments from United Technologies and electric bode. Taken together these agreements cement our leerpd in advanced manufacturing around the globe. A decade ago, if any of us had told our constituents that in 2017, not only would electric bode be ramping up their production, rather than winding it down, not only would prat whitney be planning to put thousands more people to work in our state, but that sikorsk yimpt would be committed to connecticut for another generation to come, well, they wouldnt have believed us. They would have told us that we were overly optimistic at best and naive at worst. And yet, here we are today. Working together, we have turned what many once considered an impossibility into a reality. Together weve producted connecticuts aerospace and Defense Industry for a generation and likely beyond. But more importantly, weve given these employers and the tens of thousands of employees who work for them, something that is vital in todays world. We have given them predictability. We know that predictability creates confidence, and we know that confidence creates growth. When we give people reasons to believe that their job is here to stay, were giving them the confidence to purchase a home or buy a new family car, or to start a college fund. In other words, were giving them confidence to take part in our states economy. And its equally true for their employers. Predictability allows businesses to expand, to make new hires, to put down new roots right here in connecticut. That is what companies and their workers are looking for. They deserve it. And it is on us to provide it. Thats what i want to talk to you about today. About what weve done in recent years to make our budget more predictable and our economy more sustainable, and about how we can continue that important work this legislative session. Now im going to discuss three key areas that i believe we should focus on this year. We do this in order to balance our current budget, but also to continue our progress towards longterm prosperity. Now the good news is, that for each of these three areas, positive change has already begun. Its a start. We need to continue making State Government leaner and more cost effective. The responsible way to do that is by setting priorities. And allocating our resources where they are needed most. Because the truth is, we simply cant afford to continue doing everything weve done in the past. In recent years, commissioners and state employees have been hard at work finding creative ways to continue providing essential services while also saving money. These cuts were not painless. Important work had to be phased out, so that other Vital Services could continue. But the results are plain to see. Last year, we cut nearly 850 million out of the budget to bring our current fiscal year in balance. In so doing, we spent less than the general fund than we had in the Previous Year for the First Time Since 2002. Weve reduced the number of state agencies by 28 since 2011, shrinking from 81 agencies, down to 58. During that same time period, weve reduced the size of our executive Branch Workforce, by 9. 5 . We now employ 5,000 fewer fulltime employees than we did in 2008. And dont let anyone tell you that these reductions are only in front line employees. Weve reduced the number of management positions in State Government by 28 . While we had to go through the unfortunate but necessary process of layoffs last year, the vast majority of these reductions have come through attrition. We are also spending less on overtime. With your Strong Partnership and encouragement, overtime costs dropped 14. 5 . Saving the state 37 million. [ applause ] all told, excluding higher education, the executive Branch Workforce is at the smallest it has been since Ronald Reagan was president. And now, in this biennium, we need to continue that work, ensuring we reduce spending responsibly and with great care. Commissioners will need once again to work with their staffs and with you, here in the legislature, our partners, to find additional savings. Now, like families across connecticut, just because weve responsibly managed our budget in recent years, does not mean we get to take a year off. We must continue to live within our means, spending only as much revenue as we have and no more. In september, my administration asked agencies to begin thinking about what additional cuts would mean. Having further explored these options, many of their recommendations will be included in the budget that i present to you next month. Cuts in specific areas or outright eliminations should not be taken to mean that certain work is not valued. It simply means we can no longer afford to do it all. And that our spending must be focused on the very core and essential services for our residence. And to be clear, saving money isnt just about cutting line items. Or reducing head count. Agencies will continue to modernize systems, reduce waste, and increase productivity, in order to cut costs as much as possible before impacting services or the valuable employees who provide them. Together, we can continue to make State Government more efficient, more sustainable, and more reflective of our economic reality. The second area that id like to talk to you about today are the obligations we have to connecticut state workers, educators, and retirees. Connecticut state pension systems were created 80 years ago. But not a single dime was deposited into the account during the first 30 years of its existence. It was a pay as you go system. Now over many decades, legacy costs, insufficient contributions, lower than assumed returns, and early retirement packages left us with a significant unfunded liability in the States Employment and teacher retirement systems. The stark reality is that after 80 years, the state has set aside only onethird of the money necessary to responsibly fund its obligation. Let me put that in context. Of the 1. 65 billion that we will pay next year to the states retirement system, 78 of that, nearly 1. 3 billion is what were paying to make up for what past administrations and past legislatures failed to do. Simply put, our generation is paying for connecticuts past mistakes. Is that frustrating . Of course it is. Is it necessary . Absolutely. Its also the right thing to do. Our state retirees dedicated their lives and careers to Public Service, we need to pay them the pensions that they were promised. Lets also acknowledge and thank todays workers for their effort in support of connecticuts residents and businesses. In 2011, we worked at the bargaining table to help put connecticut on a more sustainable fiscal path. Together we changed benefits, reduced longevity payouts, restructured state pensions, raised the retirement age, and required all employees to pay for a portion of their post Employment Benefits for the first time. We saved the state 1. 6 billion on our unfunded liability in the immediate two years following that agreement and a total of 21. 5 billion over the following 20 years. Had we not realized that level of savings, our current 1. 5 billion projected deficit would be much, much worse. Since making this agreement in 2011, the state has honored its commitment to fully fund the pension obligation each and every year. [ applause ] we are finally doing together what should have been done over the prior 80 years, and i want to thank all of you for that. Building upon these years of work, my administration recently came to a crucial agreement with our state employees and our retirement commissioners. An agreement which will make our pension payments more affordable and, yes, more predictable. Independent analysts are taking note. Moodys investor service, a National Credit rating agency, deemed this to be, and i quote, a credit positive step for our state. And the plans actuaries say these changes will, and i quote again, enhance the stability of our pension system. I urge you to support these important reforms. Now today, today, despite all of the hard work and real progress, its clear we have much more work to do. To make our short and longterm labor obligations more affordable. Fix costs continue to increase every year. Hampering our ability to maintain vital Public Services. Pension obligations for both state employees and teachers are on track to cost the state an additional 360 million in the next fiscal year. Compared to this current year. Clearly the fiscal challenges we face during the next biennium are very real. In the weeks ahead, my administration will continue working with labor leaders to find solutions, for bringing employee costs in line with our economic reality. These talks have, so far, been frank and direct, and im appreciative that state workers are taking part in them. Its very hard, but we must reach an agreement on how to make our pension and benefits more affordable. As we face these fiscal challenges together, we must work together. We must recognize that a responsible and balanced solution to our budget problems is one that includes state employee concessions. Those changes can and should be reached respectfully and at the bargaining table, our state must honor its legal obligation to our Public Servants and state retirees, while at the same time, keeping our promise to connecticuts taxpayers. Heres another promise, weel will not remake the poor decisions of the past. We will not saddle future generations with fiscal cliffs and unpaid fixed costs. Responsible changes must be made and they must be made this year. As our past record demonstrates, when we come together and hold realistic expectations and seek common ground, we can deliver results and we should do so this year. [ applause ] the third and final area that i would like to focus on with you today is how we go about distributing aid to our towns and our cities. Primarily, how we fund Public Education. The state provides a total of 5. 1 billion in municipal assistance. Munis pap aid is more than 1fifth of our overall budget this year, making it the biggest single expense. Not state employee pensions, not medicaid, not debt service, not salary and benefits of employees town aid accounts for the largest portion of our state budget. So it simply would not be fair for us to talk about continued state Agency Reductions or talk about the need for labor concessions without talking about new ways to provide town aid. Of the 5. 1 billion distributed to the municipalities, 81 of that, or 4. 1 billion is educational funding. That doesnt include School Construction financing which accounts for onequart of connecticuts bonded debt. Let me say this, of course connecticut should be spending lots of money on local education. We all believe that investments in education are a down payment for our states future. Our budget must reflect those values. But the question is whether in this time of scarce state resources, are we spending this money in the best way possible . Are we ensuring that all students, regardless of life circumstances into which they are born, regardless of what town or city they live in, can receive a quality Public Education . I do not believe that we are meeting that standard. And i will point out to you that a recent Court Decision says that as well. Its why i have long advocated that we direct our support to those municipalities that are struggling the most. So that we can level the Playing Field for our students and our taxpayers. While we have made progress on this front in recent years, i still believe we have not gone far enough. Connecticut needs a new way to calculate educational aid, one that guarantees equal access to quality education, regardless of ones zip code. Our state constitution guarantees it. And our moral compass demands it. We need a formula that appropriately measures a given communitys burden, a formula that recognizes the specific challenges faced by local property taxpayers and a formula that takes into account the impact those challenges have on the education provided to our children. Its that simple. The budget that i will present to you next month will outline a more equitable system for providing town aid. It will be based on the local property tax burden, on student need, and current enrollment. The system will be designed to be more fair, more transparent, more accountable, and more adaptable. Meaning that it will provide flexibility to fit the needs of given communities. The results will be a fairer distribution of our states limited funds. And if we are successful in this effort, there will be an important ancillary benefit. We can help ensure that no connecticut city or town will need to explore the avoidable path of bankruptcy. To be clear, that kind of help should not come without strings attached. If a state is going to play a more active role in helping less affluent communities, in helping higher taxed communities, part of that role will be holding local Political Leadership and stakeholders to a substantially higher standard and greater accountability. [ applause ] let me be very clear, to greater accountability than they have been held to in the past. We should do it so that increased aid doesnt sumply mean more spending on local government. Those are the steps that i believe we need to take on town aid funding. The budget they propose next month, will lay out a detailed path to getting there. Now based on prior experience, i can assume that the proposal i put before you will not exactly be the one i get back on my desk a few months later. I understand it. Thats how it works. But i am ready to partner with you. But understand this, real change needs to be made and it needs to be made this year. Change that leads to a better, more equitable system of town aid. For the sake of our collective future, there is no reason to wait. So lets get to work. Now, i began today by talking about our recent historic partnership, having to do with sikorsky perform b sikorsky. But of course its not just about the aerospace industry. Regardless of region, employment, or income, people in every industry and at every income level are counting on us to get it right. A family in farmington, where both parents work in the Insurance Industry deserves the reassurance of a stable business climate. One that keeps their jobs here in connecticut. A math teacher in norwalk should have the peace of mind that their pension that her pension and benefits will be intact when she retires after decades of work. A New London High School graduate following his fathers foot steps building submarines here in connecticut is owed a stable job with liveable wages, enough to buy a home and raise a family. Now, if you dont think we can do it for these people, or for that matter, for all the people of our state, if you dont think we can help our constituents and make their lives and their careers more positive and more predictable, i ask that you look no further than the progress that we have made together in recent years. To see exactly, to see exactly what is possible when connecticut works together. Now years of Good Economic Development are helping to grow jobs in our state. In fact, since the end of the great recession, we have recovered 85,000 jobs. Through the Small Business express program, more than a program that did not exist a few years ago, we have helped more than 1,600 companies and theyve retained 18,000 jobs good jobs. And they are now creating even more jobs. And in the manufacturing assistance act, we have already helped 150 Companies Since 2011. They have retained 34,500 jobs and are growing 8,500 more as we speak. All told, unemployment is now at 4. 7 . That is the lowest level since 2007. [ applause ] low unemployment is good. Low unemployment is good. In 2012, we worked across party lines and passed comprehensive education reforms and today, thanks to Great Teachers and principals, our studen