DENVER — Gov. John Hickenlooper on Thursday urged lawmakers to move forward on social and financial goals this session, encouraging them to prove "cynics" wrong and show they can cooperate to legalize civil unions for same-sex couples and make the Colorado more business-friendly.

The Democratic governor made his highest-profile push in support of legal protections for gay and lesbian couples during his State of the State address, saying "government should treat all people equally."

"It's time to pass civil unions," Hickenlooper said.

Lawmakers passed a civil union bill in the Democratic-led Senate last year but the legislation failed in the House, where Republicans have control. About a dozen states allow civil unions or same-sex marriage.

Hickenlooper also encouraged lawmakers in Colorado's split Legislature to work together to attract businesses at a time when the state's economy is still recovering from the recession.

"If there were ever a time when Colorado needed to spur greater support for entrepreneurship to create and attract new business, it is now," Hickenlooper said.

The state faces nearly $700 million in budget cuts this coming year. The general fund budget is at about $7.4 billion.

He said collaboration would prove wrong those who predict gridlock.

"Cynics say it's an election year and partisan fights will drown out any hope for success," he said. "We believe the cynics are wrong"

Hickenlooper also highlighted the need to ease regulations on businesses and asked lawmakers to send voters an overhaul of the state personnel system, saying, "The state constitution is riddled with personnel rules and administrative procedures that are obsolete and should be reformed."

Hickenlooper also used his address to cite some successes from his first year in office, including attracting Arrow Electronics to move to Colorado, passing a budget by a majority vote after a contentious debate and creating a health insurance exchange as required by federal law.

Hickenlooper said the state's economy is still recovering from the recession and that revenues are still $1 billion lower than they were five years ago and cited that lost revenue a reason to do away with a nearly $100 million property tax credit for seniors.

Republicans are adamant the credit remain and the issue is likely to be sore point during the session.

Hickenlooper said although revenues have begun to increase, Colorado's economy recovering at a slow pace. He said he wants to restore the property tax break for seniors when the economy is healthier and lawmakers should work on economic development if they want the tax credit restored.

Republicans have said the state should seek a "waiver" from some Medicaid spending requirements.

Hickenlooper said that's not possible, but acknowledged that the growth of Medicaid is "not sustainable for the state budget."

Medicaid would account for $185.6 million of the $227.1 million spending increase in Hickenlooper's proposed general fund budget.

"We are absolutely committed to bending the Medicaid cost curve and pursuing strategies that will cut Medicaid costs. We are tackling fraud, over-payments and eligibility," he said.