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Jessica Hill, Associated Press
Gov. Dannel P. Malloy delivers the State of State address at the State Capitol in Hartford, Conn., Wednesday, Feb. 8, 2012.

HARTFORD, Conn. — Gov. Dannel P. Malloy called on lawmakers Wednesday to help him create an economic revival in Connecticut, now that it appears the state's flagging economy is starting to improve. He urged them to work together to create more jobs and overhaul the state's public education system, including teacher tenure.

A little more than a year after taking office amid a massive $3.5 billion budget deficit, Malloy proclaimed that his administration and the General Assembly have brought "positive, far-reaching, meaningful, and systematic change to Hartford" and helped to add 9,400 new, private sector jobs last year.

"Yes, it has been a long 13 months. But a state that was on its knees has stood up and said, 'Enough is enough — we're ready to change our future,'" Malloy told lawmakers on the opening day of the 2012 session of the General Assembly. "Yes, we have a long way to go, but a state that was at the crossroads of crisis and opportunity is beginning to turn a corner because we chose opportunity."

Now, Malloy said, it's time for state officials to "think big" and "be bold."

"Today, I am challenging the people in this chamber and the business leaders across the state to join me in committing to building nothing less than a full-scale economic revival. Not a recovery, a revival," he said.

Malloy said he wants to see Connecticut become a national leader in bioscience, personalized medicine, and precision manufacturing. The Democrat said he also foresees the state being home to a reinvigorated insurance industry and a mecca for digital and sports entertainment.

"We have spent the past 13 months setting the stage for this economic revival," he said. "Now is the time to commit to making it a reality."

A key component of Malloy's plan is to overhaul the state's public schools — a concept that has received strong bipartisan support. Malloy has called for spending an additional $128 million on various education proposals, such as funding 500 new early childhood education seats, targeting additional funding to problem schools and requiring they embrace key changes, and having the state serve as a temporary trustee of public schools with the worst academic performance records.

He is also proposing to revamp teacher tenure practices, requiring teachers to earn and re-earn tenure by meeting certain standards that include "student performance, school performance and parent and peer reviews." Malloy acknowledged teachers might put up some resistance to the proposal.

"The goal is not gotcha. It's not to find fault. It's to help teachers improve their practice," said Stefan Pryor, the state's new education commissioner. "It ought to be possible within the education system to separate from service teachers who are not making the grade."

Senate Minority Leader John McKinney, R-Fairfield, predicted that Republicans will be willing to work with Malloy over the next three months on passing an education package.

"We might disagree over how you allocate the funding toward those programs. The governor wants to add new spending. I would prefer that we reduce spending in other areas," McKinney said. "But I think you're going to see very little disagreement on the actual reform agenda itself and that will be very good if we can adopt many or all of those reforms."

The GOP was less enthusiastic about Malloy's budget, the second year of the two-year, $40.1 billion package passed on a party-line vote in the Democratic-controlled General Assembly last year. The plan included $1.4 billion in tax increases in the first year and $1.2 billion in the second, which begins on July 1. Malloy's new budget does not propose any further tax increases.

"This is the second half of a bad budget," said State Republican Chairman Jerry Labriola.

"Governor Malloy talks about having Connecticut lead again, but we already do lead. We lead in the highest cost to do business in the nation," he said. "He feels we will be in balance but in fact I think he's operating on hope and prayer that the revenues will come in as he projects."

Malloy's $20 billion budget proposal for the next fiscal year increases spending by $329 million, or 1.6 percent. Benjamin Barnes, Malloy's budget director, said much of that increase is covered by a surplus that was included in the original budget, as well as reductions in funding to medical programs for low-income residents due to eligibility changes, and reductions throughout state government.

The plan also anticipates that state revenues will grow, but at a slightly smaller rate than first anticipated.

Sen. Leonard Suzio, R-Wallingford, said he questions whether those projections will hold up. Barnes recently had to make spending cuts to balance the current fiscal year after a $73.6 million deficit developed. The state legislature's nonpartisan Office of Fiscal Analysis has estimated the deficit at $150 million.

"Since the budget was passed last year, I said it was built on a foundation of sand," he said.

Suzio criticized the plan for being just $5.9 million under the state's constitutional cap on spending. By fiscal year 2014, the state budget is projected to be nearly $650 million over the cap. That figure then grows to $1.1 billion in fiscal year 2015 and nearly $1.3 billion in 2016.

"I don't see how we're going to avoid that as a crisis," said Suzio, a member of the legislature's Appropriations Committee. "I pray and hope for some miracle, but we can't plan that way. That's not financial discipline."


Associated Press Writers Shannon Young, Stephen Singer and Stephanie Reitz contributed to this report.