Governor M. Jodi Rell State of the State Address

February 8, 2006

Thank you.

Mister President, Mister Speaker, Constitutional Officers, Legislators, Guests … thank you for joining us in this historic chamber as we mark the beginning of another session of the Connecticut General Assembly.

There is always a certain excitement on opening day, as we cannot help but look forward, with a renewed sense of hope and expectation, to all that may be accomplished in the weeks and month to come, on behalf of those whom we proudly serve.

I share in that excitement. I too am filled with hope and expectation, and I possess an unwavering determination to lead our great state forward.

At the same time I cannot help but to look back to all that we have faced, all that we have accomplished, in the past year.

For it was a little more than a year ago that I first addressed a joint convention of the Legislature as the Governor of Connecticut. What a year it has been. And what a difference we have made.

We faced a $1.2 billion deficit, and together we passed a responsible budget that provided $170 million in new funding to municipalities for property tax relief and addressed many of the pressing needs of our citizens.

We put in place a new Office of State Ethics and enacted a number of tough, new ethics reforms for elected officials, contractors and lobbyists.

We honored our past and planned for our future by passing into law legislation which sets aside tens millions of dollars each year for farmland preservation, open space acquisition and historic preservation.

We became a national leader on the issue of stem cell research by enacting a ground-breaking $100 million program that will help us discover new cures for illnesses and disease, and at the same time, promote jobs in the bioscience industry.

We invested in our future by appropriating more than $21 million for pre-school education programs and we established an Early Childhood Education Cabinet that will help ensure that every child in Connecticut enters school ready to learn.

We took an historic step forward in breaking the gridlock that has choked commuter traffic and stifled economic development for far too long by passing a $1.3 billion transportation package that calls for new rail cars, new rail maintenance facilities, new transit buses and various improvements to our highways.

We made history by passing landmark campaign finance reform that eliminates the power of special interests in politics and puts elections back in the hands of Connecticut’s citizens.

And we worked, as Team Connecticut, to prevent the closure of the Groton/New London Submarine Base and saved its 31,000 jobs.

I am proud of our accomplishments and I am proud of how we have worked together, hand in hand, to move our state forward. We have shown leadership. We have been innovative.

As I said in my State of the State speech one year ago, “The people of Connecticut, and history, will judge us by whether we accepted our stewardship simply to preserve the comfortable status quo or whether we seized it with boldness of purpose.”

We did seize it with boldness of purpose, and we must do so again, for many challenges still confront us.

Our successes however are no cause for complacency. Our work is not yet complete. Our vision has not yet been fulfilled.

The state of our state, I am proud to say, is strong indeed - but there is much we can do to make it stronger yet.

First and foremost, we must address the issue of jobs and economic development.

Just as we have restored the people's confidence in their state government, together we will strengthen their confidence in job security and our economic future.

Join me in transforming Connecticut into a national model for job creation and economic growth.

Two years ago, we ranked near the bottom in job creation nationally. We have worked hard in the last 18 months and we have created 24,600 new jobs.

That’s real progress, substantive progress, but we want to be the national leader in creating quality jobs for our workers.

Let me tell you how I see this in human terms. I believe that every single hard-working person in our state who is searching but cannot find a quality job is one person too many.

I believe that every single hard-working person who receives a pink slip, whether it’s from Stop & Shop or Electric Boat or U.S. Repeating Arms or any other business, is one person too many.

I believe that our economy is not about statistics or rankings or percentages. It's about people - people who want to raise their families in security and with dignity.

It is for these people and their families that we must do better. And we will do better.

Our state is blessed with a wealth of resources: a highly skilled workforce; excellent schools, colleges and universities; a prime location on the Eastern seaboard; companies that are world leaders in technology, innovation, and financial services; and many cultural and recreational opportunities.

Connecticut has led the nation in economic prosperity, and we will continue to lead the nation, but only if we better utilize our resources and better respond to a constantly changing economy.

We need to make sure that the companies now operating in Connecticut want to stay here and expand here, and we need to let companies all over the world know that our great state is the perfect place to do business.

We need to make the right investments in job training and skill development. We need to provide roads and rails and airports where our workers can easily get to work. We need to provide affordable housing near places of employment. We need to break down the barriers of over-regulation and bureaucratic obstinacy.

Let there be no doubt, our core mission this session is a straightforward and critical one: to stimulate economic growth, retain good jobs, create new and even better jobs.

Our mission begins anew today and my budget serves as a blueprint for that mission. We know what needs to be done – now we must show the will and the leadership to get it done.

First, I am calling for a major reorganization of how state government aids in economic development.

Right now there exists a complicated maze of economic development procedures, programs and policies.

Under my budget, the many alphabet soup agencies will be reshaped and re-energized with a new command focus.

The Department of Economic and Community Development will become the new Department of Business and Employment and will be given new tools to make it more responsive and more customer-oriented.

It will contain a new office of national and international commerce, a new CT Research Institute and a strong planning unit to coordinate housing development with job growth and transportation initiatives.

Also, the multiple financing authorities that businesses need to sift through will be streamlined into a new CT Finance Collaborative, providing a coordinated and user friendly approach to those seeking state assistance.

Further, as Connecticut’s CEO, I will personally take charge of building our economic future. I will work closely with our employers and with the Department of Business and Employment and the CT Finance Collaborative. I will also appoint a new Director of Economic Development who will be housed in my office and who will report directly to me.

Make no mistake about it: re-organizing is not enough. Businesses in the state and those considering moving here need to know that our corporate tax structure is both fair and consistent. Therefore, today I am calling for the early elimination of the surcharge on the corporate income tax.

We also need to encourage companies to take risks and to expand in Connecticut rather than elsewhere. My budget provides for two new important tax credit programs.

The first is the Job Creation Tax Credit. A company that creates 50 or more new jobs will be eligible for a tax credit based on the estimated withholding tax paid by the new employees. This provides an incentive to create jobs and ties it to a new source of revenue for the state.

The other is the Displaced Worker Tax Credit. A company will be able to take a credit against their corporate tax for hiring laid-off workers who lost their jobs through no fault of their own. The skilled workers at Stop & Shop, U.S. Repeating Arms and Electric Boat, among others, deserve our best efforts to help them find new, well-paying jobs right here in Connecticut.

My budget includes several other initiatives that will help increase our competitiveness. These include:

$1.5 million for the 21st Century Jobs Program to customize job training for employers;

$150,000 for the Connecticut Career Resource Network to help to students, teachers and guidance counselors;

$250,000 for an expansion of the Connecticut Apprenticeship program to provide mentoring for businesses; and

$3 million for a new loan forgiveness program to encourage college students to choose work in “high needs” fields in Connecticut. $1.5 million of this program will be made available to students who plan on becoming math or science teachers, one of our true shortage areas.

I am also proposing that all legislation carry an economic impact statement so that legislators and the administration know full well how their proposals will affect jobs and our economy.

My budget contains other tax cut proposals designed to stimulate our economy.

Last session the estate tax increase passed by the General Assembly contained a significant anomaly commonly referred to as a cliff. Under the law, the estate of a Connecticut resident who dies with an estate of $1.99 million owes no tax but the estate of one whose assets are valued at $2,000,001 owes $99,600. This obvious inequity diminishes confidence in our tax system, drives productive residents out of state and dissuades others from moving here in the first place.

I am seeking an immediate elimination of the so-called cliffs and a doubling of the amount of an estate that is exempt from the estate tax. I am proposing that the estate tax be phased completely.

I am also recommending tax relief for energy costs. Not since the energy crisis days of the 1970s has America seen such a jump in oil, gas and other energy prices. To help consumers, I am proposing a 25% across-the-board cut in the state’s public utilities tax beginning this July. This change will lower everyone’s electric and gas bills, saving businesses and consumers an estimated $45 million next fiscal year.

Also, in an effort to spur the lucrative economic opportunities associated with the entertainment industry, I am recommending that a motion picture production company be allowed a credit against its corporation tax for production expenses or costs, including payroll. The credit will be equal to 25% of those expenses or costs and is capped at $5 million for any one production. I thank Speaker Jim Amann for his work on this issue.

A few moments ago I spoke of the boldness of purpose. I believe in that deeply. I believe that if we are truly to make a difference, if we are truly to be the leaders that our constituents want us to be and that if we are truly serious about getting something done rather than just talking about it, we need to be bold in our thinking and in our actions.

So, let me begin our new session, set our new agenda, with what I think is the truly bold: today I am calling for the complete elimination of property taxes paid by individuals on their cars.

Under my plan, beginning this July you will no longer have to write a check for your car taxes. It will be a thing of the past, and the real property tax relief that so many have been talking about for so long will finally become a reality.

Direct property tax relief, with money actually put in the wallets of taxpayers. Not indirect property tax relief that is little more than spending relief for elected officials.

This is a bold step to eliminate a regressive tax and to put millions of dollars back in the economy. It is a step which that will make Connecticut a much more attractive place to live, while reducing the financial burden on the average working family.

Here's how it would work: each city and town will receive a check from the state for the amount of revenue they would have collected from the car tax. In fact, the check may be for more than the municipality likely would have collected because we are assuming a 100% collection rate – and many municipalities generally fall well short of that rate.

Further, we will continue to send out the $86 million for tax relief to cities and towns under the Pequot Fund formula, as well as the additional monies for host towns.

And to pay for this program we’re going to do something people thought we had been doing – and should have been doing - all along. We’re going to use the revenue derived from the two casinos to pay for the tax relief.
So the next time someone asks, “Where did all the money go?,” they will know exactly where it went and how it was used. It’s paying for their car taxes.

How we can afford to do this?

We will intercept the $435 million we collect each year in casino revenue along with another $61 million in General Fund revenue to ensure municipalities will not lose local revenue as a result of the elimination of the property tax on automobiles. The balance of my Casino Assistance Revenue or CAR grant will come from eliminating the $350 property tax credit that some taxpayers received.

While the CAR grant will serve to replace the revenue that municipalities will forgo by not imposing car taxes, the State budget will remain balanced notwithstanding the withdrawal of $497 million from the State budget because of the availability $173 million of surplus revenue created by limiting spending growth and $325 million available by eliminating the property tax credit. The property tax credit helps some taxpayers but not others. Some taxpayers receive limited or no benefit from the credit because there income is too low; others receive limited or no benefit because there income is too high. Moreover, a married couple with two cars only gets the benefit of a single credit.

The elimination of the car tax helps virtually every individual car owner in the state It helps them directly, immediately and significantly.

In total this program increases property tax relief by 50% more than the old and inefficient credit program

For those who wonder if this proposal is fair, let me give you a few eye-opening examples:

If you are a Bridgeport resident who owns a 2003 Four-Door Taurus Wagon, you are paying $309 in annual property taxes. The same exact car carries a tax of $103 in New Canaan. So, a taxpayer in Bridgeport pays a tax bill that is 3 times higher than a taxpayer in New Canaan.

If you are a Norwich resident with a 2002 Four Door Toyota Camry, your annual tax bill is $292. A Lyme resident pays just $138 – slightly less than half of the Norwich rate.

One last example. A taxpayer in Greenwich pays $273 in property taxes for a 2005 Four Door Mercedes-Benz Sedan. A taxpayer in Waterbury taxpayer pays $278 in property taxes for a 2000 2-Door Convertible Chevrolet Cavalier.

Does it make sense for a Greenwich taxpayer to pay $5 less in property taxes per year for a new Mercedes than a Waterbury taxpayer pays for a 6-year old Chevy?

Forget about equalized tax rates; let’s get rid of the tax all together.

Under my proposal, a typical family in New Britain will save $828 per year in property taxes, assuming the family has two mid-priced sedans: a 2003 Camry and a 2001 Honda Accord.

A family in Torrington with the same vehicles would save $591 per year. A Stamford family would save $643 per year. The savings for a New Haven resident would be $768 and the savings for a Hartford resident would be $1,098.

And the savings begins this July!

How often is it that we are able to take a tax completely off the books? They often seem to get passed into law easily enough. They seem to get adjusted on occasion, sometimes even reduced. But eliminated altogether?

I ask you to stand with me on this historic proposal and to provide immediate, direct, real property tax relief to the citizens of Connecticut. They deserve it. And they deserve it now.

While jobs and the economy must be our central focus this year, other issues need to be addressed as well.

At a time when Washington is pulling back on heating oil assistance monies, double-digit rate increases are stretching family budgets thin this winter. The cost of oil, natural gas, and electricity is rising far faster than the ability of consumers to pay.

Long-term, permanent solutions to our energy problems will not be found in state houses like ours but rather at the national and international level. However, there are steps we can take to help residential and business consumers in Connecticut.

I have already mentioned a cut in the public utilities tax. I am also calling for the creation of a new Department of Energy in order to bring a new vision and a new emphasis to planning for the state’s energy needs for the 21st century.

A new Department of Energy would develop a state-wide energy policy, conduct market analysis, promote energy efficiency and new technologies, participate in proceedings before federal agencies and act as a liaison between state and local governments.

I am also calling for the addition of two new voices to rate-making decisions by the Department of Public Utility Control – a consumer advocate and a business advocate. Families and business owners are the ones paying the bills; they should have a voice in how those bills are calculated. These individuals will be non-voting members, but they would be able to question utility company representatives, participate in rate-setting discussions, and make recommendations on behalf of Connecticut ratepayers.

In addition, I am asking regulators, as one of their determining factors in setting rates, to take into consideration the ability of consumers to pay higher costs. It seems reasonable. It seems logical. Let’s make it the law.

I am also seeking an extension of the sales tax exemption for certain energy efficient products, restoring $12 million in funding for the Energy Conservation and Load Management Fund and proposing a delay, from April 15 to May 31, in the shut-off date for this year for utility customers running behind on their bills.

A few years ago Connecticut’s state government was itself running behind in paying its bills. We had to deplete the Rainy Day Fund, layoff employees, cut expenses and finance our debt. They were difficult times.

Now, because we have largely held spending in check, we have a sizable budget surplus. It is a surplus that should not be viewed as a license to spend, but rather as a means to get our fiscal house more in order.

I am committed to retiring state debt and increasing our Rainy Day Fund. To that end, I am dedicating $85.5 million of the surplus to pre-funding two outstanding debt payments payable in 2008 and 2009.

Further, I am proposing that $335 million of the surplus be deposited into the state’s Rainy Day Fund. This represents the largest single deposit ever made and will provide us with a highest-ever balance of $940 million. It is our fiscal responsibility to take this action, and I am proud to recommend it.

It is also our responsibility to respond to tragedy when it occurs, as it did last July when a horrific accident occurred at the intersection of Routes 10 and 44 at the base of Avon Mountain. We have already taken several actions to address safety concerns. This budget continues our efforts by providing $400,000 to support more commercial truck safety inspectors.

It also contains funding to hire new Department of Motor Vehicle employees at the busiest full-time branch offices in order to reduce waiting times. In addition, services will be expanded at the Northwest/Winsted, Putnam, Willimantic and Stamford satellite branches by adding one additional day per week. Despite the best efforts of our loyal employees, complaints about long lines at DMV are legendary. We’re working to make them a thing of the past.

We’re also continuing our work in the area of transportation. Last year, we focused on the transportation system’s most pressing needs. This year we turn our focus to new strategic investments.

As part of my budget initiative, I am proposing to build on last year’s progress by adding another $344 million in additional transportation improvements over the next several years.

My commitment includes:

Commuter Rail Service between New Haven, Hartford and Springfield, including connections between the rail lines and Bradley International Airport;

* $50 million for the 9.4 mile New Britain Busway that will serve twelve stations in New Britain, Newington, West Hartford and Hartford;

Rail station and parking improvements on the New Haven Line and Shore Line East;

Facility and service improvements on the New Haven Line’s Danbury, New Canaan and Waterbury branch lines;

Rehabilitation of forty locomotive pulled passenger coaches used on the branch lines; and

Improved transit connections between rail stations and employment centers.

The initiative’s focus on public transportation is intentional. While highways remain the largest part of the state’s transportation system, developing and maintaining a sound public transportation system is essential to the state’s long term social and economic health.

No investments will pay greater dividends than those we make on behalf of our children. My budget serves to meet the needs of Connecticut's children in several ways.

Considerable new funding is being proposed again this year for the Department of Children and Families – an increase of $24 million for new and expanded programs. This funding is necessary to help protect our most vulnerable children - those who are abused or neglected. It is also necessary to have appropriate programs for children who unfortunately become involved with the juvenile justice system.

Among my recommendations are:

the development new group homes;

a restructuring of emergency shelter services;

rigorous in-home services;

new specialized treatment foster care slots; and

finally, a long overdue self-contained secure state run facility for juvenile justice girls.

These children deserve our love and our attention. They deserve effective programming and responsive services. They deserve it - and it is our moral responsibility to provide it.

If Connecticut is to compete in the 21st century, we must continue to provide a highly educated workforce. By 2012, almost half of the state’s new jobs will require post-high school training. Unfortunately, even with Connecticut’s statewide academic success, there are still significant achievement gaps. In order for the state’s economy to prosper, this achievement gap must be eliminated.

I strongly believe that quality preschool or early childhood education will help children born in poverty emerge from economic disadvantage to become vibrant and dynamic workers in tomorrow’s economy.

That is why my proposed budget will:

Increase the number of inner city children in preschool by 500;

increase the School Readiness per child funding from $7,750 to $8,025 per year;

Add funding for five more communities to add preschool programs; and

Initiate the creation of a true kindergarten assessment tool.

I am also committed to alternative school options such as magnet and charter schools. Next year, almost $120 million will be spent on these innovative schools. Approximately 20,000 children, many of them from disadvantaged backgrounds, will attend schools with unique programming designed to help them succeed academically.

For charter schools, I am recommending $1.7 million for the expansion of seats for those schools that have natural grade growth. For our Education Cost Sharing grant, I maintain our commitment from last year and note that my budget includes direct educational grants to cities and towns of $2,026,000,000. This represents an increase of $142 million in direct educational aid in the last two fiscal years.

Our educational system is second to none in Connecticut. By and large our students excel and our teachers are the best and brightest in the nation. But the needs of our children extend far beyond the walls of our classrooms. In recent months there has been a troubling increase, particularly in our urban areas, in the number of shootings and other acts of violence involving young people.

Our children are killing each other - often with little remorse, too often with little regard for the legal or moral consequences. What is leading our children to turn to violence at such a young age with such a desperate sense of vengeance? The root causes - economic, educational and familial breakdowns - are easy to identify; the solutions to them are not.

And the violence in our cities is not limited to the young. Next week I will be meeting with the mayors of many of our medium and large cities to discuss the escalation of violence and to see how we can work together to ensure the public's safety. I have already met with state agency leaders, law enforcement personnel and some community officials on this issue. The meetings will continue, but we must take action now to address this situation.

Therefore my budget includes funding for:

* 3 new prosecutors and 3 new inspectors in the Chief State's Attorney Office to investigate and prosecute violent crime in our cities. This unit will work on criminal cases from the earliest stage, prior to an arrest, through all court proceedings and post-conviction

* $520,000 for the Department of Public Safety to create a state and municipal task force to combat violent crime in our major cities. A team of state troopers and two officers each from the major cities will focus on "Hot Spots" of crime and violence by gathering intelligence, conducting undercover investigations and implementing large scale arrests and sweeps.

* $4.25 million is set aside to provide direct grants to municipalities to prevent violent criminal activity. The three largest cities, Bridgeport, Hartford and New Haven, would be eligible to apply for Urban Violence Reduction grants up to $750,000 each. Waterbury and New London would be eligible for grants up to $500,000 each. A pool of grant funds of up to $1,000,000 will be made available to the state's remaining urban areas.

Municipalities will be allowed to design their own programs, working with their own community organizations that target after-school recreational opportunities, mentoring, job training, tutoring and literacy assistance and the like.

* $1.94 million for the Judicial Branch to continue various discontinued federally funded juvenile programs. These funds support court diversion initiatives, multi-system therapy for juvenile offenders and juvenile risk reduction centers.

* $238,000 to continue paying out Local Officer Incentive grants as to reduce fiscal impediments to local police departments partnering with the Statewide Narcotics Task Force and federal law enforcement agencies.

* funding for a minimum of 280 Global Positioning System units and fifteen additional probation officers and two parole officers to provide increased supervision for violent sex offenders.

Yes, our challenges this session are many, but I know that we will meet our challenges by working together, by being bold and by putting people, not politics first.

You know, when the people of Connecticut watch what is happening at the State Capitol they do not think about party affiliations, or who held a press conference on what proposal on what day, or who was the first to put an idea or a program on the table for discussion.

What they want, what they expect, is that we will work together, that we will make the best use of our resources and that we will come up with the best solutions to the problems of the day.

We have come such a long way over the past year – but our journey is not yet over.

As your Governor I will never settle for less than what I know to be this state’s limitless potential. My Administration will continue to set the highest of goals – and I promise to work with you to reach those goals.

So it is with resolution and confidence that I ask you to join me in pursuing a vision of prosperity equal to Connecticut’s endless possibilities.

Thank you and God bless our great state.