*UPDATED* Malloy Holds Final Town Meeting in Middletown: VIDEO

Gov. Dannel P. Malloy made his budget pitch to nearly 400 residents Tuesday in the packed Middletown High School Auditorium for his final town hall meeting on the budget.

For the past eight weeks Malloy has held 17 town hall meetings across the state to discuss his fiscal plans for the state and the $3.5 billion budget deficit Connecticut is facing.

Before his town hall series began in February in Bridgeport, Malloy expressed his preference to communicate personally in the town hall-style meetings with Connecticut residents.

Barely dodging the rain showers, about 150 people stood in line waiting to enter the auditorium two hours before Malloy was scheduled to speak.

The governor entered the auditorium to a standing ovation. He tried to lighten the rainy day mood with a joke.

“When I’m out at dinner and people stand up when I’m introduced, I always am reminded that I’m the youngest of eight; at the dinner table if anybody stood up they grabbed your food.”

But more serious discussion ensued as Malloy explained his budget ideology once again.

“In November, I was handed a budget pursuant to state law by outgoing governor Jodi Rell that was $3.5 billion out of balance,” he said.

Malloy explained that all federal stimulus money and “rainy day funds” had been spent, much of it for state operating expenses. In the current fiscal year, he said, there was also an authorization to borrow an additional $1 billion to maintain current expenses.

“I reject that as a way of doing business, borrowing money for operating expenses,” Malloy said as the crowd applauded. “We could play games, use gimmicks … but tough choices need to be made.”

His plan of attack, he said, includes a combination of spending cuts, restructuring of government, savings from state employees and increased revenue.

Malloy said his budget framework includes no new base spending in the general fund with two exceptions: more money for hospitals and transportation.

Even with those, “we’re actually spending less money next year than the current year,” he said.

For the first time in a long time, he added, the state’s pension obligations will be fully funded at $877 million and that education will not be cut.

The framework of his budget plan includes cutting $760 million in spending, reducing state government from 81 agencies to 57, identifying savings of $1 billion from state employee concessions and raising new revenues of approximately $1.5 billion.

To drive the point home, Malloy said if he can not plug the $271 million hole in the state budget's Education Cost Sharing grant, Middletown would lose $4.8 million in the next budget year.

Prior to Malloy's arrival some health care advocacy groups rallied outside the school in support of SustiNet, a health care plan passed into law in 2009 and intended to provide affordable health care coverage to 98 percent of Connecticut residents by 2014.

“We feel health care is a moral imperative,” said Damaris Whittaker, of the Christian Activities Council.

“Governor Malloy stood with us and marched with us on this issue in the past,” Whittaker continued. “We hope he will continue to work with us.”

Sean Moore, president of the Greater Meriden Chamber of Commerce expressed how health insurance has become cost prohibitive for some businesses.

“Many small businesses are opting out of providing health insurance for their employees because of the expense.“

Matt O’Connor, communications director for the Connecticut State Employees Association, SEIU Local 2001, has attended all of Malloy’s town hall meetings and the CSEA initiative has asked the same question each time: “Why the middle class is being asked to pay more when corporations, the super rich and the banks, are not.”

“It’s a balance,” said O’Connor.

Most of the 20 or so questions from the audience dealt with health care and taxes and were mainly civil.

Paul Wessel questioned Malloy’s reluctance to have a dialogue on health care, “We appreciate the fact that you support the goals of SustiNet and we want to encourage you to come on board the train with us and help get there.”

But Malloy indicated he was not quite ready to jump on the SustiNet train just yet.

“I don’t agree with the requirement that the state give up control of $5.5 billion worth of expenses ... including giving up our right to negotiate with our employee group over the benefits they receive,” replied Malloy. “But I’m hopeful we’re going to make progress this year.”

Laureen Cannata, a nurse from Higganum whose husband is a local businessman, said she fears Malloy's budget will hurt businesses in the state.

“The taxes you propose will greatly harm our state and its residents. This is the time for Connecticut to be a leader in business, supporting, not suppressing, established ones.” 

Malloy said he is trying to fix two decades of fiscal irresponsibility.

“Over the past 20 years, governors did not institute generally accepted accounting principles, and governors did not fully fund pension plans and governors called differed payments to pension plans as savings," he said. “With all due respect … I think we ought to look to a different direction.” 

Middletown resident Gail Whitright spoke with consternation at Malloy’s plan granting in-state tuition to children of illegal residents.

“Illegals have totally undermined our entire economy,” she said. “It is your party that has made Connecticut the welfare haven of the Western world. Are you going to stand up for illegals or are you going to stand up for Americans?”

“I’m going to stand up for children who graduate from our schools,” an irritated Malloy responded.

At one point, tension mounted when a man had to be removed by two police officers because he was not on a sign-up list of those chosen to speak.

The last questioner, Bill Buhler, a school psychologist at Middletown's Connecticut Juvenile Training School, said he fears Malloy’s budget will have a major impact on the middle class.

“I don’t believe that Connecticut’s business economy is driven by tax breaks from the ultra wealthy, I think Connecticut’s business economy is pushed up by having a strong middle class that has disposable income.”

As the final town meeting came to a close, Malloy reflected that he has learned a lot from the meetings and will use the information to help with his budget decisions.

“I want you to understand that we can no longer afford to be on the losing side for another 22 years of job growth. We’ve got to be transparent, we’ve got to be honest, we’ve got to put our economic house in order and we have to have relationships with our fellow state employees that are sustainable for the long run.”

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