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Mr. Fedele said that a governor is required to submit a deficit-mitigation plan whenever the shortfall is 10 percent of the budget, which is roughly $19 billion for this fiscal year.
He predicted during his 26-minute talk at the Kimberly-Clark Conference Center on Pickett District Road that it would "be a challenge" to establish a mitigation plan with the Democratic majority in the state House and Senate.
Gov. M. Jodi Rell (R-Brookfield) and the Democratic leadership had protracted negotiations through the summer on the two-year state budget, which was suppose to be adopted by June 30, the end of the last fiscal year, but wasn't in place until early September when the Democrats approved a package. Mrs. Rell declined to sign it, which allowed it to become law 10 days later without her approval.
Reportedly, it was the first time that a governor had allowed a budget to become law without her signature since former Gov. Ella Grasso (D-Winsor Locks) took that step in 1977.
Mr. Fedele told the more than 150 people in attendance that Mrs. Rell declined to sign the proposed budget because it had "too many one-shot deals" in revenue.
He said the two sides recognized by late summer that a budget had to be in place because, for example, school districts cannot receive construction reimbursement funds for capital projects through the state Bond Commission, which the governor chairs, until a budget is in place.
State Rep. Clark Chapin (R-New Milford), who attended the breakfast, said in a phone interview this week he believes that the executive branch and the General Assembly may have to develop a deficit mitigation plan even before the next regular session starts in February.
"When a business has lower revenue, it lowers its spending," Mr. Fedele told the audience. "But in state government when the revenues are declining we have more obligations, because people are seeking unemployment compensation and Medicaid funds."
In September, Connecticut had an unemployment rate of 8.4 percent compared to 9.8 percent nationally.
Mr. Fedele said that revenue streams can take huge swings within a short period of time.
He said that when Mrs. Rell began developing her proposed two-year budget a year ago this month, figures indicated that there would be a $4 billion deficit for the current fiscal year and by the time she presented her proposal four months later the estimate had grown to $8.5 billion.
Mr. Fedele said that the $787 billion federal economic stimulus package that Democratic President Barack Obama signed in February has had some impact on the state, noting that it may be partly responsible for the 1,200 construction jobs that were added last month in the state.
The lieutenant governor said states and municipalities have encountered obstacles in acquiring funds because "there was no application, no process to apply. The dollars are there, but you don't have the ability to apply for them" because of glitches in getting the programs to run smoothly.
Mr. Fedele, who, for example, has held one of his community days in New Milford and was featured at a campaign fund-raiser for Mayor Patricia Murphy last month, said that state officials have helped the town secure funds to help pay for the $30 million renovation of the wastewater treatment plant that began last month.
U.S. Rep. Chris Murphy (D-Cheshire) said at an event in Brookfield this week he believes that the stimulus funds have helped the state and its municipalities by providing revenue that allowed them to retain employees who otherwise would have lost their jobs during an economic downturn that has been described as the worst since the Great Depression of the 1930s.
Secretary of the State Susan Bysiewicz (D-Middletown) said this summer that one of the areas where there is economic growth is in exports from Connecticut, which has long been noted for selling many goods and services overseas.
Reports have indicated that Mr. Fedele has been more aggressive in seeking foreign commerce than any state official since former Gov. William O'Neill (D-East Hampton), who went on several trade missions while serving from 1980 to 1991.
Mr. Fedele said that he took a trade mission to Europe in 2007 and to China a year ago this month and had spoken in recent days with officials from Taiwan and Israel about Connecticut's economy.
The Hartford Courant has reported that the state's overall employment is about the same as it was 20 years ago.
Some state officials have said that Connecticut is plagued by a high cost of living and excessive businesses taxes through the years.
Mr. Fedele said that many of the state's college graduates are relocating elsewhere. He noted that a study by the University of Connecticut's economic team indicates they often don't leave immediately upon graduation but a year or two later after they have acquired a job in another state that has better opportunities for advancement than they might have by working for a business in Connecticut.
The lieutenant governor said the high cost of housing is a concern for younger workers but that, for example, in Stamford the state provided funds to help a developer build many rental units near the train station that takes many commuters to their jobs in New York City each weekday.
Mr. Fedele said the state's universities also might need to develop curriculums that "more parallel" job needs in Connecticut. He noted that an official at Electric Boat in Groton, which makes submarines, told him that there are many engineers in Connecticut but not enough that have knowledge in the ocean-related areas that his company needs.
He said the state does have some advantages, such as the highest number of residents with doctorates, per capita, in the country and a financial services sector in Stamford that is the fourth largest in the world.
Mr. Fedele said that the state's tax credit for movie production has helped bring film companies to the state that have established permanent operations that generate a considerable number of jobs.
Mrs. Rell said in September before an appearance in Brookfield that she would probably announce shortly after next week's municipal elections whether she will seek a second full term as governor. She took office in July 2004.
Mr. Fedele, who became lieutenant governor in January 2007, said earlier this year that he would seek the Republican nomination for governor if Mrs. Rell announces that she will retire in January 2011. Most political observers believe he would be a frontrunner for the party's nod.
