Connecticut Gov. M. Jodi Rell yesterday called on lawmakers to cut spending in light of Moody’s Investors Service decision Monday to lower the state’s rating outlook to negative.

“What is needed now is sure and decisive action to reduce the size and cost of state government so as to ease the burden on Connecticut’s struggling families and employers, avoid the pitfalls of quick fixes, and position our state for long-term financial security and opportunity,” Rell said in a press release. “We must finally accept the necessity — indeed, the inevitability — of further reductions in state spending if we are to avoid setting up future generations for fiscal failure.”

Moody’s cut its outlook on Connecticut’s general obligation rating to negative from stable while affirming its Aa3 rating. The agency said the state’s reliance on one-shot solutions to balance the fiscal 2010-2011 biennial budget was one of the main reasons for the change. The outlook change affects approximately $12 billion of GO debt.

Last week the state Office of Policy and Management announced that Connecticut faces a $388.5 million budget deficit in the current fiscal year. It projected that revenues will be $172.1 million less than originally forecast while agency operating expenses would be $212.5 million greater.

The Republican governor said she would craft a deficit mitigation plan and called on the Democratic-led General Assembly to do the same. While Rell criticized Democrats for not implementing more spending cuts in the budget that became law last month without her signature, Democrats have cast blame on the governor.

Derek Slap, spokesman for Senate Democrats, said that all of the one-shots in the budget were first proposed in some form by Rell to avoid raising taxes and that she had increased spending in certain areas herself.

“When she says she’s very concerned about he structural hole and the one-shots, that’s good to hear but it appears like a new strategy,” Slap said. “Deficit mitigation has to begin with the governor living within the constraints of the budget and she has not shown she knows how to do that.”

State Treasurer Denise Nappier said in statement that Rell and the General Assembly had “struggled to strike a balance between what we need and what we can do without.”

“These are sobering times for Connecticut as tax revenues have fallen, just as the need for state services has become ever more pronounced — especially for those who can least afford to cope with the financial burden posed by this sustained period of economic downturn,” she said. “Moody’s perspective reinforces what the state already knows it must do, and that is head back to the drawing board and strengthen the state’s fiscal footing going forward.”

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