Connecticut Gov. M. Jodi Rell released a state budget for the next two fiscal years today that was notable as much for the elephantine cuts it proposes as for what it leaves unchanged.

Rell’s proposal would cut 400 state jobs, ask unions for hundreds of millions of dollars in concessions and raise state licensing fees on everything from liquor stores to bakeries. In an address to the General Assembly, Rell said these cuts would allow the state to balance its budget without raising taxes, a pledge she made to state residents earlier this week.

In the address today, Rell asked for support in her proposal to eliminate a slew of state agencies.

“To the soothsayers and naysayers I say: Step aside,” Rell said. “We need leaders. Help me as I lead Connecticut to a smaller, more affordable, more responsive government. It starts with fewer state agencies. My budget eliminates 10 of them. All serve worthy purposes on paper, but all have functions largely duplicated by regular state agencies.”

Rell’s proposal leaves several funds for municipalities intact – funds many observers expected would be cut by 20 percent or more. Funding for the Payment In Lieu of Taxes program has been preserved at its fiscal year 2009 level – vitally important for cities like New Haven, where a substantial amount of property is not taxable.

“I am pleased to announce that so will my budget, in that it flat funds – yes, flat funds – state aid to municipalities for the next 2 years,” Rell said. “We cannot, in good conscience, balance the state budget on the backs of property taxpayers. They cannot afford higher local taxes any more than they can afford higher state taxes.”

Surprising to many, Rell did not pursue across the board cuts to Medicaid, saying she was hopeful for assistance from the federal government’s American Recovery and Reinvestment Act.

But the budget includes complete cuts to several local programs including the New Haven Arts Council and the New Haven Festival of Arts and Ideas. A state program to prevent teen pregnancy has also been defunded.

Rell defended the cuts, saying they are shared burdens.

“My budget provides a blueprint which will guide us and which will preserve the prosperity of Connecticut for our children and grandchildren,” she said. “There is pain and sacrifice in this budget, but it is shared pain and sacrifice. We are in this struggle together, and we will need to work together, to lead together, in deed as well as in word”

As the General Assembly prepares to debate and amend her proposal, Rell offered advice to the legislators.

“We need to act swiftly in these turbulent times, for the families of Connecticut need our help, need our leadership,” she said.

Lawmakers hope to have the completed budget for the next two fiscal years finalized by the time the General Assembly adjourns on June 3.