During his first State of the State address Wednesday, Governor Andrew Cuomo said that New York is at a crossroads and outlined a plan of action to restore integrity and financial stability to the state.

Speaking before more than several thousand, including members of the public, at the Empire State Plaza Convention Center, the state's 56th governor mixed talk of tough times ahead with a dose of optimism.

“We must transform the State of New York from a government of dysfunction, gridlock and corruption to a government of performance, integrity, and pride,” said Cuomo during the 47-minute long speech. “This is not about budget trimming or cutting, it’s about looking at how we can fix government and make it work for the people. Together, we must take the significant steps needed to reinvent, reorganize and redesign government to restore credibility and to rebuild our economy by creating jobs all across this state. ”

He vowed to pass a property tax cap at the rate of inflation, create regional economic development councils, restructure educational aid to offer incentives for improvement and redesign the Medicaid program.

Cuomo also unveiled a plan to close the state's $10 billion deficit in the 2010-11 budget by "imposing a one-year salary freeze on the vast majority of public employees whose contracts are up for renegotiation as of April 1; holding the line on taxes; and imposing a State spending cap limiting spending growth to the rate of inflation."

"This is a fundamental realignment for this state. You can't make up these kinds of savings over this long a period of time through a budget cutting or trimming exercise," said the governor. "We're going to have to reinvent government. We're going to have to reorganize the agencies. We're going to have to redesign our approach because the old way wasn't working anyway, let's be honest."

He also announced the first of several agency mergers he promised during his campaign – combining the state insurance and banking departments to create an agency less expensive to run, yet more effective in policing Wall Street.

Additionally, Cuomo called for a consolidation the state's 25 detention facilities in an effort to save up to $50 million a year. He cited staffed jail facilities with few or no inmates as prime examples of government waste.

“An incarceration program is not an employment program,” said Cuomo. “If people need jobs, let’s get people jobs. Don’t put other people in prison to give some people jobs."

The plans would need legislative approval.

Mayor Michael Bloomberg proposed last month that the state give control of juvenile jails to local governments, in an effort to keep city kids closer to home instead of sending them to detention centers upstate.

While Cuomo gravely detailed the state’s poor economic situation, he also offered moments of levity as he mocked how politics has bogged down past budgets.

In pitching his plan to close New York's growing budget gap, he encouraged all lawmakers to work together. Cuomo then compared the major players in the process -- Assembly Speaker Sheldon Silver and Senate Majority Leader Dean Skelos -- as ships passing in the night while taking a jab at lobbyists.

For the first time, Assembly Speaker Silver and Senate Majority Leader Skelos spoke before the governor delivered his address.

“Can we make this place to work together; my answer is yes," said Silver. "We can work together; we will work together.”

"The fiscal crisis we face is an opportunity for dramatic action to change the way New York has budgeted in the past, and actually reduce spending and taxes," said Skelos. "We simply cannot fail to achieve these goals because the future of our state, and the economic security of every New Yorker depends upon it."

Silver spoke out against hydraulic fracturing to stimulate oil wells and pushed for funding of the State University system.