Connecticut can't keep going on like this.

At 1 a.m. Tuesday, with approval by the House of Representatives, the legislature completed amending the $40 billion biennium budget it had approved four weeks ago. Gov. Dannel P. Malloy signed it later in the day. It will guide state spending and taxation for the next two years.

Fundamentally, it changes very little.

Yes, there were tax increases, though the amended version rolled them back a bit, particularly on business.

There is increased aid to municipalities, particularly cities. Whether that municipal aid translates into property tax relief, as characterized by the Democratic leadership, or simply more city spending, remains to be seen. In any event, there is no guarantee the legislature will sustain the increased aid.

What did not change are the dynamics that, in the words of Office of Policy and Management Secretary Benjamin Barnes, have placed Connecticut “into a period of permanent fiscal crisis in state and local government.”

He said that Nov. 18, shortly after the re-election of his boss, Gov. Malloy. Politically speaking, it would not have made a good talking point before the election. During the campaign, Gov. Malloy pledged to fix the latest deficit without more tax increases — tough to do when you’re in a permanent fiscal crisis.

The problem is that the level of state spending is unsustainable. Many municipalities are in the same situation. Every session the legislature’s Democratic majority scrambles to make the numbers work. Some line items are frozen, or small cuts imposed. Money is borrowed to pay ongoing expenses, one-time revenues are spent, promised aid withdrawn, and anticipated tax cuts repealed.

There is no strategy to it.

In a commentary in The Connecticut Mirror, Julie McNeal described it as financial game of “Whack-a-mole,” as attempts to fix the budget in one area cause problems elsewhere, often in future years. The nonpartisan Office of Fiscal Analysis already projects that the 2017-2018 fiscal-year budget, the first following the current two-year cycle, will face an $832 million hole. Ms. McNeal is the director of finance and operations for the Connecticut Society of Certified Public Accountants.

When the whacking ends, it always seems the last mole standing is tax increases. If the economy were growing, businesses and individuals could better withstand higher taxes. But as the Connecticut Center for Economic Analysis reports, economic growth is stagnant in the state and over the next two years job creation “will likely stall and may even now decline.”

In that environment, tax increases act like an anchor on any potential recovery, pulling money out of the private economy, leading to higher prices, less hiring and lower consumer spending. A struggling economy means tax revenues come in lower than expected, the budget again confronts deficit, and the mole whacking resumes.

The group Truth in Accounting, which analyzed state government financial reports, found Connecticut is grossly underfunded when it comes to meeting promised employee retirement and health care benefits, reporting $10 billion in assets but owing $48 billion.

Trying to close the gap is eating up an ever-larger piece of the budgetary pie, $5 billion for state employee and teachers’ retirement benefits in the current $40.3 billion two-year spending plan, muscling out other needs.

Major, structural changes are necessary, such as regional services to eliminate rampant redundancy in municipal government in Connecticut; rebalancing negotiation rules that now tip in favor of labor; moving new state hires into 401(k)-type savings plans; and contracting for most social services through nonprofits rather than high-cost government agencies.

After his initial election in 2010, Gov. Malloy showed a willingness to tackle big change. His negotiations with labor did improve the long-term pension outlook. The administration also pushed through the legislature some consolidation and streamlining of state services, along with the adoption of more straightforward accounting practices.

That leadership was notably lacking this time, at least on budgetary matters. Gov. Malloy, boxed in by his promise of no tax increase, handed the legislature a budget with huge cuts in social service programs that he knew it would never accept, but which freed him of initiating the tax increase. He took a hands-off approach until the closing days of the session. Only when the business community loudly objected to the big tax hike that hit them, did the governor utilize some political muscle, pushing lawmakers to trim $178 million from the $1.5 billion in tax hikes.

Unless it wants the “permanent fiscal crisis” to continue, the Malloy administration will have to propose far more dramatic action than that token gesture.