This is the transcript from Democratic Gov. Dannel Malloy’s appearance with his Republican counterpart Gov. Rick Scott of Florida this morning on CNN’s State of the Union. The news network’s veteran Candy Crowley was the referee.
CROWLEY: In state capitols across the country, 2012 is likely to be the most difficult budget year on record. 45 states and the nation’s capital are projecting a red ink total of $125 billion. No matter how you add it up or who adds it up, it won’t be just a difficult year, it will be a painful one.
A short tale of two governors. In Florida, Republican Governor Rick Scott is facing an expected $3.6 billion budget deficit. He says he’ll still cut taxes by about $2 billion and balance the budget in the coming year. Scott has proposed shrinking the state budget by more than $4 billion, about $3 billion of that from education. Community services and law enforcement are also targeted.
Democratic Governor Dan Malloy faces a similar shortfall in Connecticut, $3.7 billion. He wants to increase spending on education and raise taxes, increasing state sales, gas and income taxes, increasing taxes on luxury items, and increasing some corporate taxes. Malloy also proposes consolidating some state agencies and reducing state services to save more than $1.5 billion. Connecticut’s richest residents are already among the highest taxed in the country.
Up next, Governors Rick Scott and Dan Malloy.
CROWLEY: Joining me now here in Washington, Democratic Governor Dan Malloy of Connecticut, Republican Governor Rick Scott of Florida. Gentlemen, thank you both. Here in Washington for a Governors Association meeting. Both of you freshman governors facing big deficits, about the same actually, $3.7, $3.8 budget deficits.
Let me start with you first, Governor Malloy. Even the president of the United States when it came time to deal with whether the richest of Americans should continue to enjoy a tax cut or not, decided, OK, you know, the rich — yes, we’ll continue those tax cuts. And part of the rationale for the Democrats who were pushing him to do that was you don’t want to raise taxes in the middle of a recession.
CROWLEY: You have got a 9 percent unemployment rate and yet you are raising taxes — corporate, wealthier Americans. Why do you think that’s going to help when at least conventional economic wisdom has been that’s not what you do in the middle of hard times?
MALLOY: So let’s actually now talk about the reality. He has got a $3.6 billion deficit spread out amongst 18 million people. I have my deficit, $3.7 as you indicated, but on an operational basis probably $3.3 billion spread out amongst 3.3 million people. So we are in a lot tougher shape in part because none of the hard decisions have been made in Connecticut for a very long period of time.
Some of those are where we spend our money. For instance, in my budget — from the budget I was handed by my Republican outgoing governor we cut spending by $800 million. We are also asking for a billion dollars in concessions from our employees, both long and short-term concessions. And then on top of that we are also looking at the revenue side. Why? Because $3.3 billion spread amongst 3.3 million people, we’d have to close just about every nursing home, we would have to slash aid to schools, we’d have to lay off thousands and thousands of teachers.
CROWLEY: But you are increasing education funds as well in this.
MALLOY: Sure. Well, in part, again, in my opinion, misuse of money the stimulus money by my predecessor and the legislature came to an agreement with the governor. They used that money to displace state money so there was a hole in the educational cost sharing grant which is how we distribute $1.9 billion to local communities. There was a hole in that of about $271 million. If I allowed that to go through a place like Bridgeport, Connecticut, one of the poorest cities in America would have lost $23 million and 270 teachers and would be looking at classroom sizes of about 40 children per class in a system that’s already in an advanced state of difficulty if not failure.
CROWLEY: I want to ask you about cutting taxes here in a minute. But just a yes or no if I could, do you worry that raising taxes is going to cost you in unemployment and cost you some business coming into Connecticut?
MALLOY: I think if you take reasonable projections we are going to see unemployment drop, not rise. And certainly that’s the hope. But this package is about jobs. It’s about having the business community have confidence in what we are doing. That’s why the business community largely is supporting what I’m doing. Because for many years Connecticut has not made a single hard decision, they’ve just kind of bumped along. We didn’t fund pensions. We don’t comply with generally accepted accounting principles. We had no control on our spending.
We had a Republican governor who gave a 20-year benefit package to employees. So I’m a little bit different. You know, I have asked for shared sacrifice and that includes unions in a respectful way. It includes $800 million in cuts.
CROWLEY: Governor Scott, let me move to you, because you promised during the campaign that you would cut taxes. You say you are going to cut taxes by $2 billion, still make up for that. In doing that you’re going to cut some funds out of education, some funds out of law enforcement. And I want to show you a quick poll by Quinnipiac. And it was Floridians. Will Rick Scott be able to keep his pledge not to raise taxes on Floridians? Yes: 26 percent said yes. No: 58 percent of Floridians do not believe that you can possibly keep your promise not to raise taxes much less lower them.
How are you going to do that without enormous cuts in education? That is a hard, hard sell, I think.
SCOTT: Here’s what we did. What we did is we kept the state funded portion of education exactly the same. So what we didn’t do is replace the federal funding. It’s like they took the stimulus money and believed it would go on forever and ever. It’s like winning the lottery one year thinking you will win it the next year and the next. So we kept that flat. We have looked at — we’ve benchmarked what we’ve spent in corrections, for example. And there’s significant dollars that we can save in corrections. So we’ve gone through piece by piece by piece and we’ve cut $3.6 billion deficit. We have got another $2 billion worth of tax cuts. We don’t have an income tax.
Here’s what I believe, I believe we have to make our state that’s very difficult for somebody in business to say, why wouldn’t you do it in Florida? We don’t have an income tax. We’re a right to work state. We have the great weather, we got the great beaches. On top of that we have a 5.5 percent business tax we’ll cut to three and then phase it out. And then on top of that, we’re going to reduce our property taxes.
We’re going to make it to where everybody — we have enough money. People in Florida believe that the state government has enough money. We have a $70 billion budget. I’m cutting it to $65 billion. We just have to spend it better.
CROWLEY: Governor Scott, Governor Malloy, stand by. We will have more from both governors. I want to get their take on Wisconsin where there is a bit of a controversy going on after this.
CROWLEY: We are back with Governors Malloy and Scott.
Governor Scott, can you assure the people of Florida that these cuts you were making in order — in some cases to afford a tax cut — is not going to fray the safety net for those who are unable to care for themselves? Because that’s a big worry — education.
SCOTT: I’m clearly going to reduce the taxes and I’m clearly going to make sure we streamline government and focus on what government is good at and make sure that we have a great safety net.
Now all of us know that Medicaid is a problem for the states. So we are going to do a better job of managing our Medicaid population and our Medicaid program. We would like the federal government to just give us a block grant because I could spend the money way better without all the strings attached.
CROWLEY: I bet you’re going to agree with that, block grants from the federal government.
MALLOY: Well, you know, except that block grants from the federal government have largely been used as an excuse to lessen the amount of money that flows to states. I mean, there is a problem in the United States. The federal government talks about balancing its budget but what it really wants to push it down to states. In most cases state governments talk about balancing their budgets but really what they’re going to do is push it down to local communities.
I didn’t do that in this budget. We basically continue to support our local governments at the same level, and maybe that’s because I was a mayor for 14 years and I have been subjected to what others have done with respect to property taxes which is how our local governments in Connecticut run. And they have seen the largest run-up of taxes in the state of Connecticut. Most of our businesses pay far more in property taxes than they do in any form of income tax.
CROWLEY: Let me ask you, looking at Wisconsin, and just ask you as a general principle, how do you feel about minority members of a legislature leaving town so they do not have to vote on something that they oppose?
SCOTT: I mean, I think you have to show up. You got elected to show up and vote, make a decision. We all know elections have consequences. So they ought to be up there and voting. If people don’t like it, they will elect somebody new next time.
CROWLEY: Governor Malloy there was an election. They elected a Republican legislature and a Republican governor of Wisconsin. And when he proposed something, the Democrats took off so they didn’t have to vote. Does that seem like it follows the democratic process to you?
MALLOY: You know, Abraham Lincoln jumped out a second story window in Springfield to avoid a vote in the Illinois legislature to prevent a quorum from taking place. There are quorum rules. And that’s part of the game.
Do I think the Democrats look great in this? No. Do I think what’s happening in Wisconsin is a travesty? The answer is yes. We should not be attacking people’s rights to join organizations. It’s un-American, frankly. And so I think people use the tools that they have, and in this case preventing a quorum taking place is one of those tools.
CROWLEY: Let me ask you both one quick question, sort of locally, if you will. You have asked your public unions to come to the table to negotiate increased pension.
MALLOY: I have.
CROWLEY: And they have not done so. In fact, they have said, now, you know what, the math doesn’t work out here that he’s telling us, we can’t give up that much money. Are you willing to get tougher if you can’t get them to the table by asking?
MALLOY: I’ve made it very clear that in the absence of these concessions we are talking about laying off thousands and thousands and thousands of people and destroying our safety net. So either everyone is going to come to the table and we’re going to be successful down this particular road, or we’ll have to take a different road.
But we don’t start taking that different road. And I think that most state workers in the state of Connecticut want to be part of the solution, not constantly be blamed as the problem.
CROWLEY: And, Governor Scott, let me just ask you, you have turned down $2.4 billion from the federal government to build high- speed rail between Orlando and Tampa. You have been given another week to think about it. Is there any chance in you know where that you would accept that money even if it went to local governments rather than the state?
SCOTT: What I have said all along is our taxpayers aren’t going to take the risk of the cost overrun in building it. It could be $3 billion, the operating costs. We already have a train that goes from Palm Beach to Miami. Only one-sixth of the cost of operation is covered by the fares. On top of that…
CROWLEY: No way no how?
CROWLEY: No way no how you are going to take that money.
SCOTT: I haven’t seen how they can do it.
MALLOY: But I’ll take some — I’ll take some of that money…
CROWLEY: You’ll take some of his…
MALLOY: … and we’ll spend it on Metro North and New Haven to Hartford.
CROWLEY: But I guess that’s up to you guys.
SCOTT: I want the money for our ports. I mean, look at — we have got the Panama Canal expansion, we’ve got the expansion of the economies to Central and South America, put that money into the Florida ports. That’s where we want that money spent.
CROWLEY: Governor Rick Scott, Governor Dan Malloy, thank you both for joining us.
MALLOY: Thank you.
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