1 ¶ >> I'M STEVE KOTCHKO. WELCOME TO ANOTHER EDITION OF "ON THE RECORD" FIRST A LOOK AT THIS WEEK'S STATE HEADLINES: DEMOCRATS, WHO CONTROL THE LEGISLATURE THIS WEEK UNVEILED THEIR TAX AND BUDGET PLAN TO COPE WITH CONNECTICUT'S BIG DEFICIT. WE'LL TALK WITH LEGISLATIVE LEADERS FROM BOTH PARTIES ABOUT THAT IN OUR NEWSMAKER SEGMENT. AND IN OUR REPORTERS ROUNDTABLE, WE'LL GET SOME BUDGET AND TAX ANALYSIS FROM A JOURNALIST WHO SPECIALIZES IN FISCAL MATTERS. ALSO, A NEW POLL INDICATES DEMOCRATIC SEN. CHRIS DODD'S JOB APPROVAL AND INTEGRITY RATINGS HAVE DROPPED TO THE LOWEST LEVELS EVER. MEANWHILE, REPUBLICAN STATE SENATOR SAM CALIGIURI OFFICIALLY JUMPS INTO THE REPUBLICAN RACE TO UNSEAT DODD IN 2010. THOSE ARE THE HEADLINES. PLEASE STAY WITH US. >> AND MY GUESTS THIS WEEK IN OUR NEWSMAKERS SEGMENT ARE STATE SENATE PRESIDENT PRO TEM DONALD WILLIAMS THE TOP DEMOCRAT IN THE SENATE, AND HOUSE REPUBLICAN LEADER OR HOUSE MINORITY LEADER LAWRENCE CAFERO, TOP REPUBLICAN IN THE STATE HOUSE. WE WANT TO TALK ABOUT THE DEMOCRATIC BUDGET PLAN THAT WAS UNVEILED THIS WEEK, AS THE ALTERNATIVE TO THE PACKAGE THAT GOVERNOR RELL PUT OUT THERE IN FEBRUARY. SENATOR WILLIAMS, I CAN FIRST GET YOU TO SORT OF ENCAPSULATE THIS BUDGET, AND TAX PACKAGE AND EXPLAIN WHY DEMOCRATS THINK THIS IS THE BETTER WAY TO GO THAN THE GOVERNOR'S PLAN. >> SURE. WELL, THANK YOU, STEVE, AND TO FRAME IT, THIS IS THE WORST BUDGET YEAR THAT WE'VE FACED IN THE STATE OF CONNECTICUT IN TERMS OF THE DEPTH OF OUR DEFICIT, AND WE KNOW THAT IT IS NOT ONLY HITTING CONNECTICUT BUT IT IS HITTING THE ENTIRE COUNTRY AND ACTUALLY A GLOBAL RECESSION. SO IT IS A TREMENDOUS CHALLENGE THAT WE FACE, AND AS A RESULT, THE BUDGET PACKAGE IS NOT A VERY PRETTY PACKAGE. ON THE APPROPRIATIONS SIDE, WE HAVE CUT MORE THAN THE GOVERNOR, WE HAVE CUT A BILLION DOLLARS, WE HAVE CUT MORE THAN HAS EVER BEEN CUT IN A BUDGET PRESENTED TO THE APPROPRIATIONS COMMITTEE AND TO THE LEGISLATURE. WE KNOW THAT WE HAVE TO DO THAT IN THE YEAR THAT'S VERY DIFFICULT, AND WE DON'T EXPECT THAT EVERYBODY IS GOING TO AGREE WITH EVERY PARTICULAR CUT. BUT THERE ARE VERY SERIOUS AND SIGNIFICANT CUTS IN 2 VIRTUALLY EVERY DEPARTMENT AND AGENCY AND PROGRAM IN STATE GOVERNMENT. AND AS PART OF THAT, WE HAVE TRIED TO BEGIN THE PROCESS OF MAKING GOVERNMENT MORE EFFECTIVE AND EFFICIENT WHEREVER WE CAN. AND FOR EXAMPLE, IN THE DEPARTMENT OF PUBLIC HEALTH, WE REALIZE THEIR ADMINISTRATIVE OVERHEAD WAS CONSIDERABLY HIGHER THAN MOST OTHER AGENCIES AND WE'VE CUT THAT OVERHEAD BY 50%. IN THE DEPARTMENT OF CHILDREN AND FAMILIES, WE LEARNED THAT THERE ARE NUMEROUS LAYERS OF BUREAUCRACY BETWEEN ENTRY LEVEL CASE WORKERS AND THE ULTIMATE SUPERVISOR OF A CASE. WE'RE LOOKING AT CUTTING THAT BUREAUCRACY, THE ENTIRE BUREAUCRACY BY ABOUT 25% AND GETTING RID OF ONE OF THOSE LAYERS OF MIDDLE MANAGERS IN DCF. WE'RE FINDING SIMILAR SAVINGS IN THE DEPARTMENT OF TRANSPORTATION AND OTHER AGENCIES. SO WE ARE TURNING OVER ALL OF THE ROCKS TO FIND AS MUCH SAVINGS AS POSSIBLE AND AT THE SAME TIME, PRESERVING SOME OF THE CORE CRITICAL SERVICES, WE KNOW THAT OUR EDUCATION DOLLARS, THE TOWNS, IS VERY IMPORTANT. WE HAVE NOT CUT ECS. WE KNOW THAT EDUCATION INFRASTRUCTURE, HEALTHCARE INFRASTRUCTURE, TRANSPORTATION AND ENERGY INFRASTRUCTURE ARE VERY IMPORTANT. SO WE'RE CONTINUING TO INVEST IN THOSE AREAS. WE'RE GOING TO NEED THOSE AREAS FOR CONNECTICUT'S FUTURE. >> BUT UNLIKE GOVERNOR RELL'S BUDGET, YOUR BUDGET RAISES TAXES BY SOME $3 BILLION OVER TWO YEARS. IS THAT THE WAY TO GO IN THIS COUNTRY? >> AT THE SAME TIME THAT WE'RE CUTTING SPENDING BY ABOUT TWO BILLION DOLLARS OVER THE NEXT TWO YEARS, IT IS THE WAY THAT WE GO, USING REAL DEFICIT NUMBERS. IF WE USED GOVERNOR RELL'S NUMBERS, WE WOULDN'T HAVE TO RAISE TAXES EITHER. NOT AT ALL. BECAUSE WE HAVE CUT MORE THAN GOVERNOR RELL HAS CUT. BUT THE SAD FACT IS, GOVERNOR RELL'S BUDGET DID NOT TELL THE TRUTH TO THE FOLKS IN CONNECTICUT IN TERMS OF THE DEPTH OF OUR DEFICIT. WE HAVE TO FACE UP TO THE $8.7 BILLION DEFICIT, NOT THE $6 BILLION DEFICIT THAT THE GOVERNOR WAS CLAIMING THAT WE HAD IN FEBRUARY RELYING ON NUMBERS FROM LAST NOVEMBER. I MEAN, THIS IS AN AREA ACTUALLY WHERE REPUBLICANS AND DEMOCRATS IN THE LEGISLATURE DON'T HAVE MUCH OF AN AGREEMENT. I MEAN, FOLKS ON BOTH SIDES OF THE AISLE HAVE BEEN 3 SAYING IT IS $8 BILLION OR MORE. MY FRIEND IN THE SENATE SENATOR MCKINNEY HAS BEEN SAYING FOR A WHILE HE THINKS IT IS CLOSER TO $10 BILLION IN TERMS OF THE DEFICIT. WE KNOW IT IS SERIOUS AND THAT'S WHY ON BOTH SIDES OF THE AISLE, WE HAVE TO ROLL UP OUR SLEEVES AND BE HONEST WITH THE PEOPLE. >> WELL, LET'S HEAR FROM A REPUBLICAN BECAUSE I KNOW YOU HAD A PRESS CONFERENCE. DUE LIKE IT WHY. >> DISAPPOINTMENT AND FRUSTRATION ARE THE TWO WORDS TO THAT JUMP OUT. THE PEOPLE OF CONNECTICUT EXPECTED MORE OF US. EVERYBODY KNOWS THAT WE'RE IN TOUGH SHAPE. WE'VE HEARD IT FROM BOTH OF US, BOTH SIDES OF THE AISLE, FROM EVERY BRANCH OF GOVERNMENT, ET CETERA AND THEY ARE HURTING AND THEY SAID, GIVE US YOUR BEST WORK. FIRST THING THEY EXPECTED IS THAT WE WOULD WORK TOGETHER, NOT SEPARATELY LIKE BUSINESS AS USUAL. THAT HAS NOT HAPPENED. THE DEMOCRATS PUT TOGETHER THIS BUDGET BEHIND CLOSED DOORS, AMONGST THEMSELVES, THEY DID NOT LET REPUBLICANS IN THE ROOM FOR THE FINAL PRODUCT. SO THAT IS NUMBER ONE DISAPPOINTMENT. THE SECOND THING IS, THE PUBLIC EXPECT BEFORE YOU DARE RAISE TAXES ON US IN THESE TOUGH TIMES, YOU HAVE TO DO EVERYTHING THAT YOU CAN TO MAKE EFFICIENCIES TO DO CONSOLIDATIONS, TO FIND EVERY BIT OF SAVINGS THAT YOU CAN AND THEN YOU RAISE TAXES. AND YESTERDAY, THERE WAS ALMOST THE SYMBOLISM, STEVE, IN THE WAY THE DEMOCRATS PUT THEIR BUDGET. THEY FIRST HAD THEIR TAX COMMITTEE RAISE THE TAXES. AND THEN THEY DID THE CUTS. THE FINANCE REVENUE BONDING COMMITTEE MET AT 12 AND THE APPROPRIATIONS COMMITTEE MET AT 2:00. AND THAT -- >> ARE YOU SUGGESTING THAT'S THE WAY IT WAS DURING THE ENTIRE PROCESS THAT THEY WANTED TO RAISE TAXES? >> TAXES FIRST, CUTTING SECOND. AND THE PUBLIC DOESN'T EXPECT THAT. THE PUBLIC EXPECTS BETTER OF US AND WE DIDN'T DELIVER THAT. WHEN THEY LOOK AT THE TOUGH TIMES THEY ARE IN AND THEY ARE SAYING WAIT A MINUTE, LET ME UNDERSTAND THIS, YOU'RE TAKING AWAY AN AND INCREASING MY PROPERTY TAX BY $500, IF I MAKE A JOINT INCOME OF $46,000 A YEAR. YOU'RE TAXING ADULT DIAPERS, YOU'RE TAXING BUSINESSES. YOU'RE TAXING MACHINERY AND EQUIPMENT ON THE VERY INDUSTRIES THAT WE HOPE TO GROW, BIOTECH AND FUEL CELL THAT DOESN'T MAKE SENSE TO PEOPLE. 4 THEY ARE GOING TO ASK USING HOW MANY PEOPLE DID YOU LAYOFF, DID YOU DOWNSIZE YOUR PERSONNEL. THE ANSWER WILL BE NO. THEY'LL SAY HOW MANY AGENCIES DID YOU COMBINE? HOW MANY EFFICIENCIES DID YOU MAKE. DID YOU COMBINE, FOR INSTANCE, THE DEPARTMENT OF AIG WITH THE DEPARTMENT OF ENVIRONMENTAL PROTECTION. THE ANSWER TO THAT IS NO. WHAT STRUCTURAL CHANGES DID YOU MAKE BEFORE YOU DARE RAISE THOSE TAXES. >> WHAT ABOUT THAT LAST POINT FIRST. THE GOVERNOR MADE THIS CRITICISM TOO. SO YOU REALLY DIDN'T CUT MUCH STATE SPENDING, YOU REALLY DIDN'T MERGE ANY AGENCIES. THE IMPRESSION IS LEFT, I THINK, THE THAT MAYBE DEMOCRATS ARE PROTECTING STATE EMPLOYEES WHO ARE UNION SIZED STATE EMPLOYEE, BASICALLY YOUR ALLIES ON A LOT OF ISSUES. ISN'T THERE ROOM IN OTHER COMPANIES AND OTHER ENTITIES IN THE WORLD RIGHT NOW, ARE CUTTING BACK, LAYING OFF PEOPLE, SHOULDN'T THE STATE GOVERNMENT BE DOING THAT TOO OR NOT? >> THAT'S RIGHT. THEY SHOULD BE. AND WHEN THE GOVERNOR SAYS WE'RE NOT, SHE'S NOT TELLING THE TRUTH. >> WELL, HOW MANY LAYOFFS ARE THERE IN YOUR BUDGET? HOW MANY AGENCY MERGERS OR LAYOFFS ARE THERE IN THIS BUDGET. >> WE'VE ELIMINATED EVERY SINGLE VACANT POSITION IN STATE GOVERNMENT INCLUDING THOSE THAT WERE INTENDED TO BE REFILLED. WE HAVE AS MUCH LABOR CONCESSION AS THE GOVERNOR HAS ACTUALLY ABOUT 30 MILLION MORE AND WE BELIEVE THAT THE GOVERNOR HAS DISADVANTAGED THE STATE, BY NEGOTIATING FOR LABOR CONCESSIONS BASED ON A $6 BILLION DEFICIT THAT SHE KNEW WAS ALMOST $3 BILLION SHORT AS OPPOSED TO WHAT THE TRUE DEFICIT IS OF $8.7 BILLION. WE'RE EXPECTING MORE IN LABOR CONCESSIONS THAN WE ARE FROM BUSINESS IN THE FORM OF ANY NEW BUSINESS TAXES. SO, THIS IS A VERY REALISTIC BUDGET. WE TRIED TO HAVE EVERYBODY AT THE TABLE. WE KNOW THAT EVERYBODY HAS TO PROVIDE SOME HELP, THERE NEEDS BE RESPONSIBILITY FOR ALL QUARTERS. WHAT'S WE'VE TRIED TO DO. THE GOVERNOR UNFORTUNATELY TRIED TO SELL THE STATE A BILL OF GOODS THAT WAS SIMPLY NOT TRUE OR ACCURATE. SHE DELIBERATELY IGNORED THE FACT THAT WE HAD A MUCH LARGER DEFICIT THAN WE DO. AND AS I SAID BEFORE, STEVE, IF WE USED THE GOVERNOR'S 5 NUMBERS, WE WOULDN'T HAVE TO RAISE TAXES EITHER. >> WE'RE ACTUALLY CUTTING MORE IN STATE SPENDING THAN THE GOVERNOR DID. WHEN SHE SAYS WE'RE NOT CUTTING, SHE'S NOT READING OUR BUDGET AND SHE'S NOT BEING HONEST ABOUT THAT. >> WHAT ABOUT THAT YOU'RE SHAKING YOUR HEAD ABOUT THAT. >> THAT IS A POINT MADE SINCE THE BUDGET CAME OUT AND EVEN IN RECENT NEWS RELEASES THE GOVERNOR HAS SAID, THE DEFICIT IS INCREASING. >> THERE IS NO QUESTION ABOUT IT, STEVE. WHAT ARE WE TALKING ABOUT IT FOR? THE GOVERNOR CAME BACK WITH HER BUDGET ON JANUARY 7, BASED AS SHE SAID ON NOVEMBER NUMBERS. THAT'S WHEN SHE HAD TO PRESENT OUR BUDGET. GUESS WHAT. IT'S THREE MONTHS LATER. >> THAT HAD TO DO WITH PRINTING SCHEDULE FOR THE BUDGET. >> WE ARE THE LEGISLATIVE BRANCH. IT IS OUR JOB TO -- >> THE GOVERNOR'S BUDGET DOESN'T MATTER ANYMORE, IS THAT WHAT YOU'RE SAYING. >> WHAT I'M SAYING IS WE'RE TALKING ABOUT THE BUDGET THAT THE LEGISLATURE PUT OUT THROUGH ITS APPROPRIATIONS OF FINANCE COMMITTEE. THAT'S OUR JOB. LET'S STOP PASSING THE BUCK. I'D SAY TO DON, DON, ARE YOU READY TO VOTE THIS BUDGET AND MAKE IT THE LAW OF THE STATE OF CONNECTICUT TOMORROW TO INCREASE TAXES 3.3 BILLION? ARE YOU COMFORTABLE WITH THAT? >> YOU KNOW -- >> I'M NOT, HAD -- >> NO ONE IS GOING TO BE COMFORTABLE 100%. >> WHATEVER BUDGET WE FINALLY WIND UP AGREEING ON. AND I'M LOOKING BACK AT HISTORY AT THE TWO TIMES WE FACED ANYTHING LIKE THIS IN 2002, AND IN 1991, SIGNIFICANT ECONOMIC DOWNTURNS. THIS IS A MUCH MORE SIGNIFICANT DOWNTURN. BUT, YOU KNOW, LARRY HAS TO HIS CREDIT TALKED ABOUT WANTING TO BE PART OF THE PROCESS AND SOLUTION BECAUSE I THINK WE SHOULD BE TALKING ABOUT SOLUTIONS, AND YOU MIGHT DISAGREE WITH SOME OF THE DETAILS OF OUR BUDGET, YESTERDAY, THAT CAME OUT. BUT IT IS BALANCED AND IT IS GOING TO LOOK MUCH CLOSER TO WHATEVER THE FINAL PRODUCT IS THAN THE GOVERNOR'S BUDGET EVER DID. BUT LARRY WAS PART OF THAT PROCESS IN 2002. I BELIEVE HE VOTED FOR THE BUDGET THAT GOVERNOR ROWLAND AND DEMOCRATS AND REPUBLICANS PUT TOGETHER AND IN THAT BUDGET, THEY ACTUALLY RAISED TWICE AS MUCH IN TAXES THAN 6 THEY DID IN CUTTING SPENDING. BUT FOLKS DID COME TOGETHER, AND SUPPORT THAT. THIS YEAR WE'RE NOT GOING TO DO TWICE AS MUCH IN TAX INCREASES AS WE WILL IN SPENDING CUTS. AND THE BUDGET THAT CAME OUT, YESTERDAY, IS MUCH CLOSER BETWEEN THE TWO. >> LET ME FOLLOW UP ON SOMETHING REPRESENTATIVE ASKED YOU ABOUT WHAT HAPPENS NEXT WITH THIS BUDGET. TECHNICALLY, AT LEAST ON PAPER, DEMOCRATS HAVE A VETO-PROOF MAJORITY IN BOTH THE HOUSE AND THE SENATE. SO THIS IS YOUR BUDGET PLAN. IF YOU'RE IN FAVOR OF IT COULD YOU ROLL IT OUT NEXT WEEK OR THE WEEK AFTER THAT, AND SAY TO GOVERNOR RELL THIS IS OUR ANSWER, AND IF YOU WANT TO VETO IT, GO RIGHT AHEAD. WE HAVE A VETO-PROOF MAJORITY, THIS IS GOING BE WHAT HAPPENS. IS THAT WHAT YOU'RE GOING TO DO OR ARE YOU GOING TO NOW OFFER TO GET INTO NEGOTIATIONS WITH GOVERNOR RELL AND THE REPUBLICANS? >> WELL, STEVE, WE PUT OUT A LETTER RIGHT AFTER THE BUDGET PASSED ASKING THE GOVERNOR TO JOIN US WITH LARRY AND SENATOR MCKINNEY TO BEGIN IMMEDIATE BUDGET NEGOTIATIONS. THERE IS NO WAY IN THE YEAR LIKE THIS THAT YOU SAY, IT IS MY WAY OR THE HIGHWAY. I MEAN, THIS IS THE TOUGHEST CHALLENGE WE HAVE EVER FACED. SO WE WANT THE GOVERNOR TO BE PART OF THE PROCESS. REJOIN US, COME TO THE TABLE. WE HAVE PUT OUR SOLUTION ON THE TABLE. YOU KNOW, LARRY HAS SOME IDEAS. HE CAN PUT A SOLUTION FROM HIS POINT OF VIEW ON THE TABLE. THE GOVERNOR CAN PUT SOME IDEAS FOR SOLUTIONS ON THE TABLE. LET'S GET BUSY NOW. I MEAN, NOW THERE IS A BALANCED BUDGET ON THE TABLE. LARRY MIGHT NOT AGREE WITH ALL OF IT. I MIGHT NOT AGREE OR THINK EVERY DETAIL IS GREAT. BUT DO YOU KNOW WHAT? IT IS A SOLID STARTING POINT SO I WANT TO ROLL UP OUR SLEEVES AND GET TO WORK WITH THE GOVERNOR. >> LARRY, THE GOVERNOR SAID YESTERDAY THAT SHE THINKS THE DEMOCRATS HAD TO GET THIS BUDGET OUT OF THEIR SYSTEM, TO PUT SOMETHING LIKE THIS ON THE TABLE WHEN THEY DON'T REALLY HAVE ANY INTENTION OF PASSING IT. YOU ASKED A QUESTION ABOUT WHEN THEY ARE GOING TO DO IT. DO YOU BELIEVE THAT'S THE CASE ALSO THAT THIS IS A SHOW BUDGET, RATHER THAN A FINAL PRODUCT OR ANYTHING? >> I DON'T KNOW WHAT IT IS BUT I'LL TELL YOU SOMETHING. 7 YOU WONDER. PEOPLE IN PUBLIC SERVICE, ELECTED OFFICIALS LIKE DON AND I WONDER WHY PEOPLE DISLIKE US. HERE WE ARE IN A CRISIS. NO LESS OF A CRISIS THAN THE COLLAPSE OF THE HYANNIS RIVER BRIDGE. PEOPLE THINK, ENOUGH OF THE BS AND THE PARTISANSHIP, YOU GUYS ARE GOING TO WORK FOR US, RIGHT? YOU'RE GOING TO ROLL UP YOUR SLEEVES AND WORK TOGETHER TO TABLE TO SOLVE THIS. I HAVE BEGGED PRIVATELY, PUBLICLY, THROUGH LETTERS, MY COLLEAGUES ON THE OTHER SIDE OF THE AISLE, LET'S -- I SAID, I'LL GIVE YOU COVER IF YOU WANT. LET'S SIT DOWN TOGETHER, AND WORK OUT THIS PROBLEM. I WASN'T ALLOWED IN THAT ROOM. I HAD NO IDEA WHAT THEY WERE PUTTING TOGETHER. I BEGGED FOR IT AND PEOPLE OUT THERE WHO SAY YOU HAVE TO BE KIDDING ME. WITH ALL DUE RESPECT, DON, ON APRIL 3 WHEN WE WENT INTO SESSION ON JANUARY 7, HOW COULD WE SAY TO THE PUBLIC, NOW WE'RE GOING TO GET SERIOUS. NOW WE'RE GOING TO DO IT. >> WHAT ABOUT THAT. DO YOU CARE ABOUT WHAT THEY THINK OR NOT? >> SURE WE DO. AND ACTUALLY, THE WHOLE APPROPRIATIONS PROCESS IS TRANSPARENT. I MEAN, LARRY IS RIGHT. AT THE VERY END THE CHAIRS OF THE COMMITTEE MAKE SOME CHANGES BEFORE THEY RELEASE THE FINAL BUDGET. BUT ALL OF THE PUBLIC HEARINGS WERE OPEN TO THE PUBLIC. EVEN THE SUBCOMMITTEE MEETINGS WERE ON TELEVISION. SO THIS IS AN OPEN TRANSPARENT PROCESS WITH BOTH REPUBLICANS AND DEMOCRATS. BUT YOU WANT TO BACK UP, I OFFERED TO THE GOVERNOR LAST DECEMBER TO HAVE THE LEADERS, DEMOCRATS AND REPUBLICANS, COME IN AND ASSIST HER IN THE PREPARATION OF HER BUDGET THAT SHE DELIVERS IN FEBRUARY. BECAUSE I SAID, YOU KNOW, WE CAN'T AFFORD TO HAVE THIS BE A YEAR WHERE YOU COME OUT WITH YOUR BUDGET, AND WE SAY WE DON'T LIKE IT. WE COME OUT WITH OUR BUDGET. YOU SAY YOU DON'T LIKE IT, AND THEN WE HAVE A HANDFUL OF PEOPLE IN THE ROOM IN MAY OR JUNE TRYING TO FIGURE OUT A TWO OR A THREE OR A $4 BILLION PROBLEM FOR NEXT YEAR. THAT'S NOT GOING TO WORK. LET'S FLIP IT OVER AND LET'S ALL COME TOGETHER EARLY AND SHE DIDN'T ACCEPT THAT OFFER. AND I THINK WE ARE BEHIND THE 8-BALL. WE HAVE LOST TIME IN THAT SENSE BUT OUR LEGISLATIVE 8 BUDGET IS AHEAD OF SCHEDULE. WE BROUGHT IT IN THREE WEEKS EARLY, BECAUSE WE KNOW WE NEED EVERY HOUR, NOW GOING FORWARD, TO WORK WITH THE GOVERNOR IF SHE'S WILLING TO COME TO THE TABLE, AND WORK WITH US TOWARD A SOLUTION. >> WHEN DO YOU THINK THAT THEY ARE REALLY GOING TO BRING A BUDGET OUT OF THE FLOOR. DO YOU THINK THEY ARE GOING TO WAIT UNTIL AFTER THE TAX RECEIPTS ARE IN MID-APRIL? >> I HAVE NO IDEA, STEVE. >> BEST GUESS. >> I HEARD RUMORS THAT THEY MIGHT DO IT AS EARLY AS APRIL 7. >> APPARENTLY THAT'S NOT GOING TO HAPPEN. >> THAT'S NOT GOING TO HAPPEN. [ LAUGHTER ] >> IT IS NO NOT GOING TO. HAS LARRY, I WOULD LOVE TO BE ABLE TO TELL YOU THAT WE'LL HAVE ALL OF THOSE PROBLEMS SOLVED BUT WHAT -- YOU SAID YOU HAD BALANCED BUDGET. ARE WE GOING TO VOTE ON IT APRIL 7. >> WE HAVE A BALANCED BUDGET. WE WANT A BUDGET THE GOVERNOR WILL SIGN. THAT'S WHAT WE NEED. >> YOU DON'T WANT TO -- >> WE NEED FOR THIS TO BE A PROCESS WHERE WE HAVE THE LEGISLATURE WORKING WITH THE GOVERNOR. LAST WE'RE THE GOVERNOR CAME BACK AND FINALLY SAID YES, MY BUDGET IS OUT OF BALANCE. I THINK I NEED TO FIX IT FOR AT LEAST A BILLION DOLLARS. WITH KNOW IT IS MORE LIKE TWO TO THREE BILLION. SO, SHE'S MOVING IN THE RIGHT DIRECTION. >> IS EVERYTHING NEGOTIATABLE? YOU HAVE TAXES IN THAT BUDGET, YOU HAVE CERTAIN CHANGES IN THAT BUDGET. IS EVERYTHING NEGOTIATABLE IN YOUR MIND WITH THE GOVERNOR? >> WELL, WE HAVE PUT TOGETHER A VERY RESPONSIBLE FRAMEWORK, AND ACTUALLY ONE THAT LOOKS BETTER THAN THE WAY THE STATE SOLVED THE BUDGET PROBLEMS IN 2002, IN 1991, IF YOU COMPARE IT TO THOSE YEARS. BUT OF COURSE, AS IN EVERY BUDGET PROCESS, WE NEGOTIATE, WE GO BACK AND FORTH WITH THE GOVERNOR. THAT'S TO BE EXPECTED. WHAT WE NEED ARE SOLUTIONS THOUGH. YOU KNOW, ASIDE FROM THE PARTISAN BACK AND FORTH, WE NEED TO ROLL UP OUR SLEEVES, COME TOGETHER IN A ROOM WITH LARRY AND SENATOR MCKINNEY AND THE GOVERNOR AND THE DEMOCRATIC LEADERSHIP AND SAY, OKAY, LET'S GET THIS DONE. 9 >> WHAT ABOUT THE REPUBLICAN SIDE. ARE YOU WILLING TO SAY THAT YOU CAN'T SOLVE THIS PROBLEM ONLY WITH SPENDING CUTS, THAT THERE MIGHT HAVE TO BE TAX INCREASES? >> WE'VE SAID FROM THE VERY BEGINNING EVERYTHING IS ON THE TABLE. BUT WE ALSO SAID, BEFORE WE DARE GO DOWN THAT TAX ROAD, LET'S DO EVERYTHING IN OUR POWER TO MAKE SURE THAT WE HAVE EVERY EFFICIENCY. I'LL GIVE YOU AN EXAMPLE. FIRST OF ALL WITH ALL DUE RESPECT TO DON, IT IS NOT BALANCED BUDGET. IT IS NOT AN HONEST BUDGET. THERE IS OVER $500 MILLION WORTH OF THESE CUTS THAT ARE MADE BY PAYING A BILL A DAY LATER. OR WE'LL FIND IT SOMEWHERE DOWN THE ROAD. THAT'S NOT AN HONEST BUDGET. YOU KNOW, WE HAD -- SENATOR WILLIAMS CALLED FOR THE AUDIT OF THE DEPARTMENT OF SOCIAL SERVICES, ONE OF OUR BIGGEST LINE ITEMS IN OUR BUDGET. >> ABOUT 30 SECONDS. >> WELL, WE HAVE FOUND THAT WE'RE PAYING DEAD PEOPLE BENEFITS AND OVERPAYING. THIS BUDGET DOESN'T INTEREST THOSE KINDS OF SYSTEMATIC CHANGES. THAT'S WHAT THE PUBLIC WANTS. >> LET ME ASK YOU A VERY QUICK QUESTION. DO YOU THINK, AND YOU HAVE SAID BEFORE YOU WOULD LIKE TO SEE THIS JOB DONE BY JUNE 3, RATHER THAN LET IT DRAG THROUGH THE SUMMER. WHAT ARE THE CHANCES OF THAT HAPPENING. >> I THINK THAT THEY ARE GOOD IF THE GOVERNOR COMES TO THE TABLE AND IF WE ALL ROLL UP OUR SLEEVES, AND WE TAKE A LOOK AT THE BUDGET PUT OUT THERE AS AN HONEST DOCUMENT, AS A BALANCED BUDGET TO PROVIDE A MODEL FOR THE FINAL -- >> YOU HOPE IT TURNS OUT THIS WAY. >> -- MEETING OF THIS CHALLENGE. >> OKAY, FOLKS. HANG ON. WE'LL BE BACK WITH THE REPORTERS ROUNDTABLE. >> JOINING ME THIS WEEK IN OUR REPORTERS ROUNDTABLE IS KEITH PHANEUF OF THE JOURNAL INQUIRER, THE BUDGET EXPERT OF THE STATE CAPITAL PRESS CORPS, THE BUDGET GURU, THE BUDGET MAVEN, OR MAYBE THE BUDGET OBSESSIVE COMPULSIVE DISORDER VICTIM. I'M NOT SURE WHICH, KEITH. BUT I THINK YOU KNOW MORE ABOUT THE BUDGET THAN MOST PEOPLE DO. >> NOT SURE ANYMORE THAT I WANT TO BUT -- [ LAUGHTER ] 10 >> THAT'S TRUE. LET ME ASK YOU THIS QUESTION FIRST ABOUT THE DEMOCRAT'S BUDGET PUT OUT. YOU HEARD THE TWO LEADERS IN OUR NEWS MAKER SEGMENT TALKING ABOUT IT. DO YOU THINK THAT THIS IS A REAL ALTERNATIVE BUDGET TO THE GOVERNOR'S PLAN, OR DO YOU THINK THAT THIS IS AN EXERCISE, SOMETHING PUT OUT THERE BY THE DEMOCRATS, BASICALLY TO PRIME THE NEGOTIATIONS. >> PROBABLY 60% OF THE LATTER, 40% THE FORMER. I DO THINK THE DEMOCRATS MADE A POINT OF TRYING TO FUND WHAT THEY BELIEVE IS THE TRUE DEFICIT BECAUSE I DO THINK THE DEMOCRATS FEEL THE GOVERNOR TOOK A PASS ON SOLVING THE BULK OF THE PROBLEMS AND SHE CONTINUES TO GO AROUND THE STATE AND PROMOTE THE FACT THE SHE HAS A BUDGET WITHOUT TAX HIKES. AND SO THERE WAS SOME LEGITIMATE FRUSTRATION THERE. THAT BEING SAID, I THINK THE DEMOCRATIC LEADERS KNOW THAT THE LEVEL OF TAX HIKES THEY PROPOSED IS NOT GOING TO FLY WITH THEIR OWN CAUCUS. COULD THEY MAYBE PASS WITH IT A BARE MAJORITY OR SMALL MAJORITY BUT NOTHING THAT COULD SURVIVE A VETO. SO THEY KNOW IT IS AN OPENING SALVO. >> WHICH IS WHY WHEN I WAS ASKING THOSE QUESTIONS DURING THE NEWS MAKER SEGMENT WHY DON'T THEY ROLL IT OUT, NEXT WEEK, PASS AND IF THE GOVERNOR VETOES IT, SO WHAT, YOU HAVE A VETO PROOF MAJORITY BUT YOU'RE SAYING THERE ARE A LOT OF DEMOCRATS WHO PROBABLY COULDN'T SIGN ON TO THIS. >> I THINK THEY WOULDN'T WANT TO TRY TO PASS IT NEXT WEEK BECAUSE IT WOULD BE TO PASS SOMETHING BY A FEW VOTES WHEN YOU POINT OUT CONTROL TWO-THIRDS OF THE CHAMBER WOULD BE ACTUALLY SEEN AS A FAILURE EVEN THOUGH TECHNICALLY THE BILL PASSED. I THINK THAT DEMOCRATS NOT JUST THOSE IN FAIRFIELD COUNTY WHO OBJECT TO THE UPPER CLASS INCOME TAX HIKES, DEMOCRATS IN A LOT OF THE BLUE COLLAR COMMUNITIES WILL LOOK AT THE CHANGES IN THE INCOME TAX AND THE PROPERTY TAX CREDIT, WHERE IN A COUPLE OF YEARS FAMILIES COULD BE OUT $500 A YEAR. THEY'LL START LOOKING THAT AND AS THE PUBLIC STARTS TO UNDERSTAND, ANYBODY'S TARGETED IN THIS. THEY'LL HAVE A PROBLEM. >> SO THIS IS NOT JUST THE TAX INCREASE ON THE AFFLUENT. SOME OF THESE THINGS ARE GOING TO AFFECT MIDDLE INCOME. >> A LOT OF DEMOCRATS ARE SAYING PRIVATELY, YESTERDAY, THEY WERE SURPRISED AT HOW HEAVILY THE MIDDLE CLASS WAS INCLUDED. YES, WE'RE LOOKING AT A RECORD SETTING DEFICIT BUT THE FACT OF THE MATTER IS DEMOCRATS HAVEN'T REALLY TALKED ABOUT, IN ALL SERIOUSNESS ABOUT A MIDDLE CLASS TAX HIKE 11 IN MORE THAN A DECADE. AGAIN, WE'RE TALKING ABOUT ASKING NOT IN THE PAYCHECKS BUT IN THEIR INCOME TAX RETURNS, WE'RE ASKING ABOUT FAMILIES PAYING ABOUT ANOTHER $500, SINGLE PEOPLE PROBABLY ABOUT 200 OR 250 BECAUSE THEY COULDN'T CLAIM THE PROPERTY TAXES AS A CREDIT. TALK ABOUT INCREASING, WELL, REMOVING EXEMPTION FROM THE SALES TAX FOR A LOT OF COMMON ITEMS. THE CIGARETTE TAX EVEN INCREASE OF 50 CENTS. A LOT OF THESE THINGS WILL HIT FAMILIES AND I THINK THE BLOW BACK IN URBAN AREAS AND SUBURBAN AREAS IS GOING TO BE SIGNIFICANT. >> WHAT ABOUT THE DEMOCRAT'S ATTEMPT TO CUT SPENDING. THEY SAY THEY HAVE DONE YOMAN'S WORK IN THIS AREA. THEY SAID THEY HAVE DONE NOTHING AT ALL, TO STREAMLINE STATE GOVERNMENT, THERE ARE NO MERGERS, NO AGENCIES BOARDS OR COMMISSIONS THAT HAVE BEEN TAKEN AWAY. SO, HOW WOULD YOU RATE THEIR EFFORT ON BUDGET CUTTING? >> I WOULD GIVE IT ABOUT A C. I THINK THAT GOVERNOR RELL IS CORRECT THAT THERE ARE SOME PHANTOM SAVINGS IN THIS BUDGET. THERE ARE SOME DANGEROUS ASSUMPTIONS. THIS IS I THINK GOVERNOR RELL, HAD SHE TACKLED THE LARGER DEFICIT AND PUT MORE SPENDING CUTS ON THE TABLE, SHE WOULD HAVE COST HERSELF SOME POLITICAL CAPITAL. PEOPLE WOULD HAVE BEEN MORE UPSET BUT SHE COULD HOLD THE DEMOCRATS' FEET TO THE FIRE BECAUSE THE DEMOCRATS ARE CORRECT THAT RIGHT NOW, GOVERNOR RELL HAS NOT PROPOSED EVEN HALF OF THE CUTS NECESSARY TO BALANCE THE DEFICIT IN THE WORST CASE SCENARIO WITHOUT TAXES. >> AND AS YOU SAID IN THE OPENING THE DEMOCRATS SINCE DAY ONE WHEN THE GOVERNOR DELIVERED HER BUDGET HAD BEEN BASHING HER ON THE FACT THAT THEY THINK THAT SHE ESSENTIALLY LIED ABOUT THE SIZE OF THE DEFICIT. SHE CLAIMED IT WAS AROUND $6 BILLION. THEY SAID IT WAS MORE LIKE $8 BILLION AND THAT HE HAD KNEW AND IT THE ONLY REASON SHE DID IT IS BECAUSE SHE WANTED A BUDGET WITH NO TAX INCREASES. OKAY, THE GOVERNOR CAME BACK PRETTY HARD THIS WEEK ON THE DEMOCRATS' BUDGET. IS THAT PAY BACK TIME IN YOUR VIEW? DO YOU THINK SHE'S TRYING TO TURN THE TABLES ON THEM BY BASHING THEIR BUDGETS SO MUCH? >> IT IS ALMOST A CHICKEN AND EGG THING. I'M NOT SURE WHO IT BEGAN WITH. I THINK AT THIS POINT BOTH SIDES ARE PAYING EACH OTHER BACK FOR THINGS THAT HAVE OFFENDED THEM OVER THE LAST COUPLE OF MONTHS. AND I DO THINK THAT'S ANOTHER REASON WHY YOU WON'T SEE AN IMMEDIATE VOTE. 12 I THINK THE GOVERNOR IS FRUSTRATED BUT SHE KNOWS RIGHT NOW THAT THE DEMOCRATS ARE UNLIKELY TO WANT TO EMBRACE MANY MORE SPENDING CUTS. IT IS GOING TO BE A LONG, LONG FIGHT. I THINK THE WAY SHE PUTS THE PRESSURE ON THEM IS SHE'S GOT TO ROLL OUT MORE CUTS, LET THE PUBLIC SEE THEM, AND SEE IF THE PUBLIC WILL GET BEHIND THOSE CUTS IN LIEU OF TAX HIKES. IF THEY'LL DO THAT, THEN I THINK -- >> WHICH HAS BEEN THE CASE IN THE POLLS UP UNTIL NOW THEM HAVE SAID DON'T RAISE OUR TAXES. >> CORRECT. >> LET ME ASK YOU THIS. DEMOCRATS, REPUBLICANS HAVE ALL BEEN SAYING WE SHOULD GET GOING ON THIS, WE SHOULD NEGOTIATE IMMEDIATELY, WHY AREN'T WE TALKING, BOTH SIDES HAVE SAID THAT. AND AREN'T THEY ALL WAITING TO SEE WHAT HAPPENS WITH THIS YEAR'S TAX RETURNS? AREN'T THEY ALL GOING TO WANT TO WAIT UNTIL THE SECOND OR THIRD OR FOURTH WEEK IN APRIL TO FIGURE OUT WHAT TAXPAYERS, WHAT ACTUALLY CAME IN REVENUES THIS YEAR SO THEY HAVE, THE TRUEST LATEST MOST ACCURATE PICTURE OF WHERE THINGS STAND. >> NOT ONLY THAT, I'LL MAKE IT ONE STEP WORSE. THE GOVERNOR'S OFFICE IS NOT ONLY GOING TO WAIT WANT TO WAIT UNTIL APRIL 15, THEY'LL WANT TO WAIT BECAUSE THEY DON'T WANT TO GET NEW YORKED AGAIN UNTIL THE LE LEGISLATURE FISCAL OFFICE GIVEN THE FORECAST. WHEN THEY SEE WHAT THEY TURNED IN, WHAT ANSWER THESE GAVE ON THEIR TESTS. >> WHEN IS THAT. >> PROBABLY AROUND APRIL 20, BUT THEN, IT WILL TAKE A LITTLE BIT OF WHILE FOR THEM TO PUT TOGETHER A NUMBER. PROBABLY MORE POTENTIAL WRENCHES IN THE WORKS. IF THERE ARE NEGOTIATIONS DON'T COME TOGETHER, IT IS THE NOT THAT MUCH LONGER BEFORE THE GOVERNOR HAS TO START SENDING OUT PINK SLIPS. IF YOU WANT SAVE FROM LAYOFFS. I'M NOT SAYING THEY ARE COMING OUT IMMEDIATELY. BUT YOU CAN'T GET TOO FAR INTO THE SUMMER WITHOUT LOOKING AT THAT. THAT COULD THROW THINGS OFF. >> AND YOU HAVE HEARD ANYTHING ABOUT THE TALKS ON LABOR CONCESSIONS. BECAUSE THEY KEEP SAYING THEY ARE WILLING TO MAKE THEM BUT I HAVE NOT HEARD A LOT ABOUT IT THE PROBLEM IS RIGHT NOW A NO LAYOFF PLEDGE. THE ASSUMPTION THAT WAS MADE AND THIS IS GOING BACK TO THE GOVERNOR'S BUDGET, THE GOVERNOR ASKED FOR ABOUT 300 MILLION A YEAR IN CONCESSIONS FROM WAGE OR BENEFITS, IF 13 YOU GIVE THOSE, LABOR SAID OKAY, PROMISE NO LAYOFFS. WE DON'T HAVE TO GIVE YOU ANYTHING AND WE ALREADY HAVE THE THREAT OF LAYOFFS. THE PROBLEM IS LABOR IS NOT BEING PROMISED THAT BECAUSE IN PART THE GOVERNOR KNOWS THE DEFICIT IS BIGGER AND ALSO BECAUSE SHE'S NOT SURE WHERE THE BOTTOM IS, THE FALLOUT ON THE ECONOMY. WITHOUT A NO LAYOFF PLEDGE I DON'T THINK THAT LABOR IS GOING TO GIVE MUCH. >> WE GET PAST THE MONTH OF APRIL WAITING FOR TAX RETURNS AND REVENUE, ESTIMATES, ET CETERA, DOES THAT LEAVE THE MONTH OF MAY FOR SOME GOOD HARD OLD FASHIONED NEGOTIATING BETWEEN BOTH SIDES HERE WITH THE LIKELIHOOD, PERHAPS THAT WE COULD GET THIS DONE BY THE END OF THE LEGISLATIVE SESSION? EARLY JUNE AS SENATOR WILLIAMS SAID? >> I THINK YOU'LL SEE GOOD OLD FASHIONED NEGOTIATING. I DON'T THINK THERE IS ANY CHANCE OF GETTING IT DONE BEFORE JUNE 4 YOU DON'T HAVE A PHILOSOPHICAL DIVIDE, A GRAND CANYON ABOUT THE SIZE OF GOVERNMENT. AND I THINK THAT DEMOCRATIC CAUCUSES ARE GOING TO HAVE TO SLOWLY COME TO THE UNDERSTANDING WITHOUT THE TAXES THEY STILL NEED BIG CUTS. >> HOW ABOUT BY JULY 1, THE START OF THE FISCAL YEAR. >> I'M GETTING AGAINST IT OKAY, WE'LL SEE WHAT HAPPENS. KEITH, THANKS FOR BEING WITH US. FOLKS, WE'LL SEE YOU NEXT WEEK "ON THE RECORD."