This is a rush transcript from "Hannity," March 31, 2011. This copy may not be in its final form and may be updated.

SEAN HANNITY, HOST: The great State of Ohio followed in Wisconsin's footsteps last night. Lead by GOP law makers, both houses of the Ohio legislature passed a bill aimed at curbing the state's $8 billion budget deficit.

Now they did so of course amidst major union protests that disrupted there proceedings with chanting and yelling.

Now this bill will bring down costs by eliminating public sector unions, collective bargaining rights over health care, sick time and pensions.

Now, despite the Democrats best efforts, Governor John Kasich signed that bill into law just moments ago. And he joins me now. Governor, welcome back to the program. Good to see you.

GOV. JOHN KASICH, R-OHIO: Always good to be with you Sean.

HANNITY: $8 billion is a lot of money. And so, you stayed true to your word. You didn't back down. You got this thing passed. And you saw a lot of people very unhappy about it.

KASICH: Well, Sean, I mean, first of all, you know, in this bill that I've just signed, we don't cut anybody's salary. We don't take away their pension. And we don't destroy their health care. What we're saying is that government workers ought to be treated a little bit more like private sector workers. Our private sector workers pay 23 percent of their health care costs, and the average city worker here in Ohio pays nine percent. So, it is a matter of balancing.

And the other thing is, we want to give local governments the ability to manage their costs, Sean. We have some of our communities racing towards bankruptcy because they haven't been able to control their costs.

So, as we get to a balanced budget and set Ohio into a situation where we can have growth. You know, Ohio has lost more jobs than every other state in America over the last 10 years, except for California and Michigan.

So, we've got to control our costs, reform our programs, make them more efficient and more effective. And create a growth environment, so people will create jobs here in Ohio that will lift everybody, Sean.

HANNITY: All right. Let's talk about this. Because if you look at the unions and these Democratic groups, they are now pouring a fortune into Wisconsin to recall the Republicans that were being fiscally responsible. In your state of Ohio, this bill that you signed into law will not take effect for 90 days. In the interim, as I understand it, your opponents would nead 231,000 signatures, if they get it, they'd be able to put a rough random on a ballot that would show up in November. What are the odds that is going to happen there?

KASICH: Well, I think there's probably going to be a drive to do that. I mean, one of the things that we do here is that we say to government workers that we want to pay you on the basis of your performance. I mean, it's just exactly the way that they pay you at Fox, that they pay you, you know, down the street at a restaurant or, you know, any kind of store, that's what we are trying to do. When I think as voters understand, you know, that we're trying to balance things out and make sure that our cities don't get bankrupted and they don't drive jobs out, I think people feel pretty good. But you know what Sean, I may have a couple of things that I may want to put on the ballot. You know, that people want to come out and express themselves, so we'll see what happens but --

HANNITY: What would you want on the ballot?

KASICH: You know, this is the first -- well, I don't know yet, Sean, we're thinking about it. I told the reporters gathered that I maybe will put merit pay for reporters on the ballot, we'll see. But Sean --


HANNITY: Just reporters, not anchors.

KASICH: Not for anchors, of course not, Sean, not for anchors.

Here's the thing, this is only the first step in an overall program to eliminate an $8 billion structural deficit. I mean, I come into office, I have the largest deficit in the history of Ohio. But with the reform program, on medicaid, on corrections, if we can in fact give local governments the tools to control their costs, we can maintain our tax cut and continue to lower costs in the state, so we can have more businesses.

Sean, Kennedy was right, John Kennedy was right, a rising tide lifts all boats. In a growth economy, families benefit, the communities benefit, that's what we're striving for.

HANNITY: Let me ask you this, it seems that people like yourself and Marco Rubio and Mike Pence and Michele Bachmann, who was on earlier tonight, and Bob McDonnell and Chris Christie, all the people that stand firm for fiscal responsibility are being rewarded with a lot of support from their constituents. As bad as your $8 billion deficit is, we have a federal $14 trillion deficit in Washington today when John Boehner said that look we only have one half of one-third of the government, we are going to continue to fight for the largest spending cuts that we can to keep the government open and funded through the balance of the fiscal year. A lot of conservatives got concerned over those comments because they are wondering if Republicans might be willing to cave on what is frankly, a fairly miniscule cut of $61 billion.

KASICH: Well, Sean, you know, look, I've got enough issues to deal with in this state. But what I can tell you is, a couple of things. First of all, John Boehner is a real conservative. John Boehner was involved in helping the Republicans to get the majority in 1994. And that led us to a point where we reformed welfare -- and, as you know, Sean, I was the chairman of the budget committee -- we balanced the budget for the first time since man walked on the moon, cut taxes and we had a great growth economy. So, I know there's always consternation in Washington.


KASICH: Bottom line is, control the government spending. Provide incentives for job creation. But they have to deal with this $14 trillion deficit.

HANNITY: I talked to Paul Ryan earlier today, I mean, they are looking at six to seven trillion when he announces his budget either next week or the week after, six to seven trillion. And I got to tell you, I think the American people will be clapping. But I also think, even though they are still dealing with tens of billions for this year, I think it is important in principle, would you agree?

KASICH: Well, it is, Sean. But I have to tell you, that when we bring about change, whether it is in Ohio, New Jersey, Wisconsin or even Washington, you know, change is difficult for people. But what we have to do is to focus on the larger picture, not play politics. Not play politics on the right, not play politics on the left. And we got to keep our shoulder to the wheel.

And look, I mean, if the Republicans are able to get $60 billion worth of spending cuts Sean at a time when last year, they probably got $60 worth of spending cuts -- look, Boehner is doing the best he can. It is good to have the Tea Party pushing him. But the bottom line is, we've got to control this deficit. And you know, entitlements matter as well. We are taking everything on in Ohio because we have to, to save our state. That's the attitude that has to prevail.

HANNITY: Well, I think if the Republicans take on everything in Washington, I think they're going to be rewarded not only when they do the right thing for the country, but I think politically, it will benefit them as well. Governor congratulations.

KASICH: It is all about our kids, Sean. You put the kids first, you put the families first, that's it.

HANNITY: Thanks so much for being with us. Appreciate it.

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