The House and Senate have agreed on a new $8.2 billion budget. A Maricopa County Superior Court judge ruled that Attorney General Terry Goddard was correct in his legal opinion regarding the scope of Prop 200 and the State Senate this week approved the use of school vouchers, but it’s likely Governor Napolitano will veto the proposal.
Michael Grant:
It's Friday, March 18, 2005. In the headlines this week, state lawmakers pulled an all-nighter at the Capitol Thursday. When it was over early this morning, the House and Senate had agreed on a new $8.2 billion budget. A Maricopa County Superior Court judge ruled that Attorney General Terry Goddard was correct in his legal opinion regarding the scope of Prop 200 and the State Senate this week approved the use of school vouchers, but it's likely Governor Napolitano will veto the proposal. That's next on "Horizon".
>> "Horizon" is made possible by the friends of Channel 8, members who provide financial support to this Arizona PBS station. Thank you.
>> Michael Grant:
Good evening, I'm Michael Grant, and this is the Journalists Roundtable. Joining me to talk about these and other stories are Bob Robb of the Arizona republic, Howie Fischer of Capitol Media Services and Chip Scutari of the Arizona Republic. The lights stayed on at the state Capitol overnight as lawmakers debated an $8.2 billion budget plan for the upcoming fiscal year. The Senate signed off the measure just before one this morning while the House gave final approval shortly after 4:00 a.m. Bob, let's talk about some of the key items in the plan. What are some of the key items in the budget?
>> Bob Robb:
Trying to compare apples to apples, it increases state spending by about 8.5% from the previous year. It fully funds student growth, K-12, and also at the university level. It fully funds anticipated enrollment growth in the state's Medicaid program. It includes a substantial tax cut program which, fully implemented, probably totals about 200 to $300 million a year although much is phased in.
>>Michael Grant:
Business.
>> Bob Robb:
Business and individual. There are cuts in the property tax rates and indexing of personal income deductions, as well as an expansion for married couples for certain income tax credits. What is politically most significant about the budget is not what it includes but what it excludes which happens to be most of the governor's priorities in terms of spending.
>> Michael Grant:
Starting with? It ain't got, the second year of the phase-in on all-day K.
>> Bob Robb:
The four major spending initiatives of the governor which aren't funded in this budget are the second year phased in state funding for all-day K. Eliminating the waiting list for the child care subsidy program. Increase in staffing for Child Protective Services, and funding of first year of a proposed downtown medical school.
>> Michael Grant:
Chip, The plan is that while the legislature will work with the governor next week on some individual bills that would maybe fill some of those gaps and maybe not?
>> Chip Scutari:
The plan right now is that the house speaker and Senate president Ken Bennett are going to meet with the governor sometime Monday to try to describe their budget, why it's good for Arizona. They're going to tout a pay raise for teachers, holding state employees harmless from rising health care and retirement costs. They gave additional pay raises to correctional officers and DPS officers. Bob mentioned without those key components it's almost a lock that she's going to veto partial all of it or partial pieces of it. They probably have to start over. I think they're going up to Monday saying, here's what we've got, it's tough dealing with a 90 member body, you have to pretty much negotiate with yourself, Governor.
>> Howard Fischer:
That's a fine line, but they weren't negotiating with 90, they basically told the Democrats get lost. This is a political game. They wanted to put out a Republican budget the last two years particularly Linda Bender and the Senate and a bunch of moderates in the House and forced to compromise, this was a pep rally for the Republicans. It's going to go to the 9th floor on Monday. Within five days the governor will slice and dice and then they have to start over, they're going to have to sit down with the governor.
>> Chip Scutari:
There is a significant difference from last year. With the House Speaker, they couldn't even do this. To their credit, they are getting something to her desk which is moving the ball along much better than last year.
>> Bob Robb:
The pitch is going to be, Governor, you don't object to what is spent in this budget, you object to what's not yet in the budget. We have five days before you have to make a decision to see whether we can work something out that's mutually acceptable on those items. We're not talking about a lot of money.
>> Michael Grant:
All-day K is 17 million.
>> Bob Robb:
The governor's spending initiatives are only about $50 million.
>> Howard Fischer:
They could find that if they didn't insist on paying $250 million in cash to school construction. I understand philosophically why they want to do it.
>> Bob Robb;
Howie, they don't have to do that. In reality, they are still underestimating anticipated revenues. Right now they trigger excess revenues to replenish and add to what's in the budget stabilization fund. The reality is that by the end of the fiscal year, you don't know what you actually spent within the amount of money. It's philosophical issues that's the difference.
>> Howard Fischer:
The question then becomes, as Chip was talking about, do they try to negotiate within the five days or for political reasons does she need to veto it to send it back so the Russell Pearces of the world and the Bob Burns of the world gets the message this ain't going to happen?
>> Michael Grant:
Who is the political fight, though? If she says, I'm vetoing the budget because it doesn't have all-day K, which pulls marvelously in terms of public support, I'm vetoing it because it doesn't have additional funds for CPS, Child Protective Services, which is a pretty near and dear issue. Does she get the leg up on the legislature on that?
>> Bob Robb:
I don't think there's any question, on the spending issue she gets the leg up, but politically it doesn't hurt the Republicans in their key political constituency, which is Republican primary voters. Even though she may gain, they don't necessarily lose. The equation may be dramatically different on the tax cuts. If she vetoes the tax cuts as part of the overall the budget in its entirety is not acceptable, then I think politically that's much for dicey for her. And perhaps in many respects a loss.
>> Howard Fischer:
Here is the problem. And I realize as a columnist that you'll slant to the right there, Bob. The tax cut, and I appreciate you talking about the thing balanced package. There are three big elements to the tax cuts. Number one is a 20% reduction in corporate property taxes. Fully phased, $200 million. Number two gives basically two dozen large multi state corporations a change in the way they compute income tax to the point where they may pay no corporate income tax. That's 150 million. Number 3 is a corporate tuition tax credit to allow the organization to give scholarships to private parochial schools. That is a $55 million price tag. The individual income taxes, marriage penalty, that's nickel and dimes.
>> Chip Scutari:
We needed that bipartisan comments.
>> Bob Robb:
Her constituency is the business leadership class. There's also a class in property tax rates which benefit homeowners. As well as the increase in tax credits for individuals. It's certainly weighted dramatically toward the business community. But the people who want it have tended to be a constituency she's courted.
>> Michael Grant:
I'm hitting the rewind button. I think the governor featured at least three of those proposals in the state of the state.
>> Chip Scutari:
Her business tax cuts were kind of mocked by Republican leaders as so miniscule that they hit a small number of companies. So what the governor has to be careful of, she probably wants to delay this process as long as she can because as long as the Senate and House are in session, they'll get grumpy with each other and she gets more of what she wants, she has to be careful looking like too big of a spender.
>> Howard Fischer:
Those are the people who pushed full day kindergarten. There may be a deal in the works here, to the extent the Chamber people may be able to lean on certain Republican lawmakers and make that happen, there may be a deal in the offing.
>> Chip Scutari:
This year it's a different ball game at the legislature. The Senate is much more conservative. I think some of the House and Senate leaders might say, Hey, Governor, districts all over the state are taxing themselves for all-day kindergarten, do we need to do this?
>> Michael Grant:
The House is prepared to dig its heels in on all-day K.
>> Bob Robb:
That's my understanding. There's also, I think, Chip is correct a desire not to fracture the Republican caucus this year. I don't think the willingness of the Republicans to leave the reservation and join in passing these things over a substantial opposition is likely this year.
>> Michael Grant:
With the budget at least temporarily Out of the way, the lawmakers will now focus on other issues before them. Next week, a measure will be introduced that could lead to the development of a theme park in the west valley and in Williams. Chip, you broke the story. What is being proposed?
>> Chip Scutari:
This is part of the trendy push to reclaim the Grand Canyon from Nevada and for developers to make a boatload of cash. This will be a special taxing district, what's a theme park. 60 acres in west Phoenix next to Cricket Pavilion and 1,000 acres in Williams. It's a big consortium of Navajo nation, the former Page mayor. Their idea is, we have all these tourists going to the Grand Canyon, let's capture those tax dollars, let them stay over two or three nights. Call it Magic Mountain meets Branson, Missouri. It's a late introduction of a bill and it will be heard in Senate finance. Howie is chomping at the bit, waving his hands.
>> Howard Fischer:
I can't -- you know, everything you said so far, we're talking about I-40 and state route 64, that's the road that goes up to the Grand Canyon. Good location.
>> Michael Grant:
Great location.
>> Howard Fischer:
Here's the deal. The former mayor of Page and Mike Morgan, who ran for treasurer --
>> Chip Scutari:
Who helped put together the original Cricket Pavilion.
>> Howard Fischer:
Wants a special layer of government to be able to tax any transaction that goes on in the thousand acres there. A 9% tax. Why, do you want the tax? Well we'll use it to pledge to repay the people who lend us money. Gary, can't you raise your fees 9% and do that? Yeah. Why don't you want to do that? Basically, it comes down to the lenders won't lend the money unless they guarantee there will be a taxing district there. This sets a very interesting if not possibly horrible precedent, when creating special tax districts for a developer, which is so weird. The board is going to be three members of the Coconino County board of supervisors, two members of the Phoenix city Council, for one developer. That's a problem.
>> Chip Scutari:
Their pitch is that the two plots of land are yielding no revenue. The calculations, you see the feasibility studies are all over the map, they're saying when this thing gets up and running, it will bring between 75 million and 15 million to the state.
>> Howard Fischer:
How many developers have come through the legislature? I have a plan, we had a guy in Gilbert a decade ago --
>> Chip Scutari:
We've been through this.
>> Howard Fischer:
a special district for a theme park. Michael Grant: Yeah.
>> Michael Grant:
Have you seen that Gilbert theme park? Michael Grant: I think the theme was crash and burn.
>> Howard Fischer:
Do we want to set a precedent? Any time a developer has a grand plan, that we're going to come and let them create their own government to do this?
>> Michael Grant:
Sounds sort of American to me. But speaking of developments, the Senate passed school vouchers.
>> Bob Robb:
They did. It's the most comprehensive program in the country, or would be if it's adopted. 3500 for anyone transferring from a public school into a private school or entering kindergarten or first grade in a private school. For elementary school. And 4500 for high school. The same proposal has passed through the House committee and waiting for action in the House. It's quite possible that this approach will be put before the governor. She has pretty well pledged to veto it, to the extent she pledges anything.
>> Michael Grant:
I think the pledge to veto it in the elevator before it gets to the 9th floor.
>> Bob Robb:
She said I don't say what I'm going to do with any legislation until it arrives, irrespective of how many times I've opined in the past. That may not be the only action if can get that far. The legislature might return volley by limiting the vouchers to low income students or students who are having trouble in school now. This one may last for awhile and it may get caught up in the second year of the K-12 program. A lot are saying if the governor wants that, she needs to concede something in the area of school choice and vouchers.
>> Howard Fischer:
If you can get past the concern of the governor's state constitutional problems about this. We now have labels for failing schools, that you can get a voucher to take your children somewhere else. For some reason this year they felt the broad-based program. Theoretically, it's not supposed to cost the state money, you can only get the voucher if transferring from a public school to a private or parochial school. It means everyone who was going to send their child to first grade in private or parochial may not get a voucher. The cost becomes 225 million. The joint legislative budget committee said in order to make that neutral to the state, you have to have 155,000 kids also shipped to private school when there are only 41,000 places.
>> Bob Robb:
There's an interesting observation, which is the premise of that is that given a choice, large numbers of parents would choose to enroll their children in kindergarten, first grade in private school rather than public school. This is where I think the political danger is for the governor. She adopted the choice language in order to sell her K-12 program, claiming that was a voluntary program. She needs to be careful about looking like an obstacle to that preferred educational opportunity for kids.
>> Howard Fischer:
The 225 million number is based on the number of kids who would normally enter private and parochial school right now without financial aid.
>> Chip Scutari:
The voucher is a red meat issue for Republican primary voters for next year. I don't know who is going to be the GOP candidate but issues like vouchers and tax cuts, the governor will probably veto it. When we do stories on vouchers, I get so many passionate phone calls saying this is great for little Johnny, we want to send our kids to the best schools. I want the best choices for my kids. It sells in a lot of parts of state.
>> Bob Robb:
Tied to low income threshold it has great popularity with the Latino community.
>> Michael Grant:
If I recall, that was a U.S. court decision where they had targeted -- was it Cleveland?
>> Howard Fischer:
A Milwaukee case. But back to what we have talked about on the show, those states do not have a constitutional provision which says you cannot appropriate funds for private education. Was this misreported in the press?
>> Michael Grant:
There was another new development this week in the ongoing legal battle over Prop 200. Maricopa County Superior Court Judge Barbara Jarrett ruled in favor of Attorney General Terry Goddard when it comes to the scope of Protect Arizona Now. Howie, what did Judge Jarrett say in her ruling?
>> Howard Fischer:
Did she -- I think it's a tricky case for some reporters, because the real issue Terry Goddard issued a opinion. I think this is the scope of 200. Randy Pullen goes into court and says I want a judge to order to make him change his opinion. The judge said, he is entitled to his opinion and I am not going to order him to change his opinion. She said, You come back with a case where you come back to where you believe the state is giving public services to who you don't believe should have it, then we'll talk.
>> Chip Scutari:
How about a judge to rule on the scope of Howie's opinions.
>> Howard Fischer:
Better people have tried.
>> Michael Grant: Are they going to go --
>> Howard Fischer:
Randy Pullen told me he could appeal this, but he is going to find a real case and say we believe Prop 200 is larger than the handful of programs Terry Goddard says it covers.
>> Michael Grant:
The legislature continues to work on the bill that would broaden the coverage.
>> Howard Fischer:
They insist they are returning it to what voters thought they were voting on. Like, should somebody be able to use adoption services or adult education. And then Russell Pearce said I think it also includes only printing ballots in English. Which brings up what part of the 1965 voting rights act do you not understand? I think they feel a voter mandate, the vote for Prop 200 was very strong, even to the extent the governor, that she refused to meet with the Mexican senators because she said Prop 200 is going to be law that's enforced. Now the one tricky one is adult education. If you have a bill to say people should only speak English, why don't you help them speak English.
>> Michael Grant:
All right. Panelists, we are out of time. If you would like to see a transcript of tonight's program, please visit our website at www.az.pbs.org. When you get there, click on the word "Horizon" and that will lead you to transcripts links and information on upcoming shows. Next Monday and Tuesday, "Horizon" takes a break as channel 8 brings you special programming. Wednesday, we'll talk about President Bush's proposal to reform Social Security. Thursday, the state Senate president and the House Speaker will be on to talk about their budget. Thank you very much for joining us on this Friday evening. Have a great weekend. Good night.
Bob Robb:The Arizona Republic;
