Arizona State University was the first university outside of China invited to participate in the country’s annual celebration of science and technology. ASU’s exhibit “Welcome to Mars” featured the university’s Mars research team. KAET went along to give you an up-close look at the historic visit.
>> Michael Grant:
Tonight on "Horizon" the State of Arizona getting a big pay raise with its first $1 billion revenue month ever and a 77% increase in income tax revenues. And ASU's Mars research program recently was showcased at a prestigious science and technology exhibition in Beijing. ASU Mars exhibit, the first for a non-Chinese participant. More on those topics next on "Horizon."
>> Michael Grant:
Good evening. I'm Michael Grant Grant. Welcome to "Horizon." The numbers are pretty incredible. In April Arizona took in $1 billion in tax revenue the first time that has ever happened in one month. There was a 77% increase in income tax revenues, second only to New Jersey nationwide, which had a 100% increase. Much of the income tax growth thought to be related to Arizona's hot housing market. Sales tax revenue going up 10.7% from last year to this year with a 19.5% increase in construction sales tax. Corporate income tax revenue saw a much more moderate increase of 3.8%. Here to talk about the increase and why it's happening is Tracy Clark. He is the associate director for the economic development center at Arizona State University and recently returned from south Lake Tahoe. Boy, Tracy, some guys have all the luck.
>> Tracy Clark:
Yeah.
>> Michael Grant:
I don't want to talk about Arizona. I want to ask why New Jersey went up 100%?
>> Tracy Clark:
Well, the reason New Jersey went up 100% is they have a very hot housing market just like we do. The hot housing markets tend to be along the coasts, and us and Nevada, and that account for a lot of the differential.
>> Michael Grant:
Well, slightly more seriously, and we're going to get into the details in Arizona, but in general, is housing booming in a lot of areas around the country?
>> Tracy Clark:
It's doing very well in a lot of areas. Most areas don't have quite the level of investor-driven interest that we do or, let's say, Las Vegas does or California, but it's not really doing badly in most parts of the country.
>> Michael Grant:
But probably the areas we would normally think of are booming most the ones you mentioned, perhaps the sunbelt areas as well Florida --
>> Tracy Clark:
Florida, up along the coast and into New Jersey, the Virginias, things like that.
>> Michael Grant:
You have been following these trends in Arizona for quite some time. Can you think of anything, '70s, '80s, '90s that would match the April experience?
>> Tracy Clark:
No, Dennis Hoffman and I have been working on this for 20 years, and it's nowhere near it.
>> Michael Grant:
Not even some of the boom times that we had, oh -- we had some in the '80s, certainly, '90s were not bad.
>> Tracy Clark:
We had times when, for example, capital gains from the stock market were giving us a lot of money. But, you know, the shear just dropping that much money into the till in a short period of time just hasn't happened.
>> Michael Grant:
All right. 77% in personal income tax collections growth from last year. How do we explain that?
>> Tracy Clark:
Well, that was for April. So that was final payments. So people had to pay more probably than they expected because of gains that they've had, and we think that it's basically in three areas, personal income has been growing faster in 2004 than we thought, so people were paying more there. The stock market, nobody's very excited about it, but in 2002 it was at 800, now it's at about 12 hundred. So there were some stock gains. Then, of course, the housing market. People flipping houses, people investing in houses, turning them over probably has made -- it's a significant addition to what we saw.
>> Michael Grant:
And that would drive, obviously -- well, probably capital -- an increase in capital gains, if you flipped it quickly, I suppose, under the holding period it might be ordinary income. It.
>> Tracy Clark:
Might be ordinary income but for the most part you're looking at capital gains at this point.
>> Michael Grant: One of the things that you pointed out when we were talking right before we went on the air is because of the price increase that we have had here, the $250,000 -- if you are selling your personal residence, the $250,000 exclusion that you get on capital gains is not meaning as much in 2005 as it may have meant in prior periods.
>> Tracy Clark:
No. In prior periods, you would have seen almost all of your activity go below that level. Now it would be quite easy for a lot of the houses to go over that by quite a bit.
>> Michael Grant:
We're hearing a lot about a lot of this price increase being driven by invest -- investors. How do we know that?
>> Tracy Clark:
Well, you can get a rough idea just by looking at how many people we think are moving into the state. That tells you how many housing units should be demanded. You kind of tote up how many are being built and how many are being sold and you come one a number that's quite a bit higher than what those numbers would suggest, which means that investors are coming in and either driving demand for building or buying a house and renting it out and hoping for capital gains down the road.
>> Michael Grant:
I think our routine appreciation rates are normally 5 to 7% annually on housing. What's it running at currently, Tracy?
>> Tracy Clark:
For 2004, above 12%, for both resale and new -- or close to 12%. Then for 2005, we don't have a lot of data, but what we do have suggests it's probably accelerated from there.
>> Michael Grant:
And, again, historically, that is above where we've ever been before, correct?
>> Tracy Clark:
We hit 10. -- something in the mid-'80s and that's the highest we had ever been before. Now we're -- we've slid right past that.
>> Michael Grant:
Now sales tax revenues up 11%. How do we he can explain that one?
>> Tracy Clark:
People actually had quite a bit more wage income and personal income in 2004 than the original estimates suggested. People are also using some of that new-found wealth in those houses to kind of drive some of their spending, and so people just -- been very happy to continue spending, and with the improving economy, everyone feels a lot more confident about that.
>> Michael Grant:
And obviously the construction sales tax increase of almost 20 or so, that's explained by several other things we've been discussing already.
>> Tracy Clark:
Right, the level of construction activity is very high, and it's high not only for residential construction, but we're starting to see increases in other kinds of construction that are also helping to drive that.
>> Michael Grant:
In the month of April, corporate income tax growth only about 4%, but that's a little misleading?
>> Tracy Clark:
Yeah, that's misleading. You have to look at the whole year, and for that we -- corporate is probably going to be up somewhere close to 40% year over year -- fiscal year over fiscal year. That's being driven by corporate profits. It's being driven by actions that corporations are taking at the federal level. They're kind of mirroring them down to the state level, even though they probably don't need to and maybe taking some of that money back at some point.
>> Michael Grant:
Well, let's get to the $64,000 questions, I guess... Greenspan talks about froth, frothies -- frothy. Everybody talks about the bubble. When's the froth going to go away? When's the bubble going to burst?
>> Tracy Clark:
Well, actually, if I knew the exact answer to that, I wouldn't be sitting here right now.
>> Michael Grant:
We wouldn't be chatting.
>> Tracy Clark:
We wouldn't be chatting. But we've expended a lot of effort to try to look at this at the research institute, and it seems to be probably is going to be predicated on two things... interest rates and then also the potential for other investments, and, of course, when banks, if they see that -- defaults and things like that are going up, they're going to pull back liquidity. The reason that we've been able to run so long with the housing market is there's an awful lot of liquidity out there. Low interest rates, banks willing to lend --
>> Michael Grant:
And confidence in the -- in the value of the underlying security.
>> Tracy Clark:
Yes. People are very confident about the housing market here because we have a lot of people coming here. We never really slowed down very much during this last recession. Which is very unusual. So we do have some demand there. It just seems like we've got more activity than the population growth would suggest we should right now.
>> Michael Grant:
Give me a short-term prognosis. I mean, likely to continue for at least some number of months longer if not into -- well into 2006?
>> Tracy Clark:
Yes, probably, because we haven't seen that increase in long-term rates, and we're going to have to see an increase in long-term rates with mortgages perhaps going up to between 7 and 8% before you have any reasonable expectation that the housing market is going to cool off a heck of a lot.
>> Michael Grant:
All right. Tracy Clark, we appreciate the input. Glad you made it back from south Lake Tahoe safely. Last month a contingent from ASU's Mars research program traveled to Beijing for science and technology week. Thousands of Chinese visitors to the exhibition given a rare look at the latest Mars discoveries while the universities feel it made some important contacts for the future.
>> Larry Lemmons:
When it comes to the study of marches, Arizona State University is an internationally recognized leader, and from the early days of the Mars research program to the present, planetary geologist Phil Christensen has been onboard to help it grow and succeed, an investigator on four Mars missions, he and his colleagues played an important role in the exploration of the red planet.
>> Phil Christensen:
We made the first mineral maps of Mars. We discovered some important things about the types of rocks frowned on the surface and from those maps we found places where there were remarkable minute result that formed in water that really led us to, hey, these are some really important sites that we ought to explore in more detail.
>> Larry Lemmons:
It was such a site, identified from orbit by the TES spectrometer that became the target for one of the two Rover rovers NASA sent to Mars. Thanks to a string of high profile successes and the broad appeal of planetary exploration, the Mars program was a logical choice to represent the university at China's prestigious science and technology week exhibition in Beijing.
>> Phil Christensen:
The original idea was to find a way to get an entree into China for Arizona State University, and the administration here is very excited about the growth that's going on in China and are there ways that we can work with universities there and ministries there to team with them to do a variety of projects. So it started very simply with, well, gee, we have this interesting technology that we do with Mars and this cool Mars stuff, and maybe we could go and have a small little booth or something at the China science and technology week and just sort of get our foot in the door with, hey, we're ASU and this is what we do.
>> Larry Lemmons:
During the planning process, that small little booth evolved into 5,000 square feet of exhibit space would that showcase highlights of the Mars program. All designed long-distance.
>> Phil Christensen:
The biggest challenge by far was just working with the Chinese on this pavilion, going back and forth, what was going to be there, and as it kept getting bigger and bigger and bigger, saying, oh, wow, how will we fill this space?
>> Larry Lemmons:
But fill it they did despite a tight deadline, much to Christensen's surprise and delight. The result, welcome to Mars.
>> Phil Christensen:
The exhibit itself I was stunned with. It was the classic sort of just in time the night before it was supposed to open it looked like it still was weeks away, and yet people stayed up all night and it all came together and it was fabulous. So I don't think it could have been any better.
>> Larry Lemmons:
In addition to the science and technology week exhibition, Christensen and his team had the opportunity to bring Mars to several Beijing schools, each of which demonstrated the high priority that is placed on academics by the Chinese.
>> Phil Christensen:
They show a tremendous interest in education and inspiring the next generation of school kids. This high school I talked at was remarkable. The students spoke very good English. They had ridiculously good questions. They were asking me about global warming and they were asking me about if we send things to Mars are we going to contaminate the planet and kill off everything there like humans have done on the earth when they've gone places and -- you know, they were asking very, very politically informed questions about exploring, very bright, very well educated, very motivated students.
>> Larry Lemmons:
Back at the exhibition, the Mars team was successfully connecting with younger students as well.
>> Sheri Klug:
We brought along through our educational outreach program hands-on activities, and what we found was really, really fun. We had lots of different kinds of engaging stations we set up, very simple kind of make and take ways to explain things, ways of learning, which we found was very different from the Chinese traditional way of knowledge and facts. This experiential kind of activities was something very foreign to them but they totally embraced and had a lot of fun with. Everything from learning about the distances between our planets in the solar system to learning how to take a sample of a planet's crustal material and figure out what that plan set like.
>> Larry Lemmons:
In addition to making a positive connection with children during the exhibition, the Mars team made an impression on the adult visitors.
>> Phil Christensen:
I think they were very taken by the fact that in American society it's common for scientists and other people to get out and really tell their story to the public, and I think they felt that, wow, you know, we're actually hearing from the people who do this, and I think they thought that was pretty remarkable.
>> Larry Lemmons:
While in Beijing, Christensen and his colleagues also had the opportunity to meet with representatives from universities, the government and industry, all part of the ASU's U.S.' ongoing effort to make valuable inroads within China.
>> John Fink:
There was a lot of media coverage. We had a lot of dignitaries come through. If our goal was to raise the profile of ASU in China, it was a terrific success. In terms of what kind of groundwork it laid for long-term relationships, that will take five, 10, maybe 15 years to really pay off. But my impression is that the goals that we had were definitely met.
>> Phil Christensen:
For me it was great. It was sort of like exploring Mars. It was this new place to go where no one had gone before. We really were the first serious group of western Mars researchers to come to China. Everywhere we went we were the first to be there. You know, you really felt that you were like this vanguard of, hey, we've got this neat story to tell and we're here to tell you. And they really appreciated that. So it was very satisfying.
>> Michael Grant:
Here now to tell us more about the China exhibition is Steve Ruff, faculty research associate at the ASU's Mars space flight facility, part of the China contingent. Phil Christensen stealing a line from Jean Luc Picard there. Welcome to the program. It looks like Phil and the rest of the contingent had just a ton of fun over there.
>> Steve Ruff:
Well, it was a lot of fun and very interesting and, you know, I wasn't prepared, I didn't know what to expect of China. You know, all I knew of China was what I've heard from the media, and I have to say that my impression of China was different than what I expected from my hearing about it from the media.
>> Michael Grant:
Much of the language -- much of a language barrier?
>> Steve Ruff:
Fortunately -- the answer is no. We had a couple of women -- a professor from the university who was both -- actually both of these women were from China originally, so, of course, they knew the language very well. In fact they were from Beijing. So we had our own interpreters along with us, but also Beijing at least as a city, very much was catering presumably to the olympics that's coming there in 2008. So there were many street signs, most of the signs had English as well, and there were many young people who knew the language. Most of the students essentially knew English well enough to communicate.
>> Michael Grant:
We got some feel for this, but logistically I imagine it was fairly complicated setting this thing up over there.
>> Steve Ruff:
It was. And part of that complication that we were trying to do this over a fairly short and few number of weeks. So we only had maybe six or eight weeks to prepare for this because it short of came about suddenly. So it was logistically difficult, made more difficult by that short time fuse, and what do we send over there, what do we let the Chinese put together for us. Most of the visual displays were prepared were printed literally in Beijing. We sent them digital files and they prepared huge murals and wall art for us. So that helped a lot.
>> Michael Grant:
Who was your primary audience at the exhibition?
>> Steve Ruff:
It started out on a weekend. So during the weekend it tended to be a cross section of the public. We saw, you know, young kids. We saw senior citizens. And then as the week went by, the weekend, we got through the weekend, and then starting during the week it was mostly students. So it was really these two different groups, and it was a very distinct sort of dynamic between when the students there were versus when the public was there.
>> Michael Grant:
What kind of reception?
>> Steve Ruff:
Incredible. Incredible. People really did seem surprised that we would go to this effort. So I think they were literally impressed that these American scientists and folks came and wanted to display our science. So the receptions everywhere we went were incredible.
>> Michael Grant:
Now, I understand that we were going to take over a model of the Rover and incidentally I want to get an update on where you leave where the Rovers are but the state department had some concerns about that?
>> Steve Ruff:
Well, yeah, we have this beautiful full-scale model of the Rover which, by the way s now sitting in the front lobby of our building here at ASU, and I would encourage people to come and see it. So we had this full-scale model that one of the reasons we bought it, and it wasn't cheap, we bought it to send to Beijing to this show to just add to the excitement. So here we have this beautiful full-scale model that when it came time to get clearance to send that model, we found hurdles, and ultimately folks at JPL and NASA decided that it wouldn't be prudent to send that Rover because of concerns about swapping technology. Now, I have to share the irony of this is that one can purchase beautiful scale models, very highly detailed models of this Rover from shops here in the U.S. Well, where do you think those Rover models are made? They're made in China. So incredibly detailed Rover models made by the Chinese and sent back here for us to buy but yet when it came time for us to send an even less detailed but full-scale Rover to China, we couldn't do it.
>> Michael Grant:
Any particular aspects of the exhibition that were most popular with this collection of different people?
>> Steve Ruff:
Yeah, we brought over meteorites. Lori LESHIN at ASU, she now has inherited this great meet right collection, so we had meteorites, both sort of normal standard meteorites, but we also had a couple small chunks of Mars there, these so-called martian meteorites that have left rocks that were blasted off the surface of Mars and swept up by earth as they traveled toward the sun and are here for us to pick up. So we had chunks of Mars, these Mars meteorites, that were under glass, so to speak. They were -- people were very intrigued by the idea that we had chunks of Mars, not to mention just these other meteorites one which have they could touch. So they were very impressed by the meteorites.
>> Michael Grant:
Where is China in its space program at this point?
>> Steve Ruff:
They are proceeding quite quickly now. They have launched their first -- they call them tikonauts as opposed to astronauts. They have now orbited a human, a man in space, and are poised to go further. They would very much like to make it to the moon and to sort of pursue the human exploration kind of program that they've seen with the U.S. and Russia.
>> Michael Grant:
And the thought at least here being that as they do that that perhaps there will be opportunities for ASU in relation to that program?
>> Steve Ruff:
That may be true, although I would say that the more likely sort of collaborations will occur in the unmanned, the robotic exploration of the universe, the solar system. So that's the more likely scenario, I think, not to mention in the possibility of students coming here, the best and the brightest from Beijing and China may show up here at ASU for example, and that would be a good thing.
>> Michael Grant:
Steve, as I mentioned, I want to get an update on how the Rover is doing on Mars.
>> Steve Ruff:
Glad to. The most exciting news is -- well, first of all, these rovers have long outlived their warranties. These were rovers designed for 90 days on the surface of Mars and they have now passed the 500-day mark in the case of one and close to that in the case of the other. The opportunity Rover in MERIDIANI for the past 40-plus days has been stuck in a sand do not. We have been traversing across these plains and across these small dunes and suddenly over a month ago we got stuck, and it's a classic syndrome of like getting stuck in snow or sand or anything else, and after -- over 40 days we finally spun the wheels enough to drive out of the sand do you know.
>> Michael Grant:
Steve RUFF, Arizona U.S. marches space flight facility thanks for the update. Congratulates on the exhibition. You can see a lot more on that trip to Beijing in a half hour special called from Mars to China that airs next month the 17th at 7:30 here on Channel 8. If you would like more information about "Horizon," please visit the web site. You'll find it at www.azpbs.org. Once you get to the homepage click on the word "Horizon" to see transcripts or information about upcoming shows.
>> Larry Lemmons:
The state's hot housing market is getting much of the credit for a record-breaking financial month for Arizona, $1 billion in tax revenue. We'll look at what that might mean for the state and Governor Napolitano calls for a summit on enforcing federal immigration laws in Arizona. Join us for the Journalists Roundtable Friday at 7:00 on "Horizon."
>> Michael Grant:
And thank you very much for joining us on a Thursday evening. I'm Michael Grant. I hope you have a great one. Good night.
Tracy Clark:associate director, Economic Development Center, Arizona State University;Steve Ruff:Faculty Research Associate, Mars Space Flight Facility, Arizona State University;