Governor Janet Napolitano makes her regular visit to HORIZON. She talks about results of the recent primary election, her time at the Democratic National Convention and continuing budget problems for the state.
Ted Simons:
>>> tonight on "Horizon" stocks take a big tumble on wall street as the economy seems to be headed further south. Hear what governor Janet Napolitano has to say about that. The governor took to the road this weekend to stump for Barack Obama. We'll get the governor's impression of john McCain's running mate, Sarah Palin. All that and more with the governor coming up next on "horizon."
Announcer:
>>>"Horizon" is made possible from contributions from the friends of 8, members of your Arizona PBS station. Thank you.
Ted Simons:
>>> Hello and welcome to "Horizon" I'm Ted Simons. Lehman brothers files for bankruptcy. Merrill Lynch is bought out by bank of America. Those headlines months ago would have been unthinkable. Throws major stories today. Bad news caused stocks to tumble 500 points. Here to talk about the struggling economy is other topics is Arizona governor Janet Napolitano. Governor, thank you for joining us.
Janet Napolitano:
>> You bet.
Ted Simons:
>> Your reaction to the news on Wall Street today. Big stuff.
Janet Napolitano:
>> it is big stuff. Really it started when the secretary of the treasury said, you know what? We're not going to bail out you, lehman brothers. That happened over the weekend, i guess sunday. Wall street must have been a sight to see. All of a sudden they realized the taxpayers wasn't going bail out everybody on wall street. The line was drawn. That caused lehman brothers to go into bankruptcy. Merrill lynch is apparently going to be purchased by bank of america. Aig, i don't know right now as we tape this what its status is. It's a sign our economy is in a major national correction and actually an international correction. We don't really yet know what the angle is going to be.
Ted Simons:
>> To that end, John McCain says the fundamentals of the economy are strong. Accent the word fundamentals. He softened that later on in the day. Is he right?
Janet Napolitano:
>> No, he can't be right. If we're sound and losing 500 points on the market and major financial houses are declaring bankruptcy and our 401(k)s still look like 201 ks, that's not fundamentally sound. I think it reflects perhaps a notion in Washington, D.C. that the free market will just take care of itself and self-correct here. Obviously, it's going to take more than that.
Ted Simons:
>> The bail-out of Bear Stearns, the assistance with Fannie Mae and Freddie Mac, not with Lehman brothers. Should the government have come to the aid of Lehman brothers?
Janet Napolitano:
>> Well, I think that requires a more intimate knowledge of Lehman brothers' status than I personally have. But it has seemed to me that once we did Freddie Mac and Fannie Mae, at some point, the U.S. treasury was going to have to say we can't do anymore. Those are huge bailouts with the assumption of a lot of risk on behalf of the taxpayers. Behind these financial houses were the automobile manufacturers and this segment and that. At some point, you have to say where was this line going to stop? How much risk where the American taxpayers going to be asked to hold? I think a line has been drawn. Now, we see the effect on the stock market. Time will tell whether it was the right line to draw.
Ted Simons:
>> You talked -- you mentioned free market types. There are, of course, those on the other side that see government intervention at every turn. Where do you see government's responsibility -- this, again, is more of a national issue than a state issue, but it could apply to both. Government's responsibility in times of crisis?
Janet Napolitano:
>> I think it's a time of crisis when people realize that saying that government is always the problem is not really accurate, because where are all of those folks turning to now? They're turning to the government. It really is the only institution large enough to help the market get to a place where there's a balance. Again, I think we're seeing that totally unregulated or not effectively regulated markets can very quickly get out of control and the big gap we see is in the last years in terms of effective enforcement in regulation of the laws that we do have on the books to make sure that the free market is truly a competitive one.
Ted Simons:
>> Last question on this, do you feel that there should be more in the way of regulation on the books?
Janet Napolitano:
>> I certainly feel that there should have been more in terms of effective enforcement of the regulations that we did have that we over the course of the last seven years -- and i say this now as a former U.S. attorney and attorney general who prosecuted financial crimes that we really disempowered the institutions that we do have. The SCC and others like that from enforcing the rules of the road. They turned a blind eye. That led financial houses and investments to be made on shakier and shakier grounds without real very particular management of the risk and analysis of the risk and deals being done far away from analysis of who actually was the borrower. That started in housing. We saw in what's happened to housing. Unfortunately, that put Arizona at the front end of this downturn in the national economy. Now, we're seeing how that spreads through other sectors as well.
Ted Simons:
>> let's get back closer to home and talk about what is happening here, especially in terms of the economy and how this plays into the state budget. First month of the fiscal year, July coming in and apparently the jail is 90 million below projections. Talk about this and your reaction.
Janet Napolitano:
>> Well, what we're doing now is watching these -- the revenues as they are. We know that we're early in the fiscal year. We also know we're not going to wait until next may to take corrective action. And so we have been in the last few days looking at where we can postpone, cut back, delay, continue to say, for example, we've got a hiring freeze in effect for over six months. Obviously, that's going to continue. Where are other places that we can cut and hold back so that the state can continue to pay for the things we need to pay for? Education, k-12, universities, incarceration, the prison system, Medicaid which is mandated by voter initiative. I said to a group earlier today, I said, we're now paying for three basic functions to medicate, incarcerate. Look for ways we can help provide a safety net for those that are temporarily going through some real extreme difficulties because of this national economic downturn.
Ted Simons:
>> We have sales taxes $60 million lower than forecast, income taxes $19 million, corporate taxes $10 million. It goes on and on. They were saying something along the lines of a 6% gdp to write this. The forecast was close to 2%. Is this the kind of thing where a special session or something along -- along these lines has to happen sooner than later.
Janet Napolitano:
>> The legislature is out trying to hold their seats. In the meantime, like I said, the executive branch is really working on this problem so that when the legislature does reconvene in January, there are options available for them. We're not just going to sit and twiddle our thumbs and wait until they come back. A special session presupposes the legislature is organized, has some answers and is ready to vote on something, rather than just coming downtown and spending per diem money and milling around that doesn't answer anything. I think it's on the executive's part right now to lay this out and take some early action.
Ted Simons:
>> There's some thought that it might be better for you or at least easier for you to deal with the current legislative make-up as opposed to what might happen come the next session with the next group. Talk to us about that. Does it make sense? You have folks you worked with this time that won't be there next time.
Janet Napolitano:
>> The folks I worked with this time know the ins and outs of the budget that was passed. They know what is in there. Their learning curve won't be as steep. We'll take it as it comes. And like I said, we already are putting into place measures to guide against having $1 billion or $1.5 billion shortfall we have to fill come next spring.
Ted Simons:
>> is employer sanctions, is that law affecting Arizona's economy to a degree that you can say some of this is because of that?
Janet Napolitano:
>> No, we really can't. First of all, there haven't been any enforcement actions really under employer sanctions. Secondly, when I compare Arizona to California and Nevada, two very comparable states in terms of our economic make-up, their problems are as worse if not worse than ours are. They don't have employer sanctions. It's difficult to attribute causality there.
Ted Simons:
>> There was $13.6 million to help with folks that are having trouble making mortgage payments and those sorts of things. $13.6 million, correct?
Janet Napolitano:
>> Yes.
Ted Simons:
>> What will that money do?
Janet Napolitano:
>> It'll do a variety of things. It's really designed as a very cohesive foreclosure prevention fund. It is to help people make -- who are in trouble of being foreclosed on to stay in their homes. There's hotlines that go along with it. There's outreach through lenders that go along with it. Our fundamental focus is to keep people in homes, move them into standard rate mortgages. The other part of it is to deal with the growing homelessness problem, particularly where veterans are concerned and to try to get those homeless into actual dwellings.
Ted Simons:
>> this is more of a short-term emergency fund kind of a thing for someone who is maybe one or two months behind on a mortgage and may need help?
Janet Napolitano:
>> Right, we won't be in the position of becoming home buyers for a lot of people but what we can do is really help people. We've been working with major lenders in this state since last December in terms of if they'll work with a borrower, moving them from the sub prime mortgages into standard mortgage.
Ted Simons:
>> No taxpayer money is going into this, correct?
Janet Napolitano:
>> This is all out of the trust fund. That's right.
Ted Simons:
>> federal money, how much are we getting for that in terms of helping folks making ends meet and, b, just the idea of prevention? Is there much in the way coming from the feds on educating people on how not to get into these situations?
Janet Napolitano:
>> There is some but obviously when we're dealing with a problem now of this magnitude, it's never going to be enough. It's incumbent on us to make best use of the dollars we have and then we're working with nonprofits and faith-based organizations any way we can think of to reach to people who normally aren't watching shows like perhaps like horizon or reading the "wall street journal" but to try to make available to them knowledge about what we can provide. The easiest way is through our web site, az211.gov. I'll say it again, az211.gov. Very easy to follow ways for people about dealing with housing. All of the information there is listed easily.
Ted Simons:
>> I want to get back to budget concerns here. A lot of folks in education are worried about the $86 million pullback as far as the repair fund is concerned. In a move to help the state budget apparently, your thoughts on that money not going to some folks who expect it or at least would like to have it?
Janet Napolitano:
>> Well, this is the so-called building renewal fund. This is for major maintenance-type projects. It's right, it was suspended for this year. As one of the -- you know the difficult decisions made to balance a very difficult budget. And I can't predict what's going to happen next year. On the other hand, they were building renewal moneys there that hadn't yet been spent by school districts it wasn't already a drawn-down fund. Moreover, if you have to make difficult choices it seems to me the number one priority goes to paying teachers in the classroom and making sure that you're dealing with the operational costs of what goes on inside the buildings. So that's our number one priority.
Ted Simons:
>> When the critics say that this was an arbitrary disregard of a state law or a state formula, you respond?
Janet Napolitano:
>> Nothing about this is arbitrary and nothing about it is easy. And earlier critics of the budget said it spent too much money without regard to these cuts that already had been made. Within the difficult budget that was passed by the legislature, there are some of the suspensions. Now, what we hope is that in a year or two, somewhere along the line or three that revenues will begin to come back. The economy will right itself. Arizona is still a growth state which puts us in a different position than say a state like Michigan which is still decreasing in population. And we'll be able to fill in and catch up on some of these things but we simply can't continue doing the 100% of everything we were doing right now.
Ted Simons:
>> Real quickly back to the repair fund. Should there be a new formula for this? I know there's a lot of fussing and fighting over that should there be a start over again with the new formula?
Janet Napolitano:
>> I don't know if that's the answer. I don't know if a budget shortfall is a reason to redo the formula. My initial view is the first thing we need to do is pay for enrollment growth and we need to make sure that we keep trying to improve the salaries of the educators in the classroom and then we'll deal with the buildings as we can deal with the buildings.
Ted Simons:
>> I want to find out, we talk about these initiatives a lot and that the idea of the time tax initiative and the idea of state reforming state land trust. But now that we know neither are going to be on the ballot, how disappointed are you?
Janet Napolitano:
>> Very. And I know there's a lot of finger-pointing, but I'll tell you, I've been back through both of those situations. I thought both were necessary. The time initiative, yes, it was an increase in the sales tax which wouldn't have occurred until 2010, by the way, but it would immediately have injected millions of dollars of capital money into our state with thousands of construction jobs, something that we could use right now for infrastructure that we know that we need. Trust land reform was finally broad coalition in support, ready to go to the ballot as a stand-alone measure. 9.5 million acres and I'll tell you, I'm very disappointed, particularly in our state courts. Particularly in one-line argument kept this case from even being put on the merits but the signatures were there. That's the case. We're going to continue forward. We're going to continue to push those things. They're both essential for Arizona's future. Yeah, we didn't get it on the ballot this year. Between now and 2010, we'll have time to regroup, retool and keep pushing.
Ted Simons:
>> regroup, retool and maybe reformulate a plan? Was the time initiative perfect as is or can you tinker with it a little bit?
Janet Napolitano:
>> Oh, no plan is perfect as is. Yeah, I'm more than willing to tinker somewhat but the overall design of the plan is a very good one. Multimodal meaning many ways of transportation, not just roads but also rail and transit and making sure we have a revenue source identified for it so we can really build the kind of structure that we know that we need.
Ted Simons:
>> Things like toll roads, can they be included?
Janet Napolitano:
>> The initiative as it was drafted included the authority to have public/private partnerships and a type of public/private partnership would be a toll road for new construction. I would oppose converting any existing road to a toll road. I don't think that's a good idea. I would be willing to consider for new construction in certain areas whether that would make sense.
Ted Simons:
>> Should there be more of an emphasis on state transportation as opposed to local projects? I know some critics were saying there's too much in the way of a trolley in Tucson and light-rail in phoenix. Let's just worry about state transportation as opposed to piece meal things in local communities. Your response?
Janet Napolitano:
>> The cities were saying they wanted more by way of local. Obviously, there's a push and pull there I thought the balance struck by the draft initiative was a fair balance. But now it's been kept off the ballot by the court.
Ted Simons:
>> As far as state land trust is concerned, do you think that initiative goes in 2010 as is?
Janet Napolitano:
>> I think that's as pretty close to as done as we can see. It's very fair. The arguments had been made. There were really good compromises made. It's a great way to manage this very valuable asset we Arizonians have, this 9 million plus acres of state trust land. We'll see by way of referendum or initiative we can get it back to the voters.
Ted Simons:
>> is there a better way to refrain that issue? It could be a complicated issue.
Janet Napolitano:
>> It can be, yeah.
Ted Simons:
>> are people up to speed on that as they should be?
Janet Napolitano:
>> It's a really hard issue to explain. The state as a trustee of millions of acres isn't an easy one to wrap your arms around. The reason we want it on the ballot this time is it was going to go by itself no competing measures, nothing really to confuse voters. In that situation, our polling shows it would have passed 3-1.
Ted Simons:
>> You referred to this earlier but why do you think these two initiatives and some others did not make the ballot? What's going on with the idea of gathering signatures for these things?
Janet Napolitano:
>> Well, obviously, there were some problems with the signature gathering. Now, our analysis is that both the transportation and trust land, if they had been able to go into court and say, these signatures were improperly invalidated, would have been able to show they should have both been on the ballot but given the supreme court kept us from making that case, it is what it is. We have to move forward.
Ted Simons:
>> Are changes needed in the way, not only signatures are gathered but in the way these signatures are counted?
Janet Napolitano:
>> I think that in light of what's happened in Arizona this summer, rethinking through the initiative process and why is it that certain cut-offs are the way they are and the timing seems to be all screwed up should be thought through again are a logistical standpoint if nothing else.
Ted Simons:
>> ok, I want to get back to national politics here and the conversation that everyone seems to be having right now and that is so what do you think of Sarah Palin?
Janet Napolitano:
>> Ha-ha, well, I know Sarah. She's very nice and funny and whatever, but I'm not supporting her to be the vice president of the United States and the reason is because I'm not supporting John McCain to be the president of the United States. I don't think the ideas that he has which mirror very closely what we've seen over the last seven years are going to get us out of what we started this program talking about which is this economic downfall.
Ted Simons:
>> do you think Sarah Palin is ready to be, a, vice president and a-plus, president?
Janet Napolitano:
>> just like I said before, I think the issue is, what does this show about John McCain and his judgment that he thinks she's ready? I have my doubts but, again, this is John McCain running for president. Obviously politically, we know why Sarah Palin was picked or she appeals to a certain party of the electorate. That's fine. Is she really ready to be one heartbeat away from the presidency? I think the next 50 days time will tell.
Ted Simons:
>> and yet the other side, the critics of the democratic district say Barack Obama doesn't have a whole heck of a lot in the way of experience as well. Much has been made of that. Compare and contrast as you can, Sarah Palin's experience as governor and Barack Obama's experience as a senator.
Janet Napolitano:
>> This is a contest between Barack Obama and John McCain. They are very different. Yes, Barack Obama hasn't been in the senate for 20-plus years as John McCain has but he has a lot of experience and a lot of nonwashington experience and better than that, he's got new ideas for what we do with this economy, how we refocus it on the real soul of this economy which is the productivity of the American worker. That's where the economic policy needs to go. Very different between Obama and McCain on that score.
Ted Simons:
>> has the media been fair in dealing with governor Palin?
Janet Napolitano:
>> Oh, I think overall, yeah. In fact, you know, i was kind of surprised when McCain's campaign manager said, well, she's not going to be interviewed anymore unless the press shows her appropriate respect and deference. I was really laughing. I said, well, jeez, I know Sarah Palin. You know, governors get talked to by the press all the time. We don't require respect and deference.
Ted Simons:
>> do you think, though that sexism has played a part in this entire debate with -- I know you want to concentrate on senator McCain but she's getting a lot of talk and a lot of concern from a lot of different corners saying that, oh, she wouldn't have been asked that if she were a man. Those sorts of things.
Janet Napolitano:
>> I really, you know, to me that's not the question at this point in time. We can second guess the press conference of this election once the election is over but we are 50-some-odd days from electing the next president of the united states. Our nation's in trouble. We're in trouble internationally. We're in trouble domestically. Probably as deep a hole we've dug ourselves in this my lifetime. We can do media criticism later.
Ted Simons:
>> Barack Obama opens an office here in Phoenix. The Obama campaign. How much effort are we going to see here in Arizona?
Janet Napolitano:
>> It was stunning. I was at the opening actually. It was like at 5:00 on a weekday afternoon. It was hot. We were out in the street. There were 800 or 1,000 people there. So those ground troops, that grassroots effort that really underlies the Obama campaign, very strong in Arizona.
Ted Simons:
>> will we see senator Obama or senator Biden in this state?
Janet Napolitano:
>> I don't know yet. I think a lot of the travel decisions are made on a short-term basis. Right now, I don't know of any plans to. I don't think i know of any plans beyond the first debate so --
Ted Simons:
>> How about advertising? Going to see a lot in the way of advertising or will that be spent in the Ohio's and the Michigan's of the world?
Janet Napolitano:
>> I don't know. The so-called battleground states, the advertising is already hot and heavy. What we see in Arizona we have yet to see.
Ted Simons:
>> The last time you were on the show, John McCain was just starting to make inroads on the polls. I know you weren't quite sure what to make of that and weren't entirely convinced this was entirely accurate. It seems like he's caught up and in many polls surpassed senator Obama. First of all, what's going on here? Secondly, how concerned are you about that?
Janet Napolitano:
>> What's going on is we have an election going on. Polls go back-and-forth and I think the newness of Sarah Palin has -- and kind of her freshness in what's been a very long campaign obviously has had appeal to some voters but as things settle down and people realize the stakes involved in this election and the real differences between the principles, I think the polls will swing the other way.
Ted Simons:
>> Last question. There's been talk about observers that maybe your power in Arizona is in the decline. Term limits are coming up. You're seeing the end of the road here coming up. Often, in best cases, that means a decline in influence. How are you responding to those who say the governor's heyday is over. She's not quite pulling as much water as she used to.
Janet Napolitano:
>> I don't know what it teens in pull as much water as I used to. All I know is I'm still the governor of this state. Not only that but as we deal with a declining economy, a rising unemployment rate, making sure that we continue to educate the next generation, those are the things I'm spending money on. We'll let those on the sidelines talk what they want.
Ted Simons:
>> so when they say, the initiative isn't making it and the staffer is leaving and the economy isn't in good shape and the budget problems, this is all -- these are all signs that maybe the governor isn't quite as strong as she used to be. You say --
Janet Napolitano:
>> i say, no, we're at it full time, full bore ahead.
Ted Simons:
>> Governor, thank you so much for joining us. Always a pleasure.
Janet Napolitano:
>> You bet.
Ted Simons:
>> Maricopa county recorder's office has a final tally of the primary elections in the county. We'll have the canvass results and talk about the issues with Helen Purcell Tuesday on horizon. Thursday, an update on v-cat, the effort by dps to catch violent criminals. Friday, it's another edition of the journalists round table. That is it for now. Thank you so much for joining us. I'm Ted Simons have a great evening. If you have comments about "horizon" please comment us at the addresses listed on your screen. Your name and comments may be used on a future edition of "horizon." "horizon" is made possible from contributions from the friends of 8, members of your arizona pbs station. Thank you. 8 is a service of Arizona State University supported by viewers like you. Thank you.
Janet Napolitano:Goveror of Arizona;
