Legislative Update

March 18, 2009

Transcript:

Ted Simons:
Good evening. I'm Ted Simons. State lawmakers are knee deep in budget work. They restored cuts made to several programs in the '09 project. Here's Arizona Capitol Times reporter Jim Small. Good to have you back on the show. Late today we get word of familiar call out of the treasurer's office that we could be running out of cash, what, in a matter of days?

Jim Small:
The treasurer said the state is on the verge of basically having no money all in its account. It only had money today to pay its bills by transferring money in from the rainy day fund and basically wiping that out. Last week it took a federal $300 million transfer as part of the stimulus package to let the state pay its bills at the end of the weeks. What this is leading to is tomorrow, tomorrow morning, the Loan Commission is going to be holding an emergency meeting and they are going to decide on basically an interest rate that the state will play for short-term borrowing for day to day loans for those days when it looks like the state is, for, you know, days when expenditures are going to outpace incoming revenue.

Ted Simons:
The treasurer's announcement today, does this mean the state will or could take out day to day loans?

Jim Small:
Basically, this means the state will. It will certainly have to by the middle of April, April 15th, there's a payment that has to go to education to the schools, and that payment, April is one of those months where the state has a double payment where they pay more than they normally do and it's going to take the state couple hundred million dollars, $250 million or so to pay those bills and basically stay solvent.

Ted Simons:
Last time we had one of these meetings the governor and the treasurer did not get along all that well. Different governor, different outcome likely?

Jim Small:
I would expect so, yeah. Former Governor Napolitano in January when they had the last Loan Commission meeting, she -- basically they didn't set a rate. She, you know, told Dean Martin what she thought of his idea and in that meeting to borrow, and walked out of the room. And so this one should be different. He said he's been working with the governor's office for a couple of weeks to schedule this meeting and try to find a time that would work. And basically now is the time to do it.

Ted Simons:
This current governor asked for a stimulus money, federal stimulus money, the package, what, like two weeks ago and we are just finding out about this now. Why was this not announced originally?

Jim Small:
The explanation that came from the governor's office was, well, you know, she's talked about taking this money and how much we need this money. So we didn't really think it was that important that she sent the letter to the president saying, Arizona intends to get this money and into the economy. It's kind of puzzling to most people down there, lawmakers, media, everyone, kind of looked at that and went, well, this happened March 5th, date after she made her big speech before the legislature. Why wouldn't you tell lawmakers? The Democrats in the house had two press conference conferences since that day to say, governor, we want you to apply for this money and say Arizona will take this money. And, you know, help certain programs. So it is kind of puzzling.

Ted Simons:
It was interesting, yeah, because Democrats were criticizing, why would you not just respond and say, it's already done, knock it off. They didn't go that far.

Jim Small:
No, no. Basically no one, no one knew. One of the reporters at the A.P. was the first to find this out just was talking with him today; he was talking about the governor's spokesperson and then got this information.

Ted Simons:
Interesting letter. As you wrote, she criticized the stimulus while at the same time saying, we'll take it.

Jim Small:
Yeah, and her main criticism is, look, Arizona has a structural budget problem. We have revenues, you know, that are far in excess or expenditures that are far in excess of what we are going to be getting in revenues in any time soon. Over the next five years we are going to see a declaration accumulation total of 20, $25 billion worth of deficit if we don't change things. She said this money is really one-time money. It's not going to help us bridge that gap and bring those, the revenues and expenditures closer together. So in that sense it's kind of a crutch and it could make these things worse down the road but she qualified that by saying, its taxpayer money and Arizonans pay taxes and we need the money because we can't do this all at once.

Ted Simons:
The status of a temporary tax going to voters, where do we stand on that?

Jim Small:
Not much different than a few weeks ago when she announced her desire to see a tax increase to help solve the budget problem. Lawmakers, probably lawmakers have been very vocal against the idea. It's a recession. Common wisdom is that if you implement a tax during a recession, it hurts economic recovery. They don't want to see that. A number of Republicans have signed no new tax pledges which, you know, when you sign that kind of a thing you have to go for an election every two years. You don't want to be pegged as a flip-flopper or someone who raised taxes. It's never good news.

Ted Simons:
Not necessarily because of this but for other reasons we keep hearing and reading about possible fractures in the Senate and in the house with the governor's office and just among the GOP caucus members in general. What are you hearing down there? What's going?

Jim Small:
When it comes to the governor's office there is definitely a sense of frustration among specifically Republican lawmakers. They really I think had dreams of everything being, being happy and being smooth going with a Republican governor in office. Most of them haven't had, haven't been in the legislature with a Republican governor. They have only known Governor Napolitano. So they are starting to realize that, well, you know, there's still conflicts, we are still fighting. The combination I think of the natural tension you have between an executive branch and a legislative branch combined with the call for a tax increase which, a number of Republicans see as, you know, essentially heretical for Republican philosophy, it's really creating a lot of tension and throw in the fact they don't think they are getting enough communication from the governor's office, they don't know what's going on. This is something I think that's going to develop and probably get -- might actually get worse.

Ted Simons:
How about in the Senate where we hear the majority whip and the Senate president may not be getting along all that well?

Jim Small:
There was a lot of talk last week over that bill you referenced about refunding some or reappropriating some child care subsidy money. The majority whip Pamela Gorman had apparently tried to put the brakes on that bill going through the process. In part because she didn't like some of the changes that were made in the house that she wanted to -- she told the media yesterday it was because she wanted to make sure members had a chance to understand the bill, knew what they were voting on. The rumors were rumors that she was threatened with get he can her leadership position pulled. There's been a lot of rancor around this and a lot of speculation about it. But, you know, as of yesterday, publicly, at least, things seemed to be fine between the Republican leadership in the Senate.

Ted Simons:
I think everyone -- a hug was referred to.

Jim Small:
Yes.

Ted Simons:
Allegedly occur.

Jim Small:
They hugged and made up.

Ted Simons:
Jim, always a pleasure. Thanks for joining us.

Jim Small:
Thanks for having me, Ted.