Budget Agreement

July 29, 2009

Transcript:

Ted Simons:
State lawmakers make a strong push to end their special session to balance the budget and possibly send a tax increase to voters. Arizona may soon be competing for billions of federal dollars that will go to states leading the way on school reform. That's next, on "Horizon." Good evening, and welcome to "Horizon," I'm Ted Simons. This is the fourth week of a slow-moving special session, but lawmakers started moving fast today. Republican leaders reached a budget agreement with the Governor and began hearing bills related to that plan. It's reported to include sending a measure to the ballot and raising the state sales tax by a penny. Both are temporary, lasting only three years. Here is Dennis Welch of the "Arizona Guardian." This came out of the blue a little bit here, huh?

Dennis Welch:
By all appearances, when we were called back to the special session, looked like we would be sitting around for most of August because a lot of people are on vacation. They set the one deadline for October 1st to get that kind of thing done. This coming out now is really fast, and really, nobody saw this coming.

Ted Simons:
The Governor gets the referral to the ballot in the deal. But the referral isn't necessarily all she was asking for, correct?

Dennis Welch:
That's correct. She does get the referral out of the whole thing; she's going to get her penny increase for the first two years. But on the third and final year of this temporary sales tax, it's going to be reduced down to half a penny.

Ted Simons:
She gave a little bit on that third year. She gave a little on the capping state spending. The taxpayer bill of rights is back in play.

Dennis Welch:
Yes, it is. Right now, spending would be capped; it could not exceed $10.2 billion. That was the 2009 fiscal year spending limit. That could have significant ramifications for access with their caseload growth, education with their growth and whatnot.

Ted Simons:
Is that cap referred to the ballot, as well, or is that something apart and aside?

Dennis Welch:
It could be part of the deal, it was a little unclear. I'm not sure how that could pass the single subject test if it was referred to the ballot. It would have to be an individual ballot item. As far as this deal goes there's only two issues going to the ballot.

Ted Simons:
We should mention again this is an agreement and deal being hashed out as we speak.

Dennis Welch:
It's in motion. They are in meetings right now trying to work this thing through. They will probably be there most of the night.

Ted Simons:
Indeed. Referring a suspension of voter protection act, as well. Is this teamed with the other items? Again, you can't team things that are separate.

Dennis Welch:
No. No, you can't do that, they are both two separate questions that voters are going to be asked about this kind of thing. The 105 money, the voter protected money, is something that a lot of Republicans really want. They feel their hands are tied when dealing with this type of a budget crisis going on because a lot of that, a majority of the budget is off limits, it's mandated spending.

Ted Simons:
Things referred to the ballot, should this go through, there's a deadline for that, isn't there?

Dennis Welch:
It's got to be done by, depending on who you talk to, by the end of this week or potentially next week to get everything set up for November elections. It's one of the reasons we're starting to see a sense of urgency coming out of the legislature this week.

Ted Simons:
There is also $650 million somewhere in tax cuts, not going to be referred anywhere. Those cuts are a done deal?

Dennis Welch:
They are. One is $250 million, which would be immediate. We're starting to see everything speed up now because that property tax was initially temporarily suspended three years ago. It went back on the books at the beginning of the fiscal year. Before the county starts sending out tax notices, they want to be able to kill that thing.

Ted Simons:
You've got $650 million in tax cuts that are a done deal if this goes through. You've also got a referral which could very possibly be voted down.

Dennis Welch:
Yes.

Ted Simons:
That's a lot of cutting going on.

Dennis Welch:
That's a whole lot. Let me tell you, a lot of the folks voting to put this on the ballot are going to actively work hard and campaign against it come this fall. It's going to be a well-organized well-funded opposition to this tax increase.

Ted Simons:
As far as this is concerned, what are you hearing as far as education cuts?

Dennis Welch:
I'm hearing that education cuts, people in education aren't happy with them. They are getting cut on what's called their 2% inflation growth, where they are given certain money on baseline spending and every year it goes up by 2%. They are going to take that away and it's about a $102 million cut. That has serious ramifications.

Ted Simons:
Democrats, I'm guessing, somewhat on the outside of this?

Dennis Welch:
Democrats thought they were negotiating with the leadership all long. They thought they were really close to a deal, according to Democrats. They thought they were about $50 million off on a deal they could get the votes on. All of a sudden we get word that the Republicans had kind of gone behind their back and cut a deal with the Governor, leaving the Democrats out.

Ted Simons:
So that suggests not a whole heck of a lot of Democrats are going to vote for this thing. The question is, are there Republican holdouts, folks from the G.O.P. that aren't happy for one reason or another?

Dennis Welch:
Yes, there are, on both sides of the political spectrum of the Republican Party. On the far right you have the real hard core conservatives who don't want to send any type of tax increase to the ballot, no matter what they get. Even though they are getting $60 million in property taxes and income tax cuts, they still don't want to send this thing to the ballot. On the more centrist part of the ballot, they are saying why are we sending this to the ballot to make these cuts permanent? Why not tie these things together, so in case the ballot measure goes down we don't get the tax cuts and put ourselves in a huge hole?

Ted Simons:
Before I let you go, there was some talk of late that everything up to and including the House building, the Senate building, everything could be for sale as far as a lease back is concerned? And that includes things like prisons, as well.

Dennis Welch:
We were told by house leadership that the capitol is not for sale, it never was. They don't know where that came from. It might have been a proposal they had been looking at. They were looking at a lot of different things. What is up for sale is state prisons out there. That is up for a sale lease back, including Iman, one of your high-security types of prison where you see everybody from your violent offenders, serial killers, these types of people, that could be sent out to public bid to have public companies run those facilities.

Ted Simons:
Good information. Things are going on as we speak and will continue, but it sounds like an agreement. Thanks for the details.

Dennis Welch:
Thank you.