Legislative Update

July 30, 2009

Transcript:

Ted Simons:
Tonight on "Horizon," the sponsor of a new foreclosure law now wants the law repeals before it goes into effect. Find out why. And find out if lawmakers have the votes they need to pass their latest budget plan. That's next on "Horizon." Good evening, and welcome to "Horizon." I'm Ted Simons. Yesterday it appeared lawmakers were well on their way to passing a budget. But then something got in the way. Not enough votes. Here now with the latest is Jim Small of the Arizona Capitol Times. Good to see you again. That's pretty much it, wasn't it?

Jim Small:
That pretty much explains it. They got everything ready, they held a press conference with the governor saying we've got a deal in place, if we could get these bills through, she'll sign it, and this whole thing will move forward. We won't have a repeat of last month, where things were vetoed, and everything kind of fell apart three hours after that press conference, and the senate came on and suddenly adjourned and caught everyone by surprise and went home for the evening.

Ted Simons:
Who is holding out and why?

Jim Small:
It looks like there's a couple of conservative Republicans in the senate. Jack Harper from surprise, and Pamela Gorman from anthem are the names most people are talking about as far as being the two kind of holdouts. You've already got one Republican senator, Ron Gould from Lake Havasu who is not going to be in support of this plan which includes tax increase proposal. He's not going to support that no matter what. They have another from Scottsdale who hurt herself the other day and she's laid up, she's immobilized so she's very unlikely to come down to the capitol to vote on something with only 18 Republicans in the senate, that basically is your entire margin of error. So they need to get every other Republican, so senator Harper, senator Gorman are opposed to the tax increase proposal, and as it stands right now leadership over there is continued to work them over as they have yesterday and they have pretty much all day today.

Ted Simons:
So senate president Burns can perhaps replace folks on the apropos committee, move it to another committee, but the fact is, no matter what happens even if it gets out after committee they doesn't have the full votes.

Jim Small:
Right. That's kind of one of the things everyone is looking at. OK, the bills can't go out of committee because senators Gould, Gorman and Harper are all on the committee. So if you've got three no votes out of seven Republicans you're in trouble. They're going to line up with the democrats and the bills will go down. So you could move it a month ago when they had the same problem, they moved the bill to the education committee, passed them out, and I think we all remember what happened there. The tax increase proposal still didn't go anywhere. And it's really the problem they have now. Sure, they can get it out of another committee, but that's only gets you one step closer to the showdown.

Ted Simons:
The governor, we're hearing some reports the governor now and maybe some leadership pitching woo to democrats. How much?

Jim Small:
The governor has been talking to some democrat lawmakers this week. I don't know what's been said or what's been offered. Certainly we haven't been ability to -- we've been scouring Democratic hallways looking for those democrats that are supporting this plan. We haven't been able to find them. Their leaders say they haven't been able to find them either. If people -- if democrats are cutting deals with the governor, it hasn't been evident yet. Frankly F. they had enough to cut the deals to make up the difference for senators Harper and Gorman, I think we'd see this thing move into the floor.

Ted Simons:
I was going to say, it would seem as though democrats would be pretty upset about the whole turn of events. They thought they had something working with leadership, and it sounds as if leadership was working something else.

Jim Small:
Yeah, they are. They're very upset with the way these negotiations were handled. For the past month, three weeks, they were working hand in hand with the Republican leadership. And it was the first time all year they've been involved with the budget process, they met for three weeks, they were supposed to have a meeting on Tuesday to come back. They said they were only about $500 million apart. They showed up at the meet can and the Republican leadership said, by the way, we've been working with the governor. So we've got a deal in the works with her, sorry, we're going to go ahead and pursue that the time being. The democrats were angry, held a press conference a couple days ago, and this -- right now they're kind of on the sidelines looking in. And in one respect in this -- if this deal falls apart, they're going to the -- they'll be in the cat bird seat because the Republicans won't have any choice but to come back to them. I spoke with the house minority leader yesterday; he said if they come back we're starting at zero. All the work we did is all out the window. We go back to where we were and our members are angry that they're going to be less willing to make the compromises.

Ted Simons:
It sounds like a harder bargain. To be clear, this package that was moving and now it's stalled, you're talking three years of a sales tax hike, one cent, one cent and the third year a half cent. And you've got spending limits to '09 levels, something like that.

Jim Small:
About $10.2 billion. Those would be on the same ballot question. So voters, if this were to pass, would it go on the ballot sometime in November. They would get the choice, do we want to raise taxes and at the same time implement a spending cap, and the idea with that is to show voters that the money won't be collect and used to grow government. It's going to be used to pay for things currently on the books.

Ted Simons:
Another part of the package includes suspending the voter protection act, again for three years, which means for three years you can monkey around with it any way you want?

Jim Small:
Yeah. It's kind of an odd component. It's a three-year constitutional amendment. Which -- I don't think anyone has ever seen before. And, yes, you would be able to go through anything that was approved by voters that has money component to it that's been approved since 1998, lawmakers could dip into the funds. So you're looking -- some of the things, the funds that they might take money from would be clean elections fund, first things first, which is the 80 cent tobacco tax that was pass add couple years ago. Things like that that have stockpiled the money that they can't touch.

Ted Simons:
And again, just to be clear, there are tax cuts that would go into effect after three years, after the sales tax should it be enacted and should it be approved by voters, the sales tax, the individual and corporate income taxes would then kick in after three years. Do those things kick in if the sales tax is turned down by voters?

Jim Small:
Yeah. If the legislature approves the budget bill, yes, they would. Basically they've tied these things together, so these Republican lawmakers who don't like the idea of the tax increase get to vote on one bill that has a tax increase ballot referral and at the same time income tax cuts for a couple years down the road. You could absolutely have a situation where this thing goes to the ballot and fails, and then in a couple years you have $400 million in income taxes that come off the books.

Ted Simons:
All right. Where do we stand right now?

Jim Small:
Right now we stand kind of waiting to see what's going to happen in the senate. It's really a matter of whether they can get the votes. If they get the votes, they're going to move as quickly as they and can you'll see the house and senate start to take bills to the floor and vote on them ASAP. If not, I think it's just a matter of when does leadership decide to cut bait and this deal will be finally dead?

Ted Simons:
Jim, good stuff. Thanks for joining us.

Jim Small:
Thank you.