Special Session

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The budget passed by state lawmakers at the last minute has been shot down in part by Governor Jan Brewer. House Minority Leader Representative David Lujan and House Majority Leader John McComish talk about efforts to come up with a new budget plan.

Ted Simons: Good evening, and welcome to "Horizon." I'm Ted Simons. Earlier today governor Jan brewer signed into law four bills that legislators approved in the special session, restoring k-12 education funding that had been eliminated earlier and the bill ensures Arizonans don't lose billions in federal stimulus money. The governor is also asking lawmakers for a temporary sales tax increase something they have not yet dealt with. Here to talk about all that and more, House Majority Leader John McComish, a Phoenix Republican, and House Minority Leader David Lujan, a Democrat from Phoenix. Good to have you both here. Thanks for joining us.
Guests: Good too be here. Thank you.
Ted Simons: Cooperation, Monday in special session, why didn't we see any of this earlier on?
John McComish: Well, David and I were joking before, saying we had a common enemy now, and that both caucuses, republicans and Democrats, were upset at being called back at a time, as well as with the details of the governor's veto, so that kind of brought us together and so we were able to work out what we needed to make sure that the schools were funded and that we didn't lose the stimulus money.
Ted Simons: Is that how you see it as well? Six months and all of a sudden six hours it's done.
David Lujan: Yeah, well, I think one of the things is we had when governor brewer vetoed those bills last week, she also put us in violation of receiving over $2 billion in federal stimulus money, so we needed to act quickly to make sure we were saving that stimulus money, and so I think that that was a real motivator for us to come in and get the work done and, you know, the biggest thing that was different this time is Democrats were included and I think it's a good sign for the future, hopefully, that when republicans and Democrats work together we can get something done in a bipartisan fashion.
John McComish: I don't disagree with that, but also what we had to do was a pretty narrow charge. It wasn't a huge budget that we were trying to fix. That yet remains to be done, so it was kind of a narrow challenge we had is, a narrow charge, so we were able to deal with the smaller issues.
David Lujan: Lot of work still to do.
Ted Simons: Indeed.
David Lujan: This was the easy part. And now the hard work begins and so that's going to be our challenge here in the next coming days.
Ted Simons: Considering how smoothly things went on Monday, did the governor do the right thing with those vetoes? Did the ends justify the means?
John McComish: Good question. The result was good, but I don't think in that case -- it could have been done differently in my mind. We didn't have to be called back quite so quickly and some of the vetoes and the way that they happened in putting the stimulus money, for example, in jeopardy and putting the education funding in jeopardy, didn't have to be done that way but we worked together and fixed it.
Ted Simons: Didn't have to be done that way, explain.
John McComish: Ok. The vetoes, I mean, the governor is as is her privilege is bent on getting the one cent sales tax, so she could have vetoed portion of the budget and had our charge to come back in the special session to deal with those things and her vetoes were unfortunately broader than that, which created some of the issues that we had to deal with quickly.
Ted Simons: Back to the original question, ends justify the means as far as the governor's vetoes?
David Lujan: Well, I mean, I think as Democrats obviously, we didn't like the budget that was sent up, so we were happy with the vetoes, because we did not agree with that budget at all. And certainly we like the fact that governor brewer says she supports more funding for education, that's something that we support. However, I don't think that Governor Brewer has a plan on how to accomplish what she says she wants to accomplish. There are five parties that are necessary if we're going to come to a bipartisan agreement. You need to have the House Republicans, the Senate Republicans, the House and Senate Democrats. Plus the governor. If you're going to come to a true bipartisan compromise, and here we are on July 8th and Governor Brewer has yet to call all of those five parties into a room and so this is all about compromise. If we're going to reach the solution that she wants to reach, she's going to have to have everybody compromise and get everyone into the room and she's yet to do that and I don't think she has a plan on how to accomplish what she wants to accomplish.
Ted Simons: Valid criticism of the governor?
John McComish: To a point, yes. But I think it needs to be remembered that in our late night on June 30th, we came very, very close to having a balanced budget that the governor would have signed, and we had a balanced budget the governor didn't sign it, the point that we were missing was the one cent sales tax, we're actually very close on that. Not quite, but very close.
Ted Simons: The idea of banding together, do you agree with the idea of the common enemy approach? I mean, does it seem as though the governor is out there and now you guys are all huddled and working together, I mean, does that make sense?
David Lujan: Well, it doesn't because if we're ultimately going to come to a solution, as I said, we need to get all five parties together, and that includes the governor and we're all going to have to compromise. I mean, we're looking at the largest budget shortfall in the history of the state. Nobody's going to be happy with the end results. We're all going to have to give something that we're not happy with. And that includes the governor, and so she has to be in the room as part of those negotiations and so we can't have any enemies in this process, we all have to be working together.
Ted Simons: What do Democrats want? What are Democrats willing to compromise on?
David Lujan: Well, as Democrats we've actually put out this session two balanced budget proposals and that includes what our caucus wants, we want to have a stable revenue source, and we want to make sure that we have revenue to protect programs like education, healthcare, and vital programs. And so we realize that we're going to have to have cuts, but we also want to see we've got the revenue to sustain our programs and our future, which I think begins with education.
Ted Simons: I want to get to some specifics in a second. From the Republican side, what is the G.O.P. ready to concede, ready to compromise with?
John McComish: I want to get back to the common enemy, that was valid for the short term and one kind of narrow decisions we had to make, that was valid. Now we need to have common friends and the governor needs to be, I certainly agree with David, the governor needs to be included in that because as we always say it takes 31, 16, and one, the house, senate, and governor to get anything done. But sure, we're willing to compromise. We are willing to look at new ways for gaining revenue and we're also looking at the Democrats to compromise on some of the cuts and the number of cuts to try to get the budget balanced.
Ted Simons: With that in mind, how best, now $2 billion short again, how best do we get this deficit under control? What do we do?
John McComish: Ok, well, if you go back and look at the budget that we passed, it was a balanced budget. Setting aside the one cent sales tax issue, it was a balanced budget. I think we used that as a framework. There were a number of items in there, there was some borrowing, using, state prisons as collateral, so to speak, and other items that we included that brought us really to a balanced budget. Now, some may not have liked the way we balanced it but it was balanced.
Ted Simons: Is that a framework? Is that kind of a ground level thing that the Democrats can work with? Or just want to take the whole thing down and start all over again?
David Lujan: I think it is a framework, we differ on the levels of various things, but if you look at the democratic budget proposal we recognize that it's a comprehensive approach. You have to have a combination of cuts some borrowing and additional revenue. And it's where we get those things that we have the differences and we just need to figure out how to reach common ground.
John McComish: Philosophically we differ in matters of degree.
Ted Simons: Right.
David Lujan: I think it's the best way to put it.
Ted Simons: The governor obviously thinks that we need the one cent temporary increase in the sales tax. And this is obviously a sticking point for both sides. I want to ask both sides, why is that a bad idea?
John McComish: Ok. Well, I worked very hard to get it passed. So I can't say that it's -- I can't say it's a bad idea. I mean, what does concern me about any kind of a tax increase is that it's a lot of economists will tell you it's not the right thing to do in a recessionary economy. But in order to get the budget passed, in order to accede to the governor's wishes, we in the Republican leadership work very hard to get the one cent sales tax increase, to get the numbers, and we didn't quite get there.
Ted Simons: Did you work hard? Because it sounds like the governor -- sounded like the governor said an agreement was broken and legislative leaders said an agreement was broken. Who's telling the truth here?
John McComish: Ok, well, obviously we are. And I think it's like some issues, it depends on where you're standing. Our understanding was that we will work very hard and the governor was told by legislative republican leadership that this is a task we may not be able to achieve and she said she understood that and she would work hard with us to get to work with -- to talk to some Democrats, to talk to republicans that were holding back and try to get us across the finish lines and we were not able to get across the finish line, so as far as we were concerned, we gave it our all and she participated and did too.
David Lujan: Can I just add to that, this gets back to what I said at the beginning is that governor brewer needs to include Democrats because all along she was just assuming that she could contact one, two, three Democrats, however many she needed for her sales tax proposal, and we would just go along with that. And we said from the beginning, we said from February that she just can't come to us at the last minute and expect us to vote on something. She needs to include us in the process. She never did that. She still hasn't done that.
Ted Simons: The one cent temporary increase in the sales tax, and you referred earlier to the democratic idea of a broadening tax base and getting rid of some credits and also targeting services, why is the one cent temporary sales tax a bad idea, and the idea of going after hair dressers and legal people and car repair folks, why is that a better idea?
David Lujan: Well, what we want to see partly in the difficult economic times, we want the cost of an increase in taxes to be as minimal on middle class families as possible. And governor brewer's temporary sales tax proposal would cost the average Arizona family about $438 a year. Whereas we believe that our broadening of the base and lowering of the sales tax rate would cost Arizona families only $180 a year, so it would cost less and bring in more revenue potentially and we believe it's a more stable revenue source so it wouldn't be so susceptible to downturns in the economy, because our revenue is so dependent on services now, so we would be broadening that base and having that revenue not only this year but in future years.
Ted Simons: Is that the kind of thing republicans could look at and consider?

John McComish: We could look and consider certainly, in fact, we've been talking about threat but it can't cost less and bring in more revenue. That kind of math won't work. And there's a lot of political issues with that. In terms of whose ox might get gored with broadening the base on services. So it's something that we've talked about and we want to pursue further. I'm not sure that we can, you know, go all the way with that idea, but we're open to looking at it.
David Lujan: The reason it costs less is because you're broadening the base, opening up the sales tax to more things, so more things are being taxed, bringing in more revenue.
Ted Simons: More oxes are being gored in other words.
Guests: Right.
Ted Simons: Were you comfortable that the flat tax kind of appeared late in the game?
John McComish: I understand what you mean by that. And I've heard that criticism, and actually it's something that we have been talking about for a long time and it's not a new concept, the number of states are doing that. And so in one sense it was brought about kind of late in the game but in the other way of looking at it, we were talking about it for months and months and many states are doing that. So it's not a brand new concept that we just pulled out of the air.
Ted Simons: Sure, but as far as taking it that far into the process, it did take some folks by surprise. Is it something that should be seriously considered?
John McComish: Absolutely.
Ted Simons: How come?
John McComish: Because it does -- we believe similar to talking about sales tax, it broadens that, and it's a more fair tax.
Ted Simons: Do you agree with that?
David Lujan: No, as we looked at it last week when this came about, there were all sorts of questions that started to be raised as getting more and more of an examination, and one of the things is the proposal would actually I believe take out hundreds of millions of dollars out of revenue that would be coming to the state so I think that's the last thing we need right now is to be decreasing our revenues at a time when we're in an economic crisis.
John McComish: That's why we had a commission that was set up, the original plan was it would not take effect before I believe a year and a half and during that time the commission would decide what the rate ought to be set because I heard these horrible figures that it would take $450 million out of the economy and something we don't believe that and we would make sure that it didn't.
Ted Simons: All of these things are going to have to be on the table, are they not, with $2 billion needing to be mended?
David Lujan: That's where you get to, you know, let's get the parties in the room, because we had a meeting today of the house and senate leadership, governor still isn't participating in these things, but that's how you get things going, you start talking about the various options and you have that give and take, and that's how you're going to get to an agreement eventually. It's not easy, but that's how you do it.
Ted Simons: I don't want to let you go without the concept of not hearing bills until the budget was passed. Did you agree with that strategy?
John McComish: No. Bad idea. I said it was a bad idea in the beginning and in the end it turned out to be a very bad idea and we had arrested judgment with a number of bills and that was unfortunate.
Ted Simons: So you believe that some of those bills did not get complete and proper consideration?
John McComish: You'd have to -- I don't know which ones, but certainly you would assume that there's a good chance that some bills didn't get a full Vetting and some bills that should have gotten a Vetting didn't, you know, didn't move along in the process because of the rush.
Ted Simons: Let me ask you this, did you agree with withholding the budget till the final hour? Not sending it -- put it this way, not sending it over immediately.
David Lujan: I think he went to court over that, didn't he?
John McComish: Yes.
John McComish: Yes, the original idea was not to hold it till the final hour. There's a lot of misconceptions about that. The original idea was let's don't send it to the governor if she's going to veto it, because then we would not have any budget and have to start again. The original idea was what we in fact did, sent trailer bills or amendments if you will, and it's easier to send just mechanically the paperwork and dealing with it all, it's easier to do that than to start all over again and try and redo the whole budget. So that's in fact what we did, and that was the reason for not sending the budget. It wasn't to wait until the last minute and try and trick her or anything like that.
Ted Simons: Is that how you saw it as well?
David Lujan: Well, yeah, and I think, you know, the lesson I think to come out of this is, you know, let's do things a little bit different now. We passed the end of the fiscal year and we still don't have a budget so how are we going to do things differently. Rather than fighting it out in court, let's bring Democrats into the process and come up with a bipartisan solution.
Ted Simons: All right. Back Monday, is that correct? Anything substantive going to happen Monday?
John McComish: I don't think on Monday, most of the work right now for the short term will be done staff work behind the scenes, leadership, as David said, leadership met today, staff has some assignments as a result of that, those meetings. And so the Monday meeting will be more formal and formality and there won't be a lot of floor work.
David Lujan: But we are working very diligently to get this done, and so while staff is working, we'll be meeting and hopefully coming up with a compromise then.
Ted Simons: Last question, I know how you're going to answer this. I want to hear from you. Bipartisanship, getting everyone in the room, whole nine yards, got about 30 seconds, can this move ahead for Monday or are we going to see the same old same old?
John McComish: We will see. We had a good meeting today and we set out some guidelines and we talked about some differences and some similarities and so I think we had a good start in that direction.
Ted Simons: All right, very good. Great discussion, thank you both for being here on "Horizon."
Guests: You're welcome.

David Lujan:House Minority Leader Representative;David McComish:House Majority Leader;

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