Ted Simons: Hello and welcome to "Horizon." I'm Ted Simons. Joining me tonight are Mary Jo Pitzl of "The Arizona Republic," Dennis Welch of "The Arizona Guardian," and Mike Sunnucks of "The Business Journal." A report by the Pew Center on the states confirms what many Arizonans already know -- We have a budget crisis, one of the worst in the country. Mary Jo, only California is worse though we're tied with Rhode Island.
Mary Jo Pitzl: And people are shocked that Arizona has fiscal peril. They took a look at California and said what are the things that lead California into the depths of their budget problem. And Arizona came close to matching that driven by our high foreclosure rate, the size of the budget gap, the drop in revenue, collections year over year.
Ted Simons: No surprises here?
Dennis Welch: You have to look at with the housing market tanking we were so dependent that for revenue and the sales tax, we have so much retail and when the economy starts to tank, that's the first thing, you're going to see a hit in the sales tax and it's going to take the revenues down.
Mike Sunnucks: We have a lot of mandated expenses but there you have them built into their budget and they cannot fight that during a recession.
Ted Simons: But the concept of mandates was mentioned by the report, yes, the voter protection act. You can't mess around with that. But the legislature needs a two-thirds supermajority just to get revenue to match as well. So you have both sides hamstring.
Mary Jo Pitzl: It cuts both ways, and we're hearing from the civic groups, maybe we should get ride of the two-thirds supermajority to raise taxes and get rid of the -- a lot of requirements of the voter protection act so that lawmaker can adjust programs.
Mike Sunnucks: Everybody is for it until it hits their pet project. Once it hits home, no one is for it.
Dennis Welch: I'd like to say, viewers of this show are probably well aware of the problems that the supermajority causes just getting a referral to the ballot and it's really hamstrung the legislature from getting anything done.
Ted Simons: We should note that the report noted a sizeable cut in personal income taxes from the 1990s, also a factor.
Mike Sunnucks: Yeah, they cited the Symington -- they go all the way back there. Where we have is $10 billion, and $7 billion in revenue, part of that is spending and part tax cuts.
Dennis Welch: Doesn't exactly go with the Brewer administration, their narrative that all things point to Napolitano. It was her that increased spending and got us into this mess.
Mike Sunnucks: The voters got to take responsibility. They want to raise spending any time something feels good but also want to cut taxes and vote in people that want to cut taxes.
Ted Simons: Does this add fuel to the fire saying Arizona government is broken and let's do something to fix it or a report that will be shelved?
Mary Jo Pitzl: I think it's a report that will be shelved. There wasn't anything new in it and the author said it's a little too soon to get around to proscribing solutions and I don't know that the legislature would listen to solutions from a Washington D.C.-based [inaudible] anyway. [Talking over each other] [Laughter]
Ted Simons: Well, in effort to fix that, we have a special session that it seems Friday we're talking about the special session is coming -- when?
Dennis Welch: To quote one of my sources I talked to before coming over here, they said, "Ain't going to happen." Obviously they've been having problems getting it done. It's not going to happen next week. I hear there's problems to get the bodies in there. As well as there's still disagreements out there.
Ted Simons: Why is this taking so long?
Mary Jo Pitzl: Yesterday the house was blaming the senate and the senate blaming the house. A lot of this going on across the capitol mall and as Dennis mentioned, there's member attendance issues. Senator Barbara Leff left today for a Caribbean cruise. They plan this had a long time ago, a part-time legislator would expect to be free in November, especially before Thanksgiving but that did leave one observer to say it seems every senator is entitled to one cruise per year. Pretty crucial times for votes on the budget. So you have her gone and Senator Ron Gould is unhappy, he's not going to vote with the Republicans and all of a sudden you have no room for error if you want to pass something with Republicans only. They're like maybe we need to wait until we get more members out back. In the meantime, in the house, there's -- the state owes [inaudible] -- others are bulking at that. And there's heartburn about the cuts. There are Democrats who don't want to do any of the cuts. And we're not talking about the entire shortfall here. The first special session is supposed to be dealing with $500 million, something along those lines.
Mike Sunnucks: She's trying to get the magic numbers. And that's why we're in the situation. She's trying to get the numbers to work and once she has the magic numbers to pass something, she'll call them back quick and try to get it done.
Mary Jo Pitzl: I think they're trying to find a win. Do we have something that the GOP governor who is now running for governor agrees on and it hasn't happened.
Mike Sunnucks: I think they're moving away from the GOP only. The conservatives, they haven't come through on how many votes now. They're trying to make the case the moderates, Democrats, you look, you want to protect these programs you need to work with us or they're going to get cut to the bone.
Ted Simons: Where do you see evidence of that? The Democrats haven't been invited to the table to negotiate the special session. It's been --
Mike Sunnucks: They're doing stuff behind the scenes. They were a couple of votes short in the senate.
Ted Simons: Are Democrats at all at play right now? They sure haven't been in the past.
Dennis Welch: They're like waiting around for someone to come knocking on their door. The problem is, what can they bring to the table that isn't going to alienate other Republicans out there, as Mary Jo was saying. You've got people like Ron Gould who is upset. What is it going to cost you politically?
Mary Jo Pitzl: The Democrats asked for a couple of policy changes, such as undoing restrictions on teacher unions, which is punitive to the teachers who have lobbied hard against the budget cuts. These are non-revenue items and they haven't heard back. Maybe they would play and I think you could put together a coalition especially in the senate with Republicans and Democrats. Not so easily in the house.
Ted Simons: And the governor needs to get something quick. The special election she's looking for keeps getting pushed further and further out. That would be the second special session after this, correct?
Mary Jo Pitzl: Yeah.
Mike Sunnucks: That's her answer to the short-term budget problems and that hangs over everything and I'm sure that's what the horsetrading is a little bit, she needs the votes for that. She's not getting with the Republicans. It's not happening. How many times can you go back to the same well and get turned down?
Dennis Welch: You have the municipal elections, we're talking in the spring at some point, put a special election, if there is one, for a tax increase.
Mike Sunnucks: The wildcard, then. [Talking over each other] Because the chance of it passing goes down.
Ted Simons: On a scale of one to ten, zero, no way, ten it's going to happen, see a special election by the end of March on an one-cent temporary sales tax?
Mike Sunnucks: Six.
Ted Simons: A six? That likely, huh?
Mike Sunnucks: I think they're moving toward it.
Mary Jo Pitzl: I would say a four.
Dennis Welch: You stole my number. [Laughter] I'm going to take three, now. 3.5.
Ted Simons: All right. Interesting scenario with first things first. Not helping with in terms of a really volatile topic, seems it's getting a lot of attention. What's going on down there and why is first things first making enemies with the decision?
Mary Jo Pitzl: It's a big hike in the licensing fees for childcare centers and the state made a policy move to say we're going to have the service pay for itself. That means the users have to pay for it. And so childcare centers are hit with a big, big jump in fees which is a three-year fee payable up front so it's a huge increase and they're screaming for help and they went to a non-profit, the funding given to them by voters by hiking the tobacco tax and set up there to help with early childhood education and healthcare. Maybe that was a fit and they turned him down to a couple of million to bridge things over. First things first, our mission is not to pay for things that the state is paying for. We don't want to start down that path and they got nothing but condemnation for failing to step in at dire need.
Mike Sunnucks: Especially from Carol Allen. Basically, it's one of those fights over money. First things first has their own pool of money that comes from the increased cigarette tax and the legislature can't get their hands on it. Allen had good arguments. And a lot of these daycare centers are going to go out of business. Three these aren't profit driven. But first things first says if we give money this time they're going to essentially raid our funds like they've done with others.
Ted Simons: The money was like $2 million and first things first that is 300 some odd million piled up.
Mary Jo Pitzl: They have a lot of money. The legislature has been hankering to get ahold of it and you could make an argument that this fits within their mission.
Mike Sunnucks: And they offered to do a short-term loan and we'll pay you back, and they said no, we don't want to play ball.
Ted Simons: Senator Allen's ideas, I wouldn't call them threats but they're close. How well will this play?
Mary Jo Pitzl: To undo it, you have to take it back out to the voters. It would be a monumental effort. On the short run on the childcare front because the fees due three years up front there's probably going to be legislation to ease that in and not require the full three years up front and that should ease the burden.
Ted Simons: Mary Jo, quickly, the cities are suing over the special session budget that included development fees and things -- again, similar to first things first. The league of cities and towns, are they starting to make enemies down at the legislature?
Mary Jo Pitzl: They're concerned that they don't want to make enemies by suing the state but feel they need to take a stand on principle. Peoria Mayor Bob Barrett said -- they're already mad at the cities, but what's interesting, they're out looking for an attorney because they can't use the attorney they were going to use because he's tied up with another lawsuit against the state. There's a host of lawsuits rained down on the state for recent legislative actions.
Dennis Welch: Looking for enemies. The cities and towns have always had enemies at the legislature. If it's not -- you know, not state shared revenue, it's something else and at the heart I think it has to with a freeze on impact fees.
Mike Sunnucks: The homebuilders who cut the deal to get it through and tried to cut deals with Napolitano and we're in the midst of this budget crisis and this is what pops up as part of the budget.
Dennis Welch: The housing crisis the reason we're in this mess and they want a moratorium to spur more housing?
Ted Simons: And they also had further restrictions on cities and undocumented folks, illegal aliens that the city is saying we could be at a risk for a library if we gave a library card accidentally to someone who wasn't a legal citizen of the United States. But the bottom line, Mary Jo, whether it's development fees or building codes or library cards, the cities are saying this isn't what the special session was supposed to be about.
Mary Jo Pitzl: That's the legal argument. That's the matter of principle. There's a process and maybe it should be followed and the governor called the legislature no special session in early July, two minutes after she vetoed their budget and bringing you back in and you're going to do the budget and talk about a sales tax referral and what comes out at the end of the pipeline a couple months later, impact fees, library cards for illegal immigrants, so this doesn't fit. There's no grounds for this.
Mike Sunnucks: We're going to see more of these lawsuits with the gimmicks and schemes. The funds and groups that get hurt are going to file suit and take them to court. The bankers have sued against the recision of the foreclosure law.
Ted Simons: Dennis, the governor who said she's been busy the whole time, but those following her would argue otherwise, she was at an event yesterday honoring Sylvestre Herrera.
Dennis Welch: She came to office in January, she's been elusive. Some weeks you look at her public schedule and there may be one or two events on it. They say she does a lot of other events. I would like to know what public events she attends that aren't public. She announced she's going to run for office. For a four-year term and lo and behold, the next week, she's got a jam-packed public schedule. It's not just the numbers but the constituency groups. She was in front of them this week -- agriculture, business, education and you can go on and on.
Mike Sunnucks: I think she's trying to introduce herself to voters a lot of folks who don't follow politics will see her on the news. And I think that's part of her election strategy.
Dennis Welch: I think it has to do with the changes that happened up at the administration. She's got an new chief of staff who understands the importance of building coalitions. She's isolated core constituencies and call for a sales tax increase and feel she's not appealing to the base.
Mary Jo Pitzl: You get the sense that the page has turned. She's running for office and a new chief of staff. This is why she needs a special session with a quick resolution and we'll see.
Ted Simons: Other opponents are -- the announced opponents, Vernon parker and John Munger. Munger is saying the more they see and hear her, the less they'll like. The gloves are off. And Terry Goddard had a little bit of criticism when he got his exploratory committee going, saying the state lacks leadership and heading in the wrong direction and -- call him a Saturday night quarterback.
Dennis Welch: I thought it was interesting that Attorney General Goddard made his announcement the day after Brewer made hers. To blunt the media from talking about her.
Mike Sunnucks: I think that Goddard will say that wrong direction a thousand times. That's going to be the gist of his campaign.
Dennis Welch: Speaking of Brewer, she plans on running as a clean elections candidate, if she can get the $5 contributions before the legislature starts.
Ted Simons: Speaking of legislature, got a ruling on -- he's going to appeal and that's part the game.
Mary Jo Pitzl: Representative Quelland was accused of violating various public finance laws. The Clean Elections Commission found him guilty of these charges and said the penalty penalties were removal from office. They reduced the fine somewhat but bottom line, he should forfeit his office and the attorney says he intends to take it to superior court and which leads to a story that Dennis has in the wake of this.
Dennis Welch: Not to say this isn't a deliberate strategy, but if he appeals and takes a seat in January, he qualifies for at least a portion of his state retirement pension. It's $4,200 a month, not a whole lot of money. I wouldn't turn down an extra $4,200 a month. But it's for the rest of his life. Some are upset.
Ted Simons: What are you hearing about the ruling itself, but about the opportunity for the retirement?
Dennis Welch: Linda Gray, who is a senator in his district, was upset. She said there's no way this should happen. If you're kicked out of the office, why should you benefit for the rest of your life on the public dime?
Mary Jo Pitzl: If he has to forfeit his seat, the way the rules are, he would be replaced by a Republican. And why wouldn't the runner up in the election get the seat? It's just the way the laws are written. But guess what? The runner up was a democrat.
Dennis Welch: He displaced Jackie thrasher and it was a close race and you could make the argument that that extra money he spent made a big difference.
Ted Simons: He's a big supporter of clean elections.
Mary Jo Pitzl: Oh, my goodness. He's been on this network. On PBS --
Ted Simons: Next on "Now," that was him.
Mary Jo Pizl: He was a poster child for public campaign finance.
Ted Simons: Ok --
Mary Jo Pitzl: and still is. Still very much believes in it.
Ted Simons: One of our friends of the program, Paul Giblin, announced he's going to go to Afghanistan. What is he going to do there?
Dennis Welch: He's going to be working as a communications specialist doing various things. Like reporting for the military. He leaves on Sunday and spends a week in Washington D.C. at which point, after that, he'll take off for Abu Dhaib. And we were surprised by it and you know, we wish him best. It's awe-inspiring to me for him to kind of go out there and serve his country like that. He's giving up a lot. His son is in his senior year. He's been one year of a brand new venture that we started and giving it up to serve his country. It's amazing to me.
Ted Simons: I was surprised as well. It came out of the blue.
Mary Jo Pitzl: It's not the usual career path for a journalist.
Dennis Welch: It's pretty bad here right now. [Laughter]
Mike Sunnucks: It's something to say he would go do that and I think he'll do great work over there. And illustrate what's going on over there with the troops and situation.
Mary Jo Pitzl: I believe he said he's going to do writing for the Guardian.
Dennis Welch: He's going to pen letters to the Guardian, and we like to look at it he's opening up a Kabul bureau.
Ted Simons: And best wishes to Paul. Good luck over there, and congratulations on the gig. That's a life experience and a and a half. Another experience, and maybe not and a half, was the Christmas tree situation. Can you describe what's going on with the Arizona Christmas tree gift?
Mary Jo Pitzl: It's a massive tree from the Apache forest, a slow circuitous route to Washington D.C. and pulled up in front of the state capitol. You couldn't see it, it was on a long flatbed and covered with some kind of plastic tarp. Designed to keep -- you know, keep the moisture in and heat off and, you know, it was like watching a --
Dennis Welch: What a bummer. [Laughter] I was out there too. An 85-foot Christmas tree. You don't see those every day. But you saw the truck. It's a great semitruck.
Ted Simons: The glass is always half full with you. I love that.
Mary Jo Pitzl: But people could look at the tippy top of the tree. What do they put at the top? A star.
Dennis Welch: And waited in line for a while. They could see the tippy top of the tree. Wonderful.
Ted Simons: We'll leave it there with the Christmas tree. Thank you for joining us tonight on "Horizon."
In this segment:
Mary Jo Pitzl:The Arizona Republic;Dennis Welch:The Arizona Guardian;Mike Sunnucks:The Business Journal;