Ted Simons: Hello and welcome to "Horizon." I'm Ted Simons. Joining me tonight -- Mary K. Reinhart of "The Arizona Guardian," Matt Benson of "The Arizona Republic," and Mike Sunnucks of "The Business Journal." It's a new year, but the state is facing the same old budget problems. We have an upcoming session and, Matt, we're going to get a state of the state address by the governor. What are we likely to hear?
Matt Benson: It comes against the backdrop of the multibillion dollar budget deficit. Call for self sacrifice and work together to solve this shortfall.
Ted Simons: Has she been talking to democratic and Republican leaders?
Matt Benson: Yeah, there's been talks through this week and frankly, at this point, we don't know where that's going. The governor will have her own budget proposal for 2011 out next Friday. So that's going to be a large part of the speech. But beyond that, she's going to talk about education, literacy requirements, an increase in the state sales tax and corporate income tax cuts and other things to draw jobs in Arizona.
Mike Sunnucks: Kind of a big difference from last year when she inherited the job from Napolitano who left to become homeland security secretary. She didn't have an agenda last year. She came in late and had this budget and deferred to the legislature to work this out at the beginning. Didn't do a good job of getting her message out on the sales tax increase so maybe she's just taking the bull by the horns because it is an election year.
Mary K. Reinhart: It's a good move on her part because you can see the state of the state address that's consumed by the budget because there is so much to be consumed by. She begins to establish an agenda, as Mike said, which she hasn't heretofore had.
Matt Benson: You remember last year at this time, there was a sort of awkward period where Brewer knew she was going to be the governor shortly, but hadn't yet taken the oath and had to sit and watch as Janet Napolitano gave the state of the state address. It was a strange period. Napolitano presented the budget plan for the fiscal year and we didn't see that much out of Jan Brewer until the beginning of March when she came out with the five-point plan and the sales tax and all that.
Ted Simons: Is the concept of income tax cuts and job trainings, this something that will compete, dovetail with the plan by Speaker Adams?
Matt Benson: I think in many ways it mirrors that plan and it's also phased in. Starts not immediately, but a few years down the road when the idea that the budget will be in better fiscal footing. You know, this corporate income tax cut would cost the state $100 million in revenue the first year. You're going to do that -- we're $1.5 billion in the red right now.
Mike Sunnucks: I think the statute of limitations for blaming Napolitano for the budget mess is over. This is Brewer's state, she's the governor, running for re-election. I don't know how much water that can cover anymore. I don't think she can lay that on her anymore. I think she needs to be governor and say, I'm going to solve this.
Ted Simons: Mary Kay, we had this week about the report, a foundation, a lot coming out of the speaker's plan, not necessarily in the report, talk about the GOP plan and what Speaker Adams -- how much different is this than what they tried to push through last session?
Mary K. Reinhart: Job creation and closing deal fund and job training, that's new. Last time it connected to the -- those same personal and corporate income tax cuts and property tax repeals and menu of cuts, $650 million at the end of the day. I think what the speaker is talking about now is that phase-in over four years, fully implemented by 2016 and some people are saying, yeah, we've got to do that, but I think the is that the president said today, we've got to stop the bleeding first. The governor has been talking about corporate tax cuts for months. I think since the five-point plan. I don't think there's disagreement about the need to do that, I think it's a timing issue.
Mike Sunnucks: I think they're looking for a Republican budget. Votes. This isn't going to get Democrats to come on board. They're going to be concerned about the spending cuts caused by this. Republicans, here's the great things that you like. Tax cuts and these things and this one thing that you don't like, the sales tax. It's going back to that drawing board of getting enough GOP votes.
Mary K. Reinhart: That's absolutely right. You saw that right before Christmas where there was difficulty getting votes for the sales tax deferral because there wasn't that component of the tax cuts together with it. As there had been.
Ted Simons: Go ahead, please.
Matt Benson: Given the contentiousness of this issue, talking about tax cuts at a time where we're cutting behavioral health programs and various programs for the needy. I'm surprised that the house Republicans came out with this in this manner and didn't do it in collaboration with the governor, I think it leaves up in the air whether they can reach agreement on this.
Ted Simons: Question: Can they do this without Democrats? Have they got the ducks lined up without any democratic support?
Mary K. Reinhart: You're talking about the senate, ducks lined up? Ducks haven't been lined up all year for sales -- for big things like that. Now --
Ted Simons: We're not talking --
Mary K. Reinhart: You're talking about the jobs?
Ted Simons: A jobs creation and phase in this 2012.
Mary K. Reinhart: That remains to be seen. I don't think anyone knows. To Matt's point, the idea of having competing plans and three different -- at least on this issue -- sort of ways of looking at things. The governor is talking about a counsel, an economic council that would be chaired by -- I think managed by Sarah dial to do what it sounds like Elliot Pollock did. To come back with great ideas so we don't seem to be on the same page here. Maybe on the same page, but they're overlapping pages. It is kind of unusual that they're not talking.
Mike Sunnucks: It's interesting that they want this close the deal fund. $10 million or more and none of the Republicans ever liked this idea when Napolitano, a democrat, was governor. But as soon as somebody is on their team, hey! We need this. A lot of southern states do it and it helps to finalize these deals with businesses. They're argument, it's going to decrease revenue -- they think it's going to grow revenue on the other side because you're going to attract jobs. And the economy is the big issue for most out there. They're trying to get beyond the budget. Hey, we're doing something to try and stimulate the economy. The federal stimulus has helped Obama a little bit. But if Brewer wants to win, she needs to address the economy.
Ted Simons: Democrats saying this is a plan that helps big business on the backs of homeowners and middle class tax payers, is that going to play?
Matt Benson: No, I don't think it will. And a lot of what you're hearing from Democrats, this is more of the same old same old. We've seen these same old corporate tax cuts, it's the same old song and dance.
Ted Simons: And the governor came out with an economic development idea of her own, in that she got big-time corporate types together for -- what is it? A committee of some kind?
Mary K. Reinhart:: That's the council I was mentioning. It's supposed to report by the end of March. Again, it appears to be the same agenda that we just saw Elliot POLLOCK report on.
Mike Sunnucks: In the general election for governor, if they pass a bunch of corporate tax cuts and try to raise attaches on consumers, you can play that populist card. That plays well in this state and people don't like big business right now, banks, home lenders, people who are taking advantage of things. And if they can play it like that it could have some lengths
Matt Benson: Jobs are going to be the issue of this cycle. And while these people want to go out there in November and say, we know the budget is tough but look what we're doing to bring jobs in Arizona. We're going to turn this around.
Ted Simons: $735 million in financing, the coliseum, the madhouse on McDowell. Again, politically speaking, can't be a good thing?
Mary K. Reinhart: No, I don't think anyone wanted to necessarily do it. And, in fact, they might do more of it coming up this session. There's a few more state assets they're looking at putting on the block. Like a lot of things you're going to be hearing about, it's a feeling there isn't any other option. Where are you going to find that $735 million?
Ted Simons: And Mike, increments of starting out with interest, 4%, 5%.
Mike Sunnucks: It's a good deal. If you have cash, go and buy a state building and the state of Arizona is not going anywhere. It's a good deal for whatever landlord comes in. Republicans and complain and complain when Janet was governor about gimmicks and smoke and mirrors. This seems like something like that line. Short term, brings in cash, but the people who are the landlords are the ones who are going to win. They're going to get rent and we're going to buy it back from them -- when? If you have cash, call the state.
Ted Simons: Mary Kay, DES, budget cuts. You wrote about them getting hit hard. Talk to us about it.
Mary K. Reinhart: Well, they've been getting hit all year. This was just the latest round. $26 million from the last round of budget cut, but there's another matter of $40 million of federal money they aren't getting. A fund for cash assistance. They're hit really -- their hit has grown far beyond what people thought it was going to be. And we haven't seen the end of it. It's continuing really the process of cutting services, of restricting services, of charging co-pays, and asking families of some means obviously to pay what they can. And so it's having real effects on --
Ted Simons: The concepts of having these behavioral health services things cut back and everything from grandparents caring for kids. When do people say this is starting to hit me hard? You can talk about restrooms and state parks being closed, but this bubbles under the surface and then people wake up and say, there are no services out there anymore.
Mary K. Reinhart: Do you mean the tipping point?
Ted Simons: Yeah.
Mary K. Reinhart: You saw rallies all during the last legislative session from people developmentally disabled, and clients from all different walks of life in human services. You know, I don't know what good that's done. Given the realities of the budget situation, they can rally and tell their stories all they want, when this begins to affect me and you, it depends on what your situation is. Right now, we're going to see real cuts to poem who are used to get -- people who are used to getting substance abuse services and those are happening now. Those aren't people typically that have much of a voice at the capitol. The people that provide the services to them, have more so, but their numbers are fewer.
Matt Benson: And she's exactly right. These are folks that don't tend to have a voice. People needing these services. It's one of the unfortunate realities of state government. It's not unique to here. And it's the reason why program like those at DES are targeted. It's a huge both pot of money. And two, if it's between hitting those programs or closing the downtown campuses at ASU, where they're going to hear it from influential parents, they're --
Mike Sunnucks: They're worried about their job and mortgage and personal economic situation and maybe their kid's school or university. This type of stuff is way under the radar screen still.
Ted Simons: Where is the radar as far as AHCCCS is concerned and the governor basically saying, can't afford what's going on now, wait until the federal system comes through.
Matt Benson: Federal system calls for insuring virtually everybody so they're concerned this is going to be a huge below to the state Medicaid access. Something the state can't afford right now. So that's been the governor's big concern and something she's carrying the flag on regarding Obama's healthcare.
Ted Simons: And it's a concern of -- it's a bipartisan concern. Clearly, under the senate bill, the U.S. senate bill, it is a huge hit to the state. Because and if part because we've been providing health insurance for people that many states haven't been providing quickly, we keep reading that we're being penalized for being more generous.
Mary K. Reinhart: At the risk of getting too deep into healthcare that I'm not exactly practicing here. The idea is that Arizona and I think about five or six other states are insuring a group of child -- childless adults. Just regular folks who don't have kids. They're a group we don't have to insure and we've decided to do it and prop 204 which voters passed, provided some funding for it. A lot is coming from the general fund, which is a concern we're going to see in the legislature coming up. But the states that don't do that, under healthcare reform, as I understand it, are going to get a whole lot of money to help them and we're not.
Ted Simons: And as we stand right now, we're not even going to get credit to help reimburse us. And the governor is saying, it can't be done.
Mike Sunnucks: She has a $17 billion, $19 billion over the next decade cost. 1.5 million people are on AHCCCS in the state and a million or so uninsured. The state is what -- six million people. I think a quarter of children, into the system, that's a lot of money for the state to cover. AHCCCS, the cost has kept going up and up.
Matt Benson: The cost of not doing anything. You mentioned the $17 million or $19 million figure, over the course of the year, there's another figure, if we don't do anything, and that figure is nearly as big. $15 billion instead of $19 billion. The cost of doing nothing is enormous as well.
Ted Simons: Mike, it's a tremendous cost as far as the state is concerned in terms of getting illegal immigrants and that whole scenario there. And for years, governor Janet Napolitano would send a bill. And apparently that's not an old idea.
Mike Sunnucks: Treasurer Dean Martin decided to use Janet's old invoice and added some interest to the cost of incarcerating and dealing with illegal immigrants that commit crime. States like Texas and Arizona and some of those folks deal with guns and end up in our jails and prisons and it's a cost to the states and the feds haven't always reimbursed the states as they should. Janet did that for years to the bush administration. Dean Martin, who increasingly looks like he's running for governor, is a good P.R. person.
Ted Simons: He did not necessarily go after the U.S. attorney's office. But instead go ahead and invoice Napolitano herself and send a copy off to the attorney.
Mike Sunnucks: You might as well send it to both. It's good political theater.
Mary K. Reinhart: The line in the news conference: I hope she doesn't forget where she came there.
Ted Simons: Speaking of politics, it's a new year, got a brand new set here, if you haven't noticed. Things have changed. Including, if you hold elective office, can announce your ambitions.
Matt Benson: We haven't had any official proclamations yet. You are referring to the law that says folks have to wait until the last year of office before they can announce for another office. Our treasurer, Dean Martin, thinking about running for governor. And Terry Goddard, I expect Dean Martin to get in in the next week or so, and Goddard gets in at the end of the month.
Mike Sunnucks: Goddard's been running for a year and a half. They form these exploratory committees. It's semantics. They're in the race, they may pull out, but Goddard's been running.
Ted Simons: What are when waiting for? I would think the minute the bell struck and it was a new year, put away the confetti and say, "I'm running."
Matt Benson: It's timing. When you make your announcement, you want the most exposure possible, you're going to wait until the smoke from the state of the state and legislative session and all of that dies down and come in later in the month and maybe you get your chance. The problem is if they're all doing it, they're sharing the same spotlight.
Mike Sunnucks: You have to plan your trip to the grand canyon or your birthplace and you have the P.R. people plan it out and launch a new day for Arizona.
Mary K. Reinhart: They've got to know what the other guy is doing, so they're not stepping on each other.
Ted Simons: All right. I guess personally, I would have already been on the campaign trail.
Matt Benson: Are you announcing, Ted?
Ted Simons: Not yet. Joe Arpaio.
Mike Sunnucks: Yes, the shoe has dropped.
Ted Simons: At least one shoe. Federal grand jury.
Mike Sunnucks: Shocking news, that people were talking about this publicly. Usually grand juries are hush-hush. But they're going to talk to the federal grand jury to talk about abuse of power against the sheriff's office and Arpaio and the critics of Arpaio have been going for this for years. That they've been intimidating people and knock on doors of county employees and judges and clerks and that type of thing and been pushing for this and saying and wanting this from the feds for years and it's much more than the civil rights investigation. That's just a civil rights thing. This is a grand jury. They can bring all kinds of charges against the sheriff and sheriff's office. You know, grand juries usually indict. The prosecutors have the power and lay out the case and a lot of times there's indictments. And I thought it was interesting to see his reaction. This time, he's the one on the defensive and he was very subdued the past couple of days.
Ted Simons: You mentioned it was shocking that the news came out. The news might have been shocking but the fact that the investigation was going on.
Mike Sunnucks: No, they've been interviewing people, the DOJ, coming and talking to people. And it's just that they came out so publicly and quickly and the folks at the county that don't like the sheriff were quick to confirm this to the media.
Ted Simons: I thought it interesting the reports we're getting, the Stapley-Wilcox case is not necessarily part of what they're looking into. It's the abuse of power in other ways with county employees and these things.
Mike Sunnucks: He's had spats with the county manager over him buying the bus and budget things and control of the computer system. You can see Sandra doweling, that they raided her house and the nepotism charge and you can see that being played into it. It's not clear yet how broad. Whether they're looking at Stapley and Wilcox, but definitely the county officials.
Ted Simons: A couple minutes left. I want to get your impression what's going to happen this coming session. Will there be a bunch of folks who say we've got to do something? Got to make a tough decision, let's move ahead? Or tooth and nail? Is anything going to change?
Mary K. Reinhart:I'd like to be optimistic. But at this point, it looks like they're setting up to do groundhog day. The same thing all over again. In the senate, talking about seperate groups -- minority and majority having separate plans and meeting to basically do an us and them thing. That's not how you get there, I don't think. Unless they can pick off members individually, I think a difficult compromise.
Ted Simons: Will pragmatism eventually raise its head or groundhog day?
Matt Benson: I'm not an optimistic person. I think the gravitational pull to stick to the right and left, and worry about primary challengers will be too strong and you'll continue to see people butting heads.
Ted Simons: Want to be Mr. optimistic here?
Mike Sunnucks: If she can't get a deal to work, she's probably not going to win. This is her baby, she's got to deal with it and hasn't been able to yet. The pressure is on her.
Ted Simons: Very good. Thanks for joining us on our first Friday edition on the new set.
Ted Simons: It's a pleasure.
In this segment:
Mary K. Reinhart:The Arizona Guardian;Matt Benson:The Arizona Republic;Mike Sunnucks:The Business Journal;