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Ted Simons: Coming up next on Arizona Horizon's Journalists' Roundtable, the first weekend of the legislative session is in the books, we'll have the latest from the capitol, including the governor's budget proposal, which was released earlier today. The Journalists' Roundtable is next, on "Arizona Horizon".

Narrator: "Arizona Horizon" is made possible by contributions from the friends of Eight, members of your Arizona PBS station. Thank you.

Ted Simons: Good evening and welcome to Arizona Horizon's Journalists' Roundtable. I'm Ted Simons. Joining us tonight is Jeremy Duda of the Arizona capital times, Howard Fischer from capital media services, and Mike Sunnucks of the Phoenix business journal. The week began with the Governor's state of the state address, and the opening of the legislative session. The week finished today with a budget proposal from the Governor's office. Lots of things happen in between, let's start with the budget proposal. What did you see?

Jeremy Duda: Well, the Governor proposed a $9.3 billion budget. We got a half billion dollars increase from last year, some of that is one-time spending. What stood out to me is, you know, fairly modest increases. They did not want to increase too much. They were trying to erase the structural deficit in a couple years, and the big increases, K- 12education and cps, which is shaping up to be kind of the theme of the session.

Howard Fischer: But understand, there may be less education that meets the eye. Seventy million of that is inflation funding, which the Governor fought until the Supreme Court slapped her and the lawmakers across the nose and said, what part of voter mandate don't you understand. And of the seventy million they want to take fifteen million of that back to help fund internet expansion. This forty million in there, for, for the Governor's incentive program, but that's only going to go to certain schools for certain students. Then you have got things that, that are quote/unquote education related like a new computer system to help the department of education, but does that help students, it depends on the eye of the beholder.

Mike Sunnucks: Modest if you take out the cps, which is all crisis spending, just to spin that off, and if you take that out, there is not a lot of ambition in there. It's a lot of piecemeal stuff, the group that's going to be fund through the u of a, and outside of cps, it's not --

Ted Simons: Let's get to cps. What kind of money are we talking about and what for?

Jeremy Duda: I think $ forty million, maybe a little more. They want, they want a lot of new employees and, and you know, they want about 212caseworkers, 120 support staff, I believe, and they also have twenty five million in, what they are calling a transition fund, and this is to help them switch over to the new independent agency that the Governor wants.

Howard Fischer: And this is fascinating. You have a division called child protective services within des. She's creating a different division, and then wants a separate agency. I'm not quite sure, other than a new director, what cost $ 25 million to move the phone lines. John says, if we don't spend it we'll just put it back, but it raised some eyebrows that of a relatively modest budget increase, setting aside $25 million for what is bureaucracy.

And 21.5 for new caseworkers and 93 criminal investigators for cps, at $8.5-9 million. And the legislature will look at this and say --

Mike Sunnucks: I think that there is support for this overall. I mean, there may be some, some questions about the spending and, and how the organizational structure of this is, but, the, what went on with cps is so egregious it would be hard to see a lot of people, especially with those running for re-election, or political ambitions, to be a big, a big fly on the ointment on this because, because I think that there is a lot of popular support for, for the idea of, of doing this. It may get stuck in the details a bit. But, I think the key is how much you are going to pay the people. I think the problem is, they don't have enough people, they are overloaded, and also, they are not paying people enough and they are not getting quality enough people to stay and work there.

Ted Simons: Andy Biggs seems the most reluctant of the folks we talked to about this, wanting to see research, wanting to see results before the money is, is put in there. Is that your impression, as well?

Jeremy Duda: Well, Andy Biggs is cautious about anything that cost any money. He's a very fiscally conservative, you know, throughout the, you know, since the whole cps scandal broke, his, he's one of the people saying, well, let's not jump to the conclusion that we just need more money. Don't throw more money at it necessarily, so, you know, he's, he's going to want to see where this goes but in a statement he put after the budget, he seemed fairly amenable, it's so early, so, they are going to work their way through this.

Howard Fischer: I talked to McGee, who supports the idea of a separate agency. She also wants to be sure that, we're not just transferring the same problems over. And I think what the President Biggs's point was, we really need what he calls a nose to toes examination of the agency. To find out what is structurally wrong because if all he's doing is putting a new name and director on it, even with additional funding, then we have not changed the culture over there.

Mike Sunnucks: I think that's the problem. They have had a lot of incompetency, they are overworked and underpaid and there's been a lot of problems, up and down the agency, with certain office and is supervisors, and certain caseworkers. And we'll see, if those people just move over there and work there, you will see some folks at the legislature will, will question that. So, I think that the idea of spinning this off and everybody is kind of, 30thousand,-foot view, we'll create a new culture and move into a new office, a new department, and we're going to lose some of the baggage that we have, but that's the challenge.

Howard Fischer: And is the larger question here, which is how much money do we have? Cps may be they are willing to say, if you look at the difference in revenue projections, there is about 300million difference for this coming year, and over three years, it gets to be about $ 1.1 billion. And so, from the legislature's perspective, is now that the one cent sales tax went away and the $900 and some million that brings in, given the questions about the economy, and given do we know how much growth will come, it's fine to say we have landed an apple. It's fine to come in and say we landed a new State Farm office. Does that translate to the kinds of tax revenues you need to keep us out of a structural deficit? We're still spending more than we're taking in.

Ted Simons: And that deficit is still a buzz word down there, and before we get there, I want to mention, a couple million for tourism. A couple million for wildfire safety initiatives, and rainy day fund gets $50 million. And higher Ed, $40million increase.

Howard Fischer: Well, but here's the problem, let's, let's understand what's in there. 15million of that, as Mike mentioned, goes to the University of Arizona. It's being laundered through u of a to give it to T.J. because you can't give it to T.J. so that's not for the u of a. Most of the money is, actually, money, to finish off the parody funding. Years ago they did a study, and found out on a per student basis u of a kids were getting more than ASU and nau. That's the parody money. That brings them up to where they should be. There is no real true money.

Ted Simons: That's what I was going to ask. Were you surprised to see so little going to secondary education?

Jeremy Duda: Given the way the budget went, not really. There is things that the higher education community really wanted that we did not see. The board of regents wanted a lot of money for, to upgrade research labs, and a lot of talk about the University performance funding stuff, and none of that was in there. And John Arnold, the budget chief, said they were trying to be prudent here, and the K- and higher education folks are just going to have to have a little patience.

Mike Sunnucks: It will be interesting to see if the cps money, the spending there, what that took. If that took away from other areas, if that was going to be allocated a little more here and there to other programs, and they moved that over to cps because of everything that happened.

Ted Simons: As far as the structural deficit is concerned. $900 some odd million surplus now, and we're hearing about where a structural deficit could be humongous from all sides here.

Howard Fischer: Oh, no, you have to look at it from John Arnold's perspective. He has these wonderful glasses, and he insists , we're growing our way out of it. Now, we still are paying off that billion dollars that we borrowed, you know. We're going to buy back the state house and Senate some day. But, he believes that, that we can grow our way out of it, and even with the Governor's spending. You talk to John Cavanaugh, head of the house, and you get a different picture, and he's not sure. He's worried about other things, including some of the unknowns. Does the Federal Government keep up the funding for the affordable care act? Do the folks who got the inflation funding get to go back to court and get the money back, the billion dollars back that they should have been funded?

Ted Simons: You mentioned John Arnold's prediction, the Governor's office looking at a5 5. To 5 .7, something like that, revenue growth, by , and other folks looking at that kind of revenue growth?

Jeremy Duda: I don't know. They are looking at a bit less -- this is the struggle that we see every year, the Governor has a little more predicting more revenue than the legislature, and eventually they will settle on some somebody in the middle but that might throw off the, the Governor's talk about we'll be structurally balanced in 2016 or 2017 . We have a lot of tax cuts that are about to go online. I believe, at the beginning of fiscal year 20.15. As Howie mentioned, we don't know whether the courts will order to pay back this funding. The schools got cut out for a few years, so there is a lot of unknowns.

Mike Sunnucks: And one of the things he did say in that response was that the recovery, has been slow, and so I think you are going to see some of the Republicans down there continue to hammer that because it has been slow, and it's continually going to be slow in terms of the population growth, wage gains, jobs and, and it's better than it was, but it's slow, and I think that that's going to be a backdrop, there are more conservative projections.

Ted Simons: Let's go back to the state of the state address, your thoughts there, Howie? A lot of self congratulations going on there, as expected.

Howard Fischer: As expected, and probably 60 % of the speech was, remember me? Remember that $3 billion deficit that we had, and aren't I great, and that's fine. Everyone does that. Presidents do that, Governors do that. The big surprise, of course, was the, the formation of a new agency at cps. Other than that, you know, not a lot of surprises, I think it was well received. In terms of what was there, we all knew the student performance funding plan was coming. What was interesting is there is a disconnect between what you said Monday and even what occurred today. And it's called infrastructure. She made a strong point on Monday talking about we need infrastructure. Today, we said so, are we going to stop grading the highway revenue fund for that infrastructure? Oh, I'm sorry we just can't afford that. That's over $ 100 million a year that should go into road construction.

Ted Simons: Is that something that the legislature -- we hear, I heard speaker Tobin saying he's tired of raiding that.

Howard Fischer: And Ted Campbell, when you have the top democrat and the Republican in the house, agreeing on something like that, that suggests that there is some basis for support on that.

Jeremy Duda: That might be a point of contention this year, and you mentioned a lot of people on both sides of the aisle really want this, and that's something that the Governor just completely kind of the budget said, we cannot afford to stop raiding this money, and I think that a lot of people were, were, apparently, you know, optimistic, apparently, without too much ground on Monday after the Governor mentioned that in the speech. I remember her speaking with the representative right after that, and said she talked about education so I'm optimistic, we can stop the sweeps and we really want to do that, and now it's not happening.

Howard Fischer: And here's the other piece, for all the talk about a balanced budget, if you were taking money that is earmarked for road construction or maintenance, and using it to balance your budget, you do not have a balanced budget. Leaving aside that, that we still have not recovered the money taken from K- 12 and universities.

Mike Sunnucks: I think one thing I took was she talked about getting rid of, of taxes on, on manufacturers, the energy usage, that's an apple, possible tax break for them, out in Mesa, and there is talks about, about, about speeding up equipment write-offs for folks, for free trade zones, apple, so you will see some apple related tax measures there. I think all the tax measures, the business tax measures will be apple related, and because we promised them a lot of, a lot of incentives, you have to promise apple a lot of incentives, and they are getting $10 million from the commerce authority, they are going to get a lower property tax rates than most businesses, and you could see a split with the groups, question that, and those types of tax breaks so we'll see how they play that and how aggressive they are in that, considering all the other fiscal situations.

Ted Simons: So, please go ahead.

Jeremy Duda: That's minor compared to some of the economic development stuff we have seen, and I think that kind of fits in with the rest of the state of the state, which was continuing on, but much less, you know, not quite as aggressive or ambitious. It seemed, you know, you are saying, patting yourself on the back but she threw in the obligatory comment at the end, whether I run again or not but it seemed like. ..

Howard Fischer: But, saying, and you could, you know, take it from that perspective, if this is your last day of the state, you don't want to set the bar this high so you go out, you only have part of it, if you are set it go low, I have got everything that I asked for.

Jeremy Duda: You don't want a lot to argue about, but after last year, she barely mentioned the Medicaid expansion stuff. She did not use the word Medicaid or access, so it sounds like she's hoping to get, everyone wants to get out of there more quickly and probably hoping for a much less contentious session.

Howard Fischer: We had a bill introduced by Adam, to repeal Medicaid, and now look, we know this is going as far as the 40-some votes in the U.S. house to repeal Obama care but he's going to insist on hearings and floor speeches, and we're going to keep this thing.

Ted Simons: It's not only just a total repeal but you have other ways in which to make sure that -- death by , 1, 000 cuts, make sure that certain people are qualified, make sure that certain things, regulations are in place for folks who deal with the affordable care. You could obstruct this thing miles long. Question is, will they do it?

Howard Fischer: Oh, I think that they will try, and the good thing for the Governor is, they are not going to get two-thirds vote to override her, and to the extent that she sees this as undermining the plan. Remember, the budget that came out today is contingent on Medicaid, the access spending is down by $75 million, or something like that. Because of the Federal money coming in. You take us out of that, and --

Ted Simons: Right.

Mike Sunnucks: I wonder if we have a less contentious budget fight, there is no Medicaid fight, does that shift the lawmakers' focus to more of the social issues, controversial issues, some of the gun issues? Obviously, we have abortion and immigration thing, do, do they have more time to spend on those and less on the money?

Ted Simons: It is an election year. So, we'll just leave it at that.

Howard Fischer: And we have seen it. We have gun bills already this week, and a religious freedom bill.

Ted Simons: We also had a move to, having a move to repeal this election reform bill. Talk about, talk, we talk about this so much last session, it's out there, and there is a movement now to repeal it, and now -- to reject it, and now app movement to repeal it. What's going on?

Jeremy Duda: The conspiracy theories are flying. The conspiracy theories are flying by the opponents of the bill. Who, you know, collected more than , signatures and put it onto the ballot. There are concerns, from what it sounds like from the folks who pushed this, if this goes through a citizen's referendum, the voters reject it, that maybe they cannot come back and do the stuff in the future, but, if you come back and you repeal this bill, you get this off of the ballot, and next year, you can come back and pass it, not only pass the entire bill but you passed it in the piecemeal versions that originally it started as so the opponents want to put it back for a referendum, and then you have five, and not just one.

Mike Sunnucks: This whole ballot process has really evolved over the years. It used to be really straightforward. A rich guy would put it on the ballot, and you would try to repeal something, and now you see them hiring petition gatherers, and they are taking steps before it gets to the voters, before they could lose this to try to -- this is one of these things, and it's really become a much more sophisticated process.

Ted Simons: Sophisticated, is it legal? Can you do that?

Howard Fischer: Well, I think that you can, you cannot tell lawmakers to, to, that they cannot rescind something just because somebody wants to vote on it first. The referendum process is the voter's last words. If you rescinded it, you have given the voters what they want. Now, can you come back and change three words in the bill? And say I'm not re-enacting the same thing, I'm reenacting something slightly different. I don't know that you can constitutionally bar lawmakers from doing that. Is it sneaky? You bet. Illegal, I don't think so.

Ted Simons: Does it pass?

Jeremy Duda: Probably. It passed last year, and a lot of these folks are going to want to see it pass again if they can. They are not going to want it on the ballot because of the potential voter protection thing, which is a shaky legal thing, but it might bring out a lot of Democrats to vote, and Republican lawmakers are not going to want that.

Howard Fischer: And I think that, that the repeal, I think, will pass. In terms of putting it back this year, that's an interesting question. There were a couple of Republicans who refused to vote on the last night of the session in the house, and I think that the feeling is among some of them, what message are we sending to our constituents? That were playing this game. And so I think that re-enacting them, they might be willing to do some of the stuff in terms of cleaning up the early voting list but the idea of telling Libertarians you need more signatures to get on the ballot, I think that that's going to offend people.

Mike Sunnucks: The thing about this, and if they don't repeal it, it's an inside baseball issue. A lot of regular folk out there, and don't carry about or understand or are energized by this, and when they see it on the ballot, a lot of times they don't understand it and they vote no, and they don't know who that helps or hurts. So, I think that, I don't think it would have the kind of impact, necessarily, on, on lawmakers if they came back.

Howard Fischer: Now, here's the other interesting part about a referendum. In general, the rule of thumb is, the no vote always has the edge in ballot measures. Now, if you are pushing an initiative to change the law, you have got that. The referendum, you need a question vote to, to ratify what the legislature has approved. And I think that scares them, that people are confused, they will vote no and that will kill, maybe permanently, depending on whether it is voter protected, what they tried to do.

Jeremy Duda: I would look for this, for maybe next year for people to come back and, and maybe not pass everything that was in the bill, but you pass certain parts of it, there is about four or five provisions, all controversial, and you eliminate a couple and maybe you eliminate some of the people who are agitated to put it on the ballot. The Libertarian, for example, and we're up in arms over one provision so maybe you leave that off and then the coalition against the bill shrinks a bit.

Ted Simons: And another move there at the legislature now, to pay the legal bills, the legal fees for supporters of sb-1070, who are being harassed by the Atlanta ACLU for email and documents and messages and these sorts of things.

Howard Fischer: One person's harassment is another person's subpoena. This comes back to the fact that Senate Bill 1070 had provisions, of which we know, we avoided the provisions, and such, and the U.S. Supreme Court took the quote/unquote pairs provision, the one that says police, if you stop someone and you suspect they are here illegally you are supposed to question them about their legal status, the Supreme Court said that's not necessarily illegal, but, if you have evidence of some sort of racial problems, some sort of profiling, fine. That brought it back into court, and what they are trying to show now is that 1070, in that provision was enacted not because of a concern about illegal immigration, but as an anti-latino method. How do you show that? Well, by what people are saying, you have the speeches, what were they e-mailing to each other at the time? What was Chris e-mailing to Russell Pearce and back and forth? And so, the judge has said that, that the plaintiffs in the case, the aclu, and the national immigration La Center has a right to, to certain emails with certain comments in them, and they can go through to prove their case.

Ted Simons: And some of those comments are relatively decisive. And others like immigration, and English, and simulation, and that's a lot of work and what lawmakers, some lawmakers are saying, it's not fair if you are in the legislature, and you are, perhaps, pushing Senate Bill 1070 , now you are faced with a Tsunami, and we have got to help these guys.

Mike Sunnucks: You have seen this argument before with, with public records request, and how you can go after Government officials and lawmakers in these types of, of cases. There is an argument there to cover this. The Oregon law, and if you were doing this on official business and this was part of the deliberation on this, you can make an argument that some of these requests are onerous, there is a lot of partisan and immigration politics on both sides of this.

Howard Fischer: There is another great angle to this, they could, they could, if this were done through the legislative website, through their official email, that's a public record. Everybody admits it's public record. What the folks are telling me, people like Andy Biggs saying some of the people were using their personal email for comments on this. Now, the interesting thing is, the journalists, which worries me, which is how much of the communication, among lawmakers, between lawmakers and constituents, is being shielded from me and the public by people just using their home email?

Mike Sunnucks: There is a ton of that going on. They learned that that's, that's somewhat protected or people don't know about that, and there's been stories in other state capitols about secret emails, and email accounts, and in Washington --

Ted Simons: Just telling them with the nsa, that's all you really need these days.

Howard Fischer: I was thinking about that, although, given the nsa's ability to keep secrets --

Mike Sunnucks: What they are looking for is the Russell Pearce email in that remember, the one from storefront group, and the Neo-Nazi group, they are looking for, for the smoking gun like that to say, you are racists.

Ted Simons: Please, go.

T Jeremy Duda: hey are looking for racial slurs, and they are looking for anything to show this is like racially motivated, and it's interesting that some of the folks weren't in the legislature at the time, which is part of the argument in favor of doing this. And of course, they did not have legislative emails at the time but this is very overbroad, look, these guys were not elected until after the bill has passed.

Mike Sunnucks: This is as much of a P.R. campaign.

Ted Simons: Before we go, impressions of this session having any lingering resentment, hard feelings from last session?

Howard Fischer: Well, obviously, there is still some hard feelings by some of the Republicans to their colleagues who voted with the Governor on Medicaid. There is the belief of you are Republican, you are supposed to stay, vote with the party. Well, who is the party? Is the party the majority leader? Is the party the President? Is the party the Governor? And so there have been a few behind the scenes discussions that we know of that have occurred about that, and I think that people are going to be watching each other and doing that. The other interesting thing, though, is that you have this, this interesting coalition that built up, of all the Democrats and some of the more moderate Republicans, who on some of these issues, like cps, like some of the budget stuff, may form another coalition to side with the Governor over their own leadership.

Ted Simons: And it's been suggested that the price for entry for that kind of coalition will be a bit higher at this go around. Is that what you see, as well?

Jeremy Duda: I don't know. I'm not really sure that we're going to see this coalition come back if, if, you know, if there is not going to be too much that divides these folks. Right off the bat you saw the Democrats taking shots already just like old days, and Republican leadership saying, happy things about the Governor, and the budget today. So, we might not have a chance to see that reemerge.

Howard Fischer: But it will come down to specific things, like the fact that there are enough rural lawmakers who want that, excuse me, Governor, you are going to have to roll over.

Mike Sunnucks: I would like to see how it turns out with cps. How much of these lingering hard feelings turns out to blow back for the Governor and the executive branch on cps and how they handle that, and when did she know and when did everybody know what was going on, and, or if there is unity on cps and it moves through quickly.

Ted Simons: All right, good stuff and good to have you here, thanks for joining us.

Mike Sunnucks:Journalist, Phoenix Business Journal; Jeremy Duda:Journalist, Arizona Capitol Times; Howard Fischer:Journalist, Capitol Media Services;

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