SB 1062 Impact

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Although it was vetoed by Governor Brewer, Senate Bill 1062 created such a firestorm that it has impacted the state. Arizona State University pollster Bruce Merrill, economist Jim Rounds of Elliott D. Pollack and Company and consultant Marcus Dell’Artino of First Strategic will discuss the impacts.

Ted Simons: After days of intense pressure, the governor vetoed senate bill 1062 yesterday, a bill that according to opponents, would have led to discrimination against gay and lesbians. Even though the bill was vetoed by the governor, the ferocity of the debate left a mark on Arizona. Here to talk about the impact of senate bill 1062 is ASU pollster Bruce Merrill, also joining us is economist Jim Rounds of Elliott D. Pollack and Company. And Marcus Dell'Artino, political consultant with the firm First Strategic. Good to have you all here. Let's start with you, Bruce. No real surprise regarding the governor's veto. Were you surprised the legislature passed it in the first place?

Bruce Merrill: Well, I was proud of the governor at least to chastise the legislature for even bringing that bill up to her office. Yes, this had implications for the economy of Arizona. We're beginning to recover now, and you talked to us about that a little more, but I think the main point is this was a bill that had -- It was a very negative bill that really could have hurt a lot of people. I just don't think it was reflective of the opinions and attitudes and values of the people in Arizona. I mean, this piece of legislation would have done a great deal of damage to individuals and I think we're better than that in Arizona. So I was proud of the governor.

Ted Simons: Were you surprised? Were you surprised that she vetoed, were you surprised at the thing -- Were you surprised at any of this? I think a lot of lawmakers that passed this, they're real surprised.

Jim Rounds: You know, this isn't our first rodeo with controversy. So am I surprised this comes up on occasion? No. I wasn't surprised that she vetoed it, and what I thought was interesting is that you have checks and balances in government. One of the issues we've talked about in the past is we've always wanted the business community to really step up, go to the capitol and bang their fists on the podium. They kicked in the door this time. So it's nice to have that additional check. And I think that played a major role. The business community speaking out louder than I've ever heard it I think did influence people.

Ted Simons: I want to get back to the role of the business community, but again, why did a lot of -- A lot of wacky stuff comes out of the legislature, this was an addendum to something that was already law. Why did this get this kind of reaction?

Marcus Dell'Artino: Remember, this isn't the first time we've seen this bill. This bill end up to the governor's office last session. And she vetoed it, which most people forget. So it would be natural they would start this bill again this session and it would move quickly again this session, because everybody is up to speed on it. You know, people were watching it, but it was an uncertain, how do we react to this bill, how do I talk about the effects it may have on the economy when it's talking about a religious freedom bill? It's a difficult paradigm to be in. So once the national media cued in on this, that was the five-alarm fire that set the business community in motion.

Ted Simons: Why did the national media cue in on this? This is not the first bill that's raised eyebrows in Arizona. Why were so many eyebrows raised?

Marcus Dell'Artino: I think we've lulled ourselves into the sense that the national media is not watching us. As soon as 1070 went down, national bureaus moved their press people here and made us a hot spot for the nation to look for these things. And I think that was -- It was an easy hit for them. A couple emails, a couple tweets went out talking about how this legislation's discriminatory, all of a sudden a reporter from "The New York Times" or "LA Times" says we've got to get to Arizona and look at this legislation. And that's how quickly it moves.

Jim Rounds: They're still going to be paying attention. They need to be careful and have a clean and short remainder of the session, because any little slip-up or anything that's a little controversial is going to be magnified because of what happened so far.

Bruce Merrill: I think also it just reinforces very negative image that Arizona has, frankly, in the media throughout the country. And after 1070, this is just followed that, so it was a natural thing with the media to jump on this. And the media creates these issues to a very large extent, and many of the questions I've been getting is has this done new damage to Arizona? Perhaps, but I think more than anything it's reinforced this idea from the interviews I've been giving today, about all these crazy things that happened in Arizona.

Ted Simons: Been giving a lot of interviews today?

Bruce Merrill: A lot.

Ted Simons: Around the country and around the world, I imagine?

Bruce Merrill: Yes.

Ted Simons: Same kind of questions?

Bruce Merrill: Unfortunately some of them start with, what's in the water out there? I mean, why do we keep hearing about this, and we'd raised this issue earlier, I think you have to look at the primary system, not only in Arizona but around the country where we end up electing people that are not really representative of the average voter. That's particularly true in Arizona.

Ted Simons: You mentioned earlier the business community coming up and making a stand here. Where was the business community back when this was being debated? I know at the legislature there was some pretty hot and heavy conversation on this. Is the -- Is this the kind of thing where the business community -- I thought Medicaid expansion would do a little bit of this, give a little impetus to business -- When is that particular beast going to start to raising its head?

Jim Rounds: These types of things you can't always anticipate. You can't always anticipate that exponential effect, like when things pick up -- It just accelerates so quickly. I think for the most part the discussion happened at the capitol. But even though the business community didn't really speak up and like I said kick the door down or bang their fist on the podium, while it was being debated, they still did it before it was enacted into law. They brought up a lot of issues to the governor. They played a major role in how the government operates and influences things. So I'd like to give them a little credit for jumping in at, at least a decent time, rather than after something could have been enacted and unanticipated consequences were realized.

Marcus Dell'Artino: To Jim's point, the tourism industry should get a lot of kudos on this one for tapping into the business community. Sometimes they're looked at a little bit differently, they're not Apple or Google, or Greyhound leasing, so they're looked at differently. They knocked on some doors and said, hey, we need help. This is going to have an effect.

Jim Rounds: They were in it early. They get kicked in the teeth all the time when this happens. The convention business impacted quite a bit, the tourism industry as a whole impacted quite a bit. And we've made comment before, when you look at the state as a whole, a lot of these impacts won't derail the economy. We are not going into a recession, but the impacts can be significant. But the tourism industry did step up early on and raise red flags. It's because they keep getting impacted time and time again when these things happen. That's the first industry to get nailed.

Bruce Merrill: This may be a little unpopular to say, part of the problem is, how do you define the business community? I mean, what's happened in Arizona with the major decentralization, where all of the -- Many of the leaders, for instance, greater Phoenix leadership, are people that have only been here a few months. I don't -- I think there's a real lack, frankly, of concerted business direction in this state that we could use more of.

Ted Simons: Speaking of businesses, business leaders that have only been here a short while, a lot of residents have only been here a short while. So with all of this going on, the impact now on upcoming elections. Republicans who oppose this, does it help them? Republicans who supported this and are fighting for it, help or hurt them? How does this change the landscape, or does it?

Bruce Merrill: Well, I think the issues that have been raised, particularly Jim some of your comments in the tourist industry, for instance, a couple of interviews I gave today that people said, is it true that the NFL was really the major reason the governor took the position that she did? I found that a little offensive. I mean, in the sense that somehow we would sell out our basic values because the NFL might pull the Super Bowl from here. But that's the real world we live in, and there were people asking that question.

Marcus Dell'Artino: By the way, once the national media touches something like this, perception becomes reality. And you lose control of -- Nobody at one point was talking about the bill, they were talking about what they think the bill does. Which in some cases was completely inaccurate, in others was accurate. But that's the danger. You lose a real -- The ability to have a true debate in front of a podium, in front of your peers because you're battling blogging and the "LA Times," and "The New York Times," who often quite frankly don't have a sense of actually the law.

Ted Simons: That perception, we're seeing now that Tesla is looking at Arizona over this battery operation. You've got Google, Apple, Super Bowl, the Pro Bowl, the NCAA tournament -- Were these things threatened much, or at all by just the fact that 1062 passed the legislature and the governor had to do what she did?

Jim Rounds: I think that they potentially were threatened. But it had to do with a lot of the interpretation and more just this momentum that -- The discussion that was going on rather than the specific bill. The reason that I think that there could have been an NFL play is that we went through this before. Not our first rodeo. All the examples you give on how these types of bills could impact the economy, Arizona is usually that first example, if you look through our history. But I think a lot of these groups jumped in late so they could be part of the bandwagon. It took a few bold people early on to say I'm opposed to it. Some of the candidates running for governor went in very early and put their neck on the line, but after that momentum it's easy to jump into that.

Ted Simons: Did that help those candidates? Back to the election question, did it help to jump on and say no early?

Bruce Merrill: I think it put some pressure on all of them on how to navigate between saying this isn't a good law in terms of what we need to do in terms of development, but on the other hand, remember, it's those voters that supported this law that are the primary voters that have a big influence on who's going to get the nomination. And nominating that, how do you say, no, this isn't good -- A good bill and still not alienate these people that you need as a supporter? And I think they're still trying to figure that out.

Ted Simons: How do you see the political landscape after 1062? Again, for those who are vocal for it, vocal against it, those who tend to follow the center for Arizona politics -- That's a very important figure down there at the capitol. Talk about the dynamics head nothing a primary and general election.

Marcus Dell'Artino: All politics is local, and in some of these cases, Kate Brophy-Mcgee, Heather Carter both voted against the bill. It helps them probably in their district.

Ted Simons: Ethan Orr in Tucson?

Marcus Dell'Artino: Very tough district. Republicans and democrats almost even. And I think it probably helps -- He voted no on the bill, I think it probably helps him. If you are in Sierra Vista and you voted for the bill, that probably helps you rather than had you voted against it.

Bruce Merrill: That's why your statewide candidates like two senators can actually come out against the bill. Because they represent everybody in the state as opposed to these local constituents.

Jim Rounds: And there's a legitimate defense to voting it down or being opposed to the bill. Even if that might be your core base, because of the economics. Ignore what was in the bill. If there's a bill, whatever number it may be, and it's causing a pretty significant economic impact, it could be a, this isn't the right time for this. We're seeing too many large numbers. We lose a thousand business locations in a high-tech company, that's about $10 million to the state in terms of taxes. What kind of multiplier do you want to apply to that, is it going to be 20 million, 30 million, or more? When the numbers are so large and the economic discussion gets so big, you might be able to bring that back in and say, this is what we had to do right now.

Ted Simons: There's been some discussion the democrats might benefit from all of this. In the long run. Valid? Does that make sense?

Marcus Dell'Artino: Take a different view of that. It's valid in this point. This is a giant fund-raising mechanism for them. The Human Rights Campaign is raising tons of money off this particular bill. And clearly focused on Arizona. They want to go to the ballot. And I think this helps them, one, organize, from a grass-roots point, and two, raise money. So I think that will have some effect. At least on the races.

Ted Simons: Bruce, you talked about the primary system and how it's such a major factor. People -- People want to know, is there a disconnect between the legislature and the Arizona general public? If there is a disconnect, why and how do you get things a little closer to each other?

Bruce Merrill: There's clearly a disconnect. I do many polls. On this bill I did not do a poll on this bill. I would estimate that to 70-75% of the people would not support this bill. And I think why -- The reason you have the disconnect, again, you have very low turnout in primary elections. And you have to give the people that do turn out credit. They feel so strongly from an ideological point of view, that they put up money, they go to the polls, and that's the game that we play. I mean, one could argue that they have a right to determine these things, because they went to the polls. And frankly, the average voter in Arizona doesn't go to the polls. Independents, which are increasing almost week by week, have a lower voting percentage than Hispanics in Arizona. So it really -- If you want to change the system, you either change the primary system, which we tried to do a couple years ago, or you get more moderate voters to the polls on election day.

Ted Simons: Do you see a disconnect as well? Because I've had lawmakers on this program, they don't see a disconnect. Not at all. They think they're doing the public's work, they're doing just that. Yet everyone sells going, what the heck is going on in Arizona?

Marcus Dell'Artino: Right. This particular issue puts a focus on what people would perceive as the disconnect. But largely, when you're down there meeting with these people you don't see a disconnect. Steve Pearce is from a rural district, and he wears cowboy hat. That's representative of the district. Heather Carter is representative of her district. I can go through the list. But it's -- When these issues move you think, hey, what happened here? So in this particular instance, the bill moved pretty quickly and nobody said anything about it until the very end. And that's what happened. But to Bruce -- Bruce is right. What needs to happen, people need to vote. It's really simple. If you want to change the system, go out and vote. Don't change the system in how we vote. I don't think that's the answer. I think people, if you're talking about this bill, if you're talking about government at all, go register to vote and show up in the primary election and the general election.

Ted Simons: Back to business. OK. We could go forever on the political aspect. You always hear, Google may not do this, Tesla may not come, what do businesses want when they're looking to relocate or looking to expand? How much does this factor in as opposed to tax incentives, and other things like that?

Jim Rounds: They're going to start with cost. They're going to look at land costs, labor costs, they're going to have an idea in their head what part of the country might they want to locate in, because of business inputs and where they might want to ship their goods. They're going to look at basic things. Then they get into the specific tax policies, they get into the economic development incentives and they also consider some of these things. One of the most cost effective things Arizona has done the last couple years is better promote the state. Three or four years ago we were doing a terrible promoting the good stuff. It's not very costly to promote what we do well, but unfortunately we just had one week negative commercial on Arizona, and so how do we go from here and maybe offset some of that damage?

Ted Simons: If you do get the incentives and other goodies, if you will, major company looking to come out here, do they just say, that's just a speed bump, it's just a glitch, or do they say, that's something we just can't abide?

Jim Rounds: From what I've been hearing, some of those companies that were considering Arizona versus another handful of states, and they were all considered pretty equal, sometimes these things can make a difference between being short listed. I didn't think that a lot of the companies that were opposed to the bill would pick up and move. A lot of the people opposed to the bill weren't going to pick up and move. They were saying this is what we'd like to do. But I think did it have a business impact. I think we took care of a lot of that with the veto. But I don't know how lasting it's going to be.

Ted Simons: Interesting.

Bruce Merrill: And I do think we shouldn't overlook, before we leave, we know what the consequences would have been had this bill gone into law. Would you have seen demonstrations, you would have seen national and international coverage of this. It would have damaged Arizona in a very, very significant way.

Ted Simons: With that in mind, last question for all of you -- Has Arizona changed because of this?

Bruce Merrill: I'm not sure that it's changed because of this. This is probably reinforced some images that may or may not be real images. But you know, I don't think it's changed dramatically because of this issue.

Ted Simons: What do you think?

Marcus Dell'Artino: I would say -- I don't think it's changed. To Bruce's point, I don't think it was a fair characterization in the first place, but this debate is going to continue. It may not be tomorrow, but this debate will have to happen and this discussion will have to happen between religious rights and the other side. Because I don't see it going away any time soon.

Ted Simons: What do you think? Does this change the state in any way?

Jim Rounds: I want to end with something positive. I was really impressed that the business community stepped up and had a major influence on something like this. I actually feel better about the business community working with the politicians going forward. Now, it's very unpleasant going through this, but if this continues in a responsible way, maybe it will keep us out of some of these problems. I'm still optimistic.

Ted Simons: Great discussion. Thanks for joining us.

Bruce Merrill:Pollster, Arizona State University; Jim Rounds:Economist, Elliott D. Pollack; Marcus Dell'Artino:Consultant, First Strategic;

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