Journalists’ Roundtable

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Three local journalists will discuss the week’s big stories.

Ted Simons: Good evening and welcome to "Arizona Horizon's" Journalists' Roundtable. I'm Ted Simons. Joining us tonight: Mary Jo Pitzl of "The Arizona Republic." Jeremy Duda of "The Arizona Capitol Times." And Jim Small of "The Arizona Capitol Times." The governor signed a bill this week that could make for major changes to healthcare in the state. if a supreme court ruling goes a certain direction. Give us the background on this.

Mary Jo Pitzl: Currently, before the Supreme Court is the case that would say people who get their healthcare through a federal healthcare exchange, are they actually entitled to that? Is that allowed under the Affordable Care Act? This is the burrwell case that's being considered now. If the court says huh-uh, people on the federal healthcare exchange don't qualify for subsidies, then every Arizonian, 150,000 of them who get their insurance through the exchange will not get those subsidies. And you would have to have a state healthcare exchange accept the bill that Governor Ducey signed into law, prohibiting the state from establishing such a state healthcare exchange.

Ted Simons: If it involves federal healthcare, correct?

Mary Jo Pitzl: That's what we're talking about. A state healthcare exchange.

Ted Simons: This decision may come down in June. I'm assuming there's a plan b in case the decision goes a certain way?

Jeremy Duda: Governor Ducey says we'll come up with some good plans but he did not exactly elaborate on what those plans were and, you know, it seems like for now the plan is that 200,000 people or so are going to lose their health insurance through the Affordable Care Act. Now, of course all this does is prevent the state from establishing one of these exchanges and, of course, that can be reversed, but the flip side of this of course if the Supreme Court rules against the Obama administration and Governor Ducey said we need to create our own healthcare exchange, you would have a heck of a fight over in the legislature. There's no real guarantee that he would be able to get that through. We remember the Medicaid expansion fight from a couple of years ago. This might have been worse.

Jim Small: There is another option too, aside from the state creating its own. The federal government gets to run it, the state can sponsor it. That's one of the maneuvers that's allowed in the law and we'll see how the decision comes down, whether it would affect those kinds of things as well where the state would essentially, you know, put its stamp of approval on the exchange but still let the federal government run it. One of the things, if they were to go down the route of trying to establish a state exchange, which is highly unlikely, it would take at a minimum nine months, probably closer to a year and it would cost 50 to $60 million just to do that whole process of creating that from the ground up even with all the groundwork that was laid in the brewer administration.

Mary Jo Pitzl: Didn't the state get money from the feds to explore establishing its own exchange and where did that money go towards?

Jim Small: That went towards exploring. [ Laughter ] I mean, they never actually got anything off the ground and started putting together some of that framework for it and, you know, it's an expensive proposition.

Ted Simons: Help me here now, clarify this for me. I thought the law says no state fund, no personnel for any exchange that involves federal issues. You're saying there's a way to side step around that?

Jim Small: There might be. It depends on how that ruling comes down and b, how that process would work in terms of the state sponsoring a federally run exchange.

Mary Jo Pitzl: Right. And this legislation which was sponsored by representative Justin olson from Mesa is an exercise of last year's proposition 122, which voters approved and said we're not going to use any state resources, staff, etc. to comply with the federal program, unless it's approved by the voters or approved by the legislature and that's why these guys have pointed out it will be a hard pull in the current legislature to get them to establish a healthcare exchange.

Jeremy Duda: And incidentally, the state could have done all of this without prop 122, I don't know that that really allows the state to do anything that it couldn't have done already but it puts more of a constitutional face on it.

Ted Simons: What kind of reaction are we hearing from hospitals, healthcare providers, from those who might be affected?

Jim Small: Certainly from the hospital and healthcare provider side, they don't want to see people go off of the insurance rolls. One of the reasons for expanding, doing the Medicaid restoration and expansion was to decrease uncompensated care where you have people who don't have insurance who show up at the E.R. because they've had a flu, it developed into pneumonia because they couldn't get it treated. The same thing would go for people who were able to get their insurance on the exchange. These are people who have access to affordable healthcare that they can use for preventive services instead of for emergency services and those are costs that are A., expensive and B. get passed on to everyone else in the state who has insurance. So they're not happy about it. They want to see ultimately the court reject this lawsuit and uphold the subsidies. If that doesn't happen, I think that really, they're dependent on either the states acting, in Arizona's case, that's a herculean task or for Congress to act which may be less of a possibility than the state acting.

Jeremy Duda: And, of course, for the healthcare industry in Arizona this is one of three, you know, major hits they might be taking this year and, you know, according to the state hospital association kind of the lesser of the three. The Medicaid expansion lawsuit, which is the big one, which can cost a lot of people their healthcare and, you know, going back to the herculean effort, if this lawsuit from lawmakers succeeds, that will go away. You have some major hit cuts to Medicaid funding in the budget, to the provider rates, if all three of these things converge at once, I mean it could be pretty disastrous for the healthcare industry, they're talking about going to the ballot for some kind of initiative.

Ted Simons: Disastrous for the healthcare industry. What about the budget? The state budget? Goodness, gracious, the goalposts are spinning all over the place.

Mary Jo Pitzl: You mean in the healthcare exchange thing doesn't work out? Well, possibly some of the people that currently are getting their insurance through the federal healthcare exchange, I don't know if their income would fall to such a point that they would go on the state's Medicaid program, that costs the state more, right?

Ted Simons: No kidding. It seems -- the governor signed this somewhat quietly on Friday, and then we didn't hear about it until Monday?

Jim Small: There was some kind of miscommunication in terms of when they reported bills that were signed, it didn't show up on Friday, showed up on Monday as being signed on Friday, so it didn't really figure it out until late in the day Monday that this bill had apparently been signed before the weekend started.

Ted Simons: Read anything into that or just miscommunication?

Jeremy Duda: Things fall through the cracks, I think they've done that with some other legislation, where they accidentally list it as being signed on the wrong day, hard to say.

Ted Simons: The governor and this is another one that's kind of confusing here. He grants a tax reprieve to a chopper firm, helicopter firm, despite the court ruling that they owe back taxes, and he vetoed a bill that would have kept -- help me.

Mary Jo Pitzl: So we had legislation that came through, that the governor vetoed that would have exempted charter air tour operators, and crop dusters from basically state sales tax. And it had a retroactive clause. That's why he vetoed it. He said we don't know how much money we might be on the hook for if we make this retroactive, we don't know if we've got the money. So I'm vetoing this but I'm going to tell the department of revenue don't collect on any big current efforts, the big one is papilion tours out of the Grand Canyon in Las Vegas, and three levels of court, judicial proceedings, culminating in the state Court of Appeals has found that this company owes the state for three full years where it did not pay state sales tax and that amounts to $700,000 without fines.

Ted Simons: So why is he offering them this reprieve? What's this all about?

Jeremy Duda: He said he's sympathetic to the intent of the bill, just had concerns over the retroactive clause. Maybe they're hoping this case is on appeal, they've appealed to the state Supreme Court and, you know, maybe they're hoping that the Supreme Court reverses this, maybe they're hoping that they can just send this back next year without the retroactive clause or find some other sort of solution but the retroactive clause, unintended consequences galore possibly.

Jim Small: It's interesting. This harkens back to the Uber Lyft thing, there was a law and the governor's office said in the interest of being a pro-business state we're going to ignore this law and not enforce it until the legislature does something to fix it. I don't think the governor called for a legislative fix in this regard. We'll wait and see if that is indeed the path they go down but this is -- this case is, though, a little bit different because of the court action. You've got an appellate court that's ruled on this already and if the Supreme Court either declines to take up the case or takes it up and affirms, then you're in a little bit of a different situation where now, you have an administration telling an agency to ignore a court order, which is a far cry from just, you know, looking the other way on those taxis until you can get that regulated.

Mary Jo Pitzl: And it raises the question of -- I'm told there's more than one potential beneficiary other than the helicopter tour operator but I'm not sure who those folks are. How can you do that when we have -- it's a gift and we're not supposed to be giving gifts away with state money and credit.

Ted Simons: A $700,000 gift.

Jeremy Duda: And kind of an eerie precedent to set where you can tell an agency that we want you to stop collecting taxes on these folks, stop enforcing taxes. I'm sure we would love to get that same kind of benefit.

Mary Jo Pitzl: And I'm not sure that you can do that but nobody's really challenging it.

Ted Simons: I was going to ask about that. The governor -- I don't want to use the word imperial but there seems to be a little bit of an imperial nature to his actions. He just says it's a me, I'm deciding this.

Jim Small: I think the correct phrase is chief executive that you're looking for. But it is in that way and we've seen some other instances of that thus far in the administration. Obviously, they're still -- I guess they're past their first 100 days now but 105 days still, and, you know, but there is some of that approach and like Mary said, who is going to challenge some of this stuff?

Mary Jo Pitzl: Department of revenue?

Jim Small: Yeah --

Ted Simons: It just seems odd that he has don't go after it right now. Court decision may come down. Go after it? I mean, I decree you go after it? That seems eerie to me.

Jim Small: It does. And I think that we haven't seen the end of this particular situation yet. It hasn't played itself out yet and we're going to have to wait and see and if ultimately, the Supreme Court picks up this case and issues a ruling, you know, upholding that the taxes need to be paid, I think that that does change things a little bit and we'll have to see how the administration would react to that.

Ted Simons: All right. This is another one that just -- it's very strange. There are renovation plans among other plans for the House of Representatives, correct? And the Speaker of the House I'm sure is in front of that parade. Is anyone behind him in this parade?

Jeremy Duda: At least half of his caucus is not. These are renovation plans on top of renovation plans. Early in the session, speaker gowan authorized about $375,000 in the renovations. Turns out there's a new round rumored to be costing as much a million for showers, a multipurpose room that may or may not be a gym and a lot of the house Republicans were pretty disturbed by this because they learned about this from the press. They didn't learn about this from him and this looks bad just based -- they just finished a legislative session where they were slashing budgets left and right, a lot of people are upset and here's the house authorizing a million dollars in new expenditures. 18 house Republicans wrote a letter expressing their displeasure and saying they want a bipartisan committee to review and approve any internal house expenditures over $25,000.

Ted Simons: Well, it may not be a capital mutiny here but a small one?

Jim Small: You're riding on a train and you've got that emergency cord to pull to hit the brakes, that's what they did and this is not -- we're not taking over control of the train yet but this is a big deal. When you have half the caucus and folks we talked with, we talked to people in that caucus today who weren't approached to sign that letter, who said I would have signed it. So this number could have easily been more than 20 and that's well more than half the caucus. This is definitely a big deal, and I think the speaker's office is trying to figure out how to react to it and what's going on and what the next step forward is. My prediction is you're not going to see a million dollars spent on renovations. You may see some renovations done and there are some that need to be done.

Ted Simons: That wasn't the only thing. The excessive spending not only for this but there's staff pay raises and things like this going on as well?

Jim Small: And that was -- one of the other things that happened was when David gowan took over as speaker, there's always a transition in staff, wherever there's a turnover in leadership, and he brought in some of his own people, some new people who were paid at higher salaries in some cases than their predecessors and also, some of the existing staff got pay raises, some of it for retention and some of it as a reward for doing good work in the past year or two. So that combined with the earlier renovation, combined with the rumored scope of this upcoming renovation and the fact that they didn't hear about it from leadership or staff, they had to hear about it from us, throw in the fact then just the cherry on top of this is that Democrats knew about it. Democratic leadership knew because all of their staff's offices are in the basement, they've been consulted with for months on this plan and so there were a number of Republicans who are conservative, you know, not the kind of Republicans who joined with jan brewer who would be castigated as opponents of conservatives like David gowan who are signing that letter and who are not happy about that.

Ted Simons: How is the speaker perceived by his colleagues down there?

Mary Jo Pitzl: I think this is marking a public show of disapproval. You've got to keep in mind that these lawmakers, the Republican ones of them, they're going back to their districts and they have to answer to constituents who might have concerns about a $100 million cut to universities and cuts to education funding and concerns about now well why are we giving a tax break to certain people? So there's a real concern that you look -- that you look like benefiting yourself while hurting others.

Jeremy Duda: And I think there are some members over there who for some of them this kind of piling on top of other dissatisfaction they may have had with the gowan speakership, things started late every day, things dragged on to the point where they adjourned in the middle of the house deliberations. This may have filed on top of that and on the list of 18 house Republicans, saw a couple of folks who wanted that job instead of him.

Ted Simons: It just seems that that last day of the session I thought could this be possible? You have somehow influenced or piling on I guess?

Jim Small: I mean, I think this is just kind of the culmination of a lot of things.

Mary Jo Pitzl: But yet you look at sine die, where they were taking recesses every five minutes so things weren't moving along and keeping people there late, there was one member who was ailing and he was laying on the floor nursing a very sore back. But hanging in there to do his job.

Ted Simons: Interesting stuff. All right, real quickly. Marijuana legalization. There's a ballot measure that's going to hit for 2016. This is -- correct me if I'm wrong, this is backed by the D.C. group, correct?

Jeremy Duda: It appears to be now. There's some friction between a couple of sides of this movement where this national movement you're seeing, we've been seeing for marijuana legalization measures and our own medical marijuana thing out here a couple of years ago, backed by this Washington group called the marijuana policy project and they had formed an alliance with some local groups and just a couple of weeks ago we saw a very serious schism with the local groups wanted to start their own initiative. Now, it looks like that's been healed enough, they're all back on board.

Ted Simons: So there is an alliance?

Jim Small: Oh, but are they is really the question. I talked to folks today who are involved, you know, knee deep in these discussions who say not so fast. We're not totally on board. We're working towards it and we think we're going to get there but we're not there yet, and, you know, this whole thing today was kind of the counter to who we saw three weeks ago when he had the other group that broke off and publicly said we're the group that's going to do it. Now, you have this group saying we're the group that's going to do it. I think you're seeing a lot of very public -- some hardball negotiating tactics being aired in public.

Mary Jo Pitzl: Do these different groups, do they have competing visions of how marijuana should be legalized and what the money should go for?

Jim Small: I think the biggest issue that's going to be this year, two things. One is existing medical marijuana dispensaries. That you had people who supported that and the people who spent a lot of money to get those dispensaries up and running. What is their future? How are they going to make sure that they protect their business interests and two, what is, you know, in terms of some of the deregulation what people can grow at home, some of the other things that may not sit well with the public writ large. How are those things going to be worked out? Probably the chief concern would be that business concern. How do these medical marijuana dispensary owners recoup their investment and make sure that they have the inside track on making the money on legalized dispensaries?

Jeremy Duda: And that's one thing that this initiative filed today does, gives those folks, people who have already gotten started in medical marijuana on gives them the leg up on getting these licenses, which will be limited, 150 recreational marijuana retailers would be allowed in the state for the first five or six years.

Ted Simons: The sales tax for marijuana will be 15% according to this with 40% going to K-12, 40% going to all-day kindergarten, 20% to the department of health services. With all that in mind, does it have a chance?

Mary Jo Pitzl: Medical marijuana squeaked by. We've had a couple of years of this state having that operate here as well as what we've seen happening in Colorado. It all depends on turnout and, you know, what kind of voters show up. And I will add that that 15%, that's on top of existing sales tax. So that's a big chunk of change.

Ted Simons: That sure is. We get back into controversy here with the former department of administration director threatening a lawsuit, a lawsuit against a former chief of staff to a former governor. A lot of formers going on here. This is a nasty little business.

Yeah this was Filed by Brian McNeil who was the director of the Department of Administration under Jan Brewer up until the couple of months before she left office, fired a few months before she was supposed to leave, no reason was really given, a few days later, brewer administration released some documents showing that an employee, an African-American woman had filed a complaint with the federal officials alleging discriminatory comments. A notice of claim, something you have to file, a precursor to suing the state and claiming -- the legal claim is that these documents, these were illegally released, they were confidential information that was released to make him look bad but it seems like the wider claim is to clear his name. There's a lot of dirty laundry aired in this, a lot of complaints against Scott smith who was Jan bBrewer's chief of staff with whom he clashed a lot, a lot of allegations about them improperly interfering in agencies and legislation.

Ted Simons: Mismanagement, waste of money, abuse of power, refusing to do something or not do something illegal.

Jeremy Duda: Big claims about how he could have filed a whistleblower complaint if he wanted because things he was fired for disclosing, possibly illegal activity or refusing to engage in illegal activity. There's a lot of stuff in there.

Ted Simons: What's going on here? A man trying to clear his name? Obviously, that but what else is going on?

Mary Jo Pitzl: There are lots of suggestions that this is a conflict between two very strong personalities. We'll see if the -- you don't really have to have a whole lot of a reason for dismissing someone from state service.

Jeremy Duda: You can have no reason.

Mary Jo Pitzl: But you can't have a bad reason. If you can prove that the bad reason was bad blood, maybe he's got a chance. This is definitely a way to try to clear his name.

Jeremy Duda: The whistleblower allegations weren't even part of the legal claims. This guy is seeking almost $1.5 million and the actual legal claims are really just limited to release of confidential information and intentionally painting him in a bad light. Then the second half of this complaint goes into well I could file a whistleblower complaint and I'm not going to but if I were going to, here's all the stuff that would be in it.

Ted Simons: Here's what I could do if I wanted. The governor vetoes some measures to take over federal lands, a couple of bills, it says we got all public lands, we get to sell whatever we want. No surprise. But he did say let's get a search committee or study committee.

Jim Small: I think this study committee that the legislation got signed on to explore the idea, I think to deliver a report by the end of 2019. They're not exactly going to be working at a break neck pace and kicking the can way down the road. It's often referred to as death by study committee and this looks to be a prime example of that,

Jeremy Duda: whereas jan brewer vetoed similar legislation a few years ago saying I'm not sure this is constitutional. The way Governor Ducey put it is we don't need this because we've got this study committee and we're going to work some things out. And I think this is kind of a trend we're seeing from the new governor, kind of a tendency to split the middle on some of those controversial issues that are going to pit the establishment against the Tea Party wing, take back our land from the feds, establishment types don't want to get us into the national news for that kind of fight. Split the middle and say we're going to do this and this is going to set us on the path.

Ted Simons: We've got 30 seconds left, that was another one of those chief executive actions there. Raul Castro died this week. He wasn't in office very long and the more we talked about and did stories on him, he wasn't all that happy being governor because he thought that I'm the governor and you should do what I say and people weren't doing what he said.

Mary Jo Pitzl: As opposed to today.

Ted Simons: But it is interesting that we're talking about that with the current governor and a past governor that was basically his biggest problem being in office. What was the reaction down there? Is institutional memory short?

Mary Jo Pitzl: I don't know about to that comment but I think recognizing his place in Arizona history that was the more dominant comment.

Ted Simons: All right. We've got to go. We should have had more time to talk about Governor Castro but thank you so much for joining us. And that is it for now. I'm Ted Simons, thank you for joining us. You have a great weekend.

Mary Jo Pitzl:Journalist, Arizona Republic; Jeremy Duda:Journalist, Arizona Capitol Times; Jim Small:Journalist, Arizona Capitol Times;

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