Journalists’ Roundtable

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

TED SIMONS: Coming up next on Arizona Horizon, Journalists' Roundtable, the latest on Glendale's decision to cancel the arena contract with the Arizona coyotes, and a planned payment cut to Medicaid health provider is no more. The Journalists' Roundtable is next on Arizona Horizon.

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, Mary Jo Pitzl of the Arizona Republic, Howard Fischer of Capitol Media Services, and Mike Sunnucks of the Phoenix business journal. City of glendale decides to cancel its agreement with the coyotes, a move blocked today by a temporary restraining order. Mary Jo, this never seems to end, but this was a surprise this week.

MARY JO PITZL: Yeah, the Counselor's decision to call a meeting, which they did on short notice but within the confines of the public notice, and debate whether to cancel the contract, and it was a, I believe, a 4-2 vote to end it.

HOWARD FISCHER: The fact is, lets get serious here, they had been looking since the last election, to do something here. This council, the majorities of the council was not here when the prior council did this. They had been looking, they have been scouring through their notes, and they found this provision that says, well, this guy used to work for us and now works for the coyotes, was involved with the negotiation, and therefore, we can cancel this within the first three years.

TED SIMONS: And I wanted to get to that law in a second but before we do, back to the surprise nature of all of this. Everyone up to and including the coyotes, were taken aback by this.

MIKE SUNNUCKS: Yeah, the coyotes, the CEO and their owner went and met with the Mayor, and vice Mayor, Ian Hugh, and other officials that week, earlier in the week and they called this, and you saw the coyotes' people doing media about the draft in the offseason. There was no indication that this was going to happen. Howie is right, they were looking to renegotiate this deal, the city has been pushing for a number of months to renegotiate the terms and they are losing money on this deal. They spent 15 million a year to the team. They don't get enough money back in terms of the revenue sharing or sales tax. To the city's liking, so they have been looking for a reason, and this was -- they went to this nuclear option of tearing up the deal.

TED SIMONS: And now, this law, this conflict of interest law, could be terminated within three years of, if someone who helps to draft or create the contract for one side, winds up going to work for the other side.

HOWARD FISCHER: The purpose behind a law like that is to make sure that if you are the city council, and you are relying on employee a for good advice, for the best advice for the best deal, and to make sure that the employee hasn't had back Channel discussions with the other side, that hey, once we get to the this contract signed, you can come to work here. So, there is a good reason for it. Now, the law doesn't specify to what extent that person has to be involved in the contract, to have to prove any sort of purposeful, misleading, and that's where it's going to get interesting.

MIKE SUNNUCKS: It centered around Craig, city attorney, worked on these deals that came through while the team was owned by the NHL but the time line is murky on this. He got pushed out, resigned in February of 2013. The deal was consummated in June, and he went to work for the team in August of 2013. So the team is going to argue, this guy wasn't even here, you don't see his name on the documents. The city will come back and say, he worked on a lot of these coyotes' deals and some of the framework of the current deal were in the other deals, and so you know, he had an influence on this deal, each though he might not have been an employee. He was getting severance from the city during the time when the council approved this. So that's kind of a gray area that the courts will have to decide.

MARY JO PITZL: Doesn't this fall within the three-year time frame that the state law requires?

TED SIMONS: Right. Exactly. 2013, and now we're 2015, and they are thinking that something has to happen. They are losing money out there, and they are losing money with the coyotes there, the question is, how much money are they going to lose if the coyotes leave?

HOWARD FISCHER: Well, that's the end game. Certainly, the coyotes could pack up, we have heard talk, the Mayor of Phoenix, say maybe we can make a little deal downtown here.

TED SIMONS: He's being very careful not to say that, but yeah --

HOWARD FISCHER: He says sort of, you know, playing all around the thing, and it may be that the end game is some new deal, you know, Mike suggested this, too, where you are not losing 11 million a year. You make it up on value. There is only so much that you can make up on volume of people going after the game over to Westgate to get a beer or something like that. Paying sales tax. And I think that may be the real end game.

TED SIMONS: And it seems obvious waist going on here, they either want out of this or to negotiate a new contract, and they have really gone pretty hard to get this done. Have they gone so hard that even if there is a new contract negotiated, no one is going to have any faith that this is going to hold, that the coyotes are going to stay, the will has been poisoned, hasn't it?

MIKE SUNNUCKS: I think that there is a lot of indications that it has, they are going to be in court fighting each other, how are they going to come back and strike a new deal? When this ownership group bought it and the other groups that tried to buy it, they needed a subsidy from the city. They needed this 15 million arena management fee. Other people call this a subsidy, in order to get financing, and from a private equity group and the NHL to help to do the deal. They came up with some of their own money but these arena deals, this is one with the coyotes, was part and parcel of them being able to buy the team and get financing, so you are taking this away, and if you take this away, to a large extent, even if something comes back, how do they make the numbers work? You have got Quebec City and Vegas and Seattle and Portland, Oregon, and Kansas City, and all sitting out there wanting a team, and when the cities want teams like this, they are often easy to bargain with, versus Glendale, when you have got a majority of the council that has no investment in this arena.

TED SIMONS: Do we have a majority? Do they know what they are voting on out there?

MIKE SUNNUCKS: There was some confusion during the voting. It was a 5-2 vote and there was one council member that the people thought he was going to vote no, and he voted yes. There is a majority of the council, including the Mayor, and the city attorney, and some of the management out there, that aren't as invested in the arena like Elaine Skruggs that built it and wanted to see Westgate. So, I don't know if Glendale is going to go to the mat to even keep it halfway on this. They may be ready to say, we're tired of throwing good money after this.

HOWARD FISCHER: This gets to the larger issue, which is, you know, a sports fan, why are we using taxpayer money?

For fairly profitable teams. I can't say that I looked at the coyotes' books and whether they can make money or not on this. But, when you have got money being spent on football, basketball, baseball, hockey, to bring folks here, when we have -- when we decide the way we'll get the NFL here is through the Super Bowl. We have got to give them the sales tax back. I'm not sure that, in the long run, this pencils out. Teams move on, we're stuck with large, empty stadiums. Look what happened to other cities, the question becomes, does this make sense?

TED SIMONS: Jerry wires, Mayor of glendale, used to be a state lawmaker at the capitol, what was he like? Was he considered a tough bargainer? Was he a guy that would throw something out there at the last second and watch everyone jump and shout?

MARY JO PITZL: No. I mean, when he was chairman of the rules' committee, he would hold bills up, and he was also probably the most famously known for leveraging his colleagues in the legislature to say hey, I need you to help me fundraise for the shriners, and the fact he went so far as to say if people in glendale are upset with me, they can bid on a chance to tase me, take out their anger by tasing me, you know, if you give the winning bid and the money will go to the shriners.

TED SIMONS: So not necessarily known as the hard bargainer.

MARY JO PITZL: He walked into a city with a lot of debt. This has been a history of bad deals, or it's not penciling out for the city. He wanted to end it.

TED SIMONS: Yes.

HOWARD FISCHER: Understand, this is part of the reason that the change in the council. Now you have the city supporting it out there because I think that part of what they realized, we fought them for years now, and we lost in court and lost in court, and maybe gee, maybe we should be on the winning side. We're bringing in money, and there is a whole change of attitudes out there in the council.

MIKE SUNNUCKS: I think that, you know, the Mayor is fiscally conservative, and I think that there is a lot of sent element from Howie's point. The Mayor had a very public spat with Michael bidwell and the Cardinals and the NFL. They moved events out, had them in downtown phoenix, and Glendale kind of feels, for the Super Bowl, that we build these things and invested them but we're the ones losing the money because the fans for the Super Bowl stayed in Scottsdale or downtown phoenix, didn't come out there. The coyotes have been -- it's always been a bad deal for them and a challenge because of the location of the arena for getting fans out there, especially for weeknight games. And all of a sudden, all this uncertainty, the coyotes argue today, all this uncertainty continues to hurt the business model more because you are not going to have season ticket-holders or sponsors or sweet buyers step forward when they think the team will move.

TED SIMONS: What does it do to the city of glendale's reputation if folks think that they signed an agreement a couple of years ago and now, they are voiding it?

MIKE SUNNUCKS: There's a narrative about all the bad deals Howie references, the risk-taking. Some of them sweetheart deals, that glendale has inked with folks, Westgate was foreclosed on when Steve allman owned it, the relationship with Jerry, the Camelback Ranch deal with the Dodgers and White Sox, they really have taken a beating. That's a way worse deal than the other, they have so much debt they are not getting any revenue. So, it's all this kind of dysfunction. They lost their city manager, have gone through staff, so there is the easy narrative, look at glendale and say you don't know what you are doing.

HOWARD FISCHER: It will be interesting to see what happens at the preliminary injunction, a temporary restraining order is a simple thing, doesn't require a hearing, the judge looks at irreparable harm, and it's easy to say glendale is not hurt if we keep them from avoiding the contract now, the preliminary injunction gets interesting. Among the things the judge has to decide at that stage, and this will be within weeks, is the likelihood of success by either party. And so, we will know very soon what the judge thinks of this whole deal.

TED SIMONS: Yeah, and that's June 29, and executive session for the glendale city council, next Tuesday?

MIKE SUNNUCKS: Next Tuesday, they will meet and kind of craft out their next steps. We need to send an official letter, a dear John, a breakup letter to the coyotes, and there is this audit that has been going on. Glendale requested an audit, this thing has dragged on almost a year. They have had a hard time getting information and they are scouring through that to see how the coyotes' have allocated money, if they were fairly doing the revenue sharing in the deal that the city benefits from and whether there is any other causes.

TED SIMONS: So did I see Ed Beasley, former city manager out there, is he in Ferguson?

MIKE SUNNUCKS: He's the interim city manager at Ferguson, Missouri.

TED SIMONS: Oh, my goodness.

TED SIMONS: All right, well, we'll move on from there. Planned Medicaid payment cuts, this idea of 5% cut to Medicaid, to help health care providers, this plan is no more. What's going on here?

MARY JO PITZL: This was the part of the budge deal, back in March, and to help make the state budget balance, the legislature, I mean, the governor proposed a 3% cut in the reimbursement rate for people who provide health care services through access. The legislature upped that to five. The providers just screamed. It was tough, they said that, you know, they could not afford to take that kind of a cut. And there was always the question of, you cannot just cut that rate. The 5%, which the legislature did approve and Ducey signed off on. Without the centers for Medicaid and Medicare approving it. They had not even -- that had not happened and then all of a sudden we get this announcement, from the agency saying, you know what, we have seen some declining enrollments, we're saving money so we think that we can cinch our belts and get that 5% savings without taking it out of our health care providers.

TED SIMONS: What's really going on here, Howie?

HOWARD FISCHER: look, we have seen this a lot, and first, there is a little more money in the state budget. We talked about this around the table. But, it's amazing what happens when some -- when cooler heads say, now, wait a second, we're not, not only endangering doctors saying we're not going to take access patients, but, the Federal money that's supposed to come in, the match, and all of a sudden, people are saying, we're going to what?

TED SIMONS: The matching, that was known, was it not? The matching funds would go away?

HOWARD FISCHER: But some how, it was -- we're only concerned about our little portion of it. And suddenly, you know, somebody, the adults in the room, said you mean there is really no way that we can make this happen? That'sa lot of what happened here.

MARY JO PITZL: What I'm hearing is that the providers have been very quiet about this announcement. There is some concern that since this was an agency decision, you know, it's -- we still have a law on the books that says, you are supposed to cut 5%, so will the legislature go back and invoke that at some point? The revenues are picking up, so I think that the budget is looking ok. You never know.

HOWARD FISCHER: Well, remember, there is another shoe to drop out there, and they passed a law that says we're supposed to ask the Federal Government to impose work requirements and lifetime limits and everything else. Something that the centers for Medicaid and Medicare are not going to approve. But, this is the kind of attitude, and this is, also, an anti-welfare and anti-Obama argument, so it's a way of getting at that. And that does not get into the affordable care act.

TED SIMONS: But, can this be seen as the Governor saying, I change my mind? Being flexible and imperial as we have heard?

MIKE SUNNUCKS: The hospitals are an influential lobby, a big sector in the state, and they have had hot and cold relationships with previous Governors. And so, I think that maybe their strategy here, maybe worked out for them, and this shows that the revenue picture is improving, is impacting policy, and fiscal decisions.

TED SIMONS: All right, and Supreme Court, Arizona Supreme Court rules on charter schools, this is the idea that charters should get the same as district schools. Didn't rule but said basically, it's good enough, let's move on.

HOWARD FISCHER: Here's the issue. Charter schools are public schools in Arizona. They can be run by for profit or not-for-profit organizations. This goes back to the 1990s. Arizona has one of the most active charter school movements in the nations. A lot of kids in there. Every kid -- there is a certain amount of money that follows each kid. Public schools get additional money for certain sorts of capital and books, plus they have access to local tax revenues. Charter schools don't because there is no local tax base, no School District. So, they sued, and they figured that they should be getting another 1200 dollars per student, comes out to 135 million. And they said there is no -- it is an equal protection argument. What the court of appeals said and the Supreme Court upheld is, no these are two different kinds of schools. You are ignoring a couple of facts. Number one, you are not subject to the same regulations. You don't have the administrative rules, you can hire and fire at will, and number two, nobody is forcing a parent to send their child to a charter school. You make that voluntary decision.

MARY JO PITZL: So, I would look for legislation next session to, perhaps, increase the funding for charter schools, and they are, already, chafing because the budget that takes effect in July, cuts this thing called the small school, so it's additional funding for schools that have fewer than 600 students. And that money is going to be phased out, and that's going to hurt, primarily, charter schools but also smaller --

MIKE SUNNUCKS: Charter schools are very popular group at the legislature, and there is a lot of legislatures that have worked for charter school groups and a lot of support within the Republican majority down there for charter schools and I think that you will see a number of bills to even this out.

HOWARD FISCHER: Here's the problem. It may get in the way of the plan that the Governor announced a couple of weeks ago, where you want to tap the trust fund and that money, the 300 per student is supposed to go into the base and equally, so in other words, we are going to put 300 dollars into the public schools and 300 dollars for students in charter schools, and you start monkeying with that base, and you start saying, but we're going to give away to the charter schools, the whole thing could blow up, and I think that the Governor cares more about the trust lands than he does about anything else with the charter schools, and he does not want anything to screw with this plan.

TED SIMONS: Was the Supreme Court decision a surprise?

MARY JO PITZL: Frankly,I don't know.

HOWARD FISCHER: The court of appeals is very clear. It was a unanimous decision. And they were very clear, judge Downie, you know, sketched out all the reasons, and it's an uphill fight for the charter schools.

TED SIMONS: Alright, who is Shawn Marquez and why is he saying such nasty things about the Governor?

MARY JO PITZL: He's a former acting director of this very well-known state department of weights and measures, which you have probably never heard of until tonight, and he was moved out of the position as is the Governor's prerogative when Ducey became Governor. It was done quietly and there was not a press release that I recall about it. But, last month, the Governor stood up in a meeting of the Republican national committee and made a big to do about hey, you know, I got rid of this former director because he was going to do a sting on ride share services during the Super Bowl and that would have been terrible and horrible and I got rid of this guy, and now he's in the private sector. And that chafed Mr. Marquez, who didn't want to talk at first, but the more he thought about it, the looser his tongue got and as he went.

HOWARD FISCHER: And what's great, and this is a great story about Mary Jo, you look at the emails, and you look at the back and forth, there is no evidence that there was some pre-Super Bowl sting planned. Now, Shawn Marquez, a carryover from the prior administering because he was a deputy director, was doing the bidding of the Brewer administration, which is Arizona law says, and continues to say today, if you offer rides --

TED SIMONS: we talked about this. He was, basically, doing his job.

HOWARD FISCHER: Yes, I know. But he was doing it, perhaps, too well.

TED SIMONS: But what was he doing with all these emails? Was he doing it too well?

HOWARD FISCHER: The question, let's assume for argument sake he was not planning a sting. But, he never backed off of the idea that he wants to enforce laws that say, if you offer rides for money, taxi, Uber, Lyft, that you have certain insurance and background checks, and that is what the department was charged by the legislature with doing until Doug Ducey said not so much.

MIKE SUNNUCKS: Uber and Lyft, there is Ducey's favorite companies. He was at the ribbon-cutting, for the announcement of Uber has a big center here, and 300 jobs downtown, and he's touting this, sass part of the speed of business ,he's very pro-business, and he sees this as more of an innovative business venture than something that needs to be regulated. And this is the agency that, over the last weekend got hacked by the Islamic middle east Cyber army, and was down, so it stays in the news the weights and measures.

TED SIMONS: And got hacked by this -- is the new director, Mr. Tobin, is he going to build it back up? Aren't they supposed to fold that?

MARY JO PITZL: It went back up today.

TED SIMONS: Did it? Ok. They had to fold that.

HOWARD FISCHER: It will be part of the department of agriculture, pieces out, I think, to the Department of Health services or dps. The fact is, that yeah, end of the year, there will be no department of weights and measures. Now the thing that we're watching for is will all the important things that weights and measures does be done? For example, the reason you no longer have the price on the top of cans in the purple ink is the retailers cut a deal. We will say you don't have to price them but you have to have accurate scanners, it's up to the weights and measures to make sure we're not getting shafted at the register.

TED SIMONS: And most folks, remember the weights and measures is one of Governor meekam's first, early priorities was to get that in line. He was very -- I thought I would bring that up, a little historical.

MARY JO PITZL: It's a big consumer protection. At the end of the footnote the weights and measures director in office at the time that fife simington was Governor, he had a public dispute with the new Governor, so I think we're following in a fine tradition.

TED SIMONS: For the record, and for your story, Mr. Marquez said that the Governor made the whole thing was made up, was the quote, and he took the coward's way out.

MARY JO PITZL: He has Very strong words, the Governor's office, you know, stands by the Governor's comments made last month. And they note now that we have seen a lot of the email correspondence back and forth, they think that this shows, well, at least he had sting in his heart, and certainly --

TED SIMONS: It goes back to Jimmy Carter.

MARY JO PITZL: My words.

TED SIMONS: Historical footnotes here.

We want to look at that. And the chamber -- we go to you, Howie, the Chamber of Commerce, and industry, says just say no to marijuana legalization.

HOWARD FISCHER: You know this is fascinating. This is really not a business issue, maybe just the dispensaries are not paying their dues, but they have come out with a study in saying some how, it's going to lead to less worker productivity, and it's bad and look what happened in Colorado, and you know I don't know why they decided to weigh in other than the fact that the Governor, has come out against legalization, and they have been doing a little butt kissing.

MIKE SUNNUCKS: The county attorneys, Montgomery, Polk, Republican, state parties against it, and I think that you will see the -- what happens, when medical marijuana passed there was not any opposition. The Cardinals gave some money, there was not that kind of organized Republican conservative opposition to it, and wow, it passed, but the sentiment is for legalization. It is legal in four states DC, California, Nevada, and us, and several others so I think that the chambers like, this argument, it will cause more work to replace claims, injuries, worker's compensation. It could help snack food sales.

TED SIMONS: Yes, it could, and they have done studies and they have seen studies, tax windfalls less than expected, criminal Justice costs would be minimal because fuel locked up -- that sort of thing. They are basically discrediting every study and survey that says this is either going to be a goods thing for a state or not such a bad thing.

HOWARD FISCHER: but,It ignores the reason that you legalize marijuana for -- first, we have recreational marijuana now. I have is a pain in my back doctor. Heres the script. This comes down to a personal liberty issue. It's a Libertarian issue. Why do you think that you have people, you know, like rand Paul talking about it. And you bounce the question, should I have the right, if I can go out and get wasted, at the bar up here on 1st street and, you know, drive home probably illegally, as opposed to sitting home and just getting wasted watching horizon while I'm stoned on TV.

TED SIMONS: God bless you.

HOWARD FISCHER: The fact is that there is a personal liberty issue and I think a lot of people see it that way.

TED SIMONS: ok, so there are -- is there likely going to be two propositions on the ballot?

HOWARD FISCHER: I think --

TED SIMONS: You think so, so just one then?

MARY JO PITZL: I think one, and the chambers, the opposition, as Mike was pointing out, is building an early fire wall or attempting to build an early fire wall against what might be a popular movement.

TED SIMONS: Pop quiz, is this thing going to pass?

MIKE SUNNUCKS: It will pass.

TED SIMONS: You think so?

MIKE SUNNUCKS: Yes.

TED SIMONS: Even with all the money against it? A lot of money there.

MIKE SUNNUCKS: I think the sentiment in the country is more liberal on issues like this. I think it will pass. We have opened the door with medical marijuana. It hasn't had any adverse reactions.

HOWARD FISCHER: I don't think it will pass. I think that the fact is that the longer this lays around, people get confused and tend to vote no, and I think that's a problem.

MARY JO PITZL: And if rand Paul is a GOP nominee, perhaps.

TED SIMONS: Perhaps, to end the show. Good to have you here and thanks for joining us. Monday, Phoenix children's hospital earns high praise from a national report. We'll speak to the author of a book that Chronicles the history of the Bill of Right, Its Monday at 5:30 and 10:00 on the next Arizona Horizon. Tuesday, Arizona department of child safety director Greg Mckay will join us. Wednesday, it's time again for renowned physicist Lawrence Krauss to discuss the latest science news. And Thursday, we'll be joined by Arizona secretary of state Michele Reagan. And Friday, it's another edition of the Journalists' Roundtable. That is it for now. I'm Ted Simons. Thank you very much for joining us. You have a great weekend.

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