Journalists’ Roundtable

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Three local journalists discuss the week’s big stories.

TED SIMONS: Coming up next on "Arizona Horizon," it's the Journalists' Roundtable. The state pulls the contract with a for-profit prison firm after a troubling report. And a court rules that Arizona's medicaid expansion is constitutional. The Journalists' Roundtable is next on "Arizona Horizon."

VIDEO: "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. Jeremy Duda of The Arizona Capitol Times. Bob Christie of The Associated Press. And Mike Sunnucks of The phoenix Business Journal. The state decides to terminate a contract with the private prison firm that operated the much and repeatedly troubled prison near Kingman. Was this a surprise?

JEREMY DUDA: Not after what we saw you know, a month and a half ago. Certainly, not after this report a couple of days ago that laid the blame for this prison riot up in Kingman squarely at the feet of Management Training Corp. The department of corrections which monitors these folks said they were kind of hiding the ball, not sharing as much information as they should have with the department of corrections, bad training policies, bad staffing policies, which they've gotten dinged for in the past and so this is your fault, taking away this contract, it's $70 million a year. It's a pretty big contract.

BOB CHRISTIE: And there's been rumors or there's been a lot of chatter for several weeks now that MTC was out. I don't think there was a lot of love lost between the corrections department and that operator in the first place. Within a week or so of the riot, there was chatter that okay, if it's as bad as we thought, they're out. The interesting part about this is absolutely no blame was placed on the department of corrections which when the escapes happened in 2010, 2010 we had three violent criminals escape from this, two of them ended up in New Mexico and killed a couple before they were caught, another one was caught up north and after weeks on the run, and Chuck Ryan, the prison director said we're going to fix this, I'm going to increase my oversight, he had five senior people up there, deputy, warden, captain and a couple of what they call co3's, very experienced people and they had no idea that there were problems up there.

MIKE SUNNUCKS: Staffing is a problem. They did reference the 2010 escapes and what bob mentioned as justification. They said they didn't improve on that. Yeah, the director, it's been tough on him. A lot of challenges over there with the assault on the instructor and the botched execution and Ducey has replaced a lot of directors, a lot of cabinet level people, and he seems to stick around.

TED SIMONS: We had director Ryan on the program last night and we had asked him numerous times will anyone be penalized for this, punished for this? There's some people calling for his firing, some sort of accountability. And he said no. He thinks and he was saying that they've deceived him, MTC deceived his monitors.

JEREMY DUDA: And it seems kind of surprising that no blame is being placed on DOC here. Even if they're saying that MTC is not being forthright was the way Governor Ducey put it, the department of corrections are supposed to be monitoring these folks and MTC, while simultaneously taking the blame for this said hey, by the way you know, you guys didn't give us a chance to respond to support and you've given us consistently high grades for years and years since the killers got out in 2010.

TED SIMONS: They called the report flawed and they said that the state's handling of the riot actually made things worse.

BOB CHRISTIE: They did. When the second riot broke out, one started in the minimum-security prison, that was the first day, and there was basically the whole yard full of prisoners trying to get to a prisoner that they had just returned and there was a big melee and that involved basically the guards trying to save this one guy from all the rest of the prisoners. Two days later, all heck broke loose in the medium security, which is the violent offenders, more serious criminals, and MTC said we were ready to try to get a handle on that and then corrections folks showed up and said you know, you messed up the whole deal.

MIKE SUNNUCKS: It seems like if you have oversight, these are corrections officials that are overseeing a prison run by a contractor, some of the issues that popped up, staffing, morale, prisoner complaints, those would be the things that you would think monitors wouldn't be able to hide from, they were on the ground there at any time. We kind of catch on to that if they're in the industry and kind of experts. So it seems kind of odd that they said they deceived them. I could see on some issues but some of those things, if you were a prison industry law enforcement expert in your field, you would notice those things.

TED SIMONS: And I asked director Ryan about that last night. He said this is something we may need to look at to see how monitors do their monitoring and see how monitors can be deceived.

BOB CHRISTIE: He said it Wednesday and on your program last night. He was very careful in how he worded it. He said they were dealing with their statutory duties. We have 3,500 prisoners up there that private prison operators, they can't do discipline, they can't do work time credits, they can't do the releasing that prisoners need, there's a lot of that goes on. He had five people up there full-time and they were supposed to do that, plus inspect the prison for potential problems, plus rotate around and make sure that everything was fine. And that's where they didn't get the job done I think.

TED SIMONS: So with this information, it sounds like private prisons, the controversy arises again, the governor will take his time.

JEREMY DUDA: It sounds like we're moving forward with these 2,000 beds that we need contracts for, MTC gets to keep their contract for now at the prison down in Marana as well and this will open up a debate but it's the same debate that's been going on for years with the Republicans on one side and the Democrats on the losing side.

TED SIMONS: Well, yeah being sarcastic there, but the fact is the governor couldn't wait to say we're going to get another private operator.

MIKE SUNNUCKS: That's not going to end here and he's a CEO and we see this a lot throughout his term here. He's brought in his own managers, his own executives, his own directors. He's going to cut a better deal. He's going to have a better deal that he's going to cut with the private prison and he had no allegiance to this previous deal because it was before the predecessor. It's not wavering in his support for conservative things like private prisons but the management of things, you're seeing his imprint on.

BOB CHRISTIE: What the issue is for the director and for the governor is if we can't -- if we have five people working in there for the state, they're supposed to be making sure the contract is done right and doing the things they have to do by statute and they miss all that stuff. You can't put 10 or 15 in there because then all the cost savings of having it privatized goes away. They have to find operators that are fully trustworthy and two of the senior people at this prison were retired corrections department people. The deputy warden and another person were. They know the way the system works.

MIKE SUNNUCKS: The problems are still there. Everything's done on the cheap. The problems with the corrections department and the health contracts that they contracted out, same problems. If it's a low-bid contract, how do you improve that? How do you staff it enough, how do you have quality people working there, how do you have the services as a contractor that you're supposed to provide but do it cheaper than everyone else?

TED SIMONS: Everything you say there deals with the business aspect of this and are people starting to think about whether or not the primary purpose of the justice system is to allow for -- you're equating justice with profits here. I mean, is there no one having a problem with that down at the legislature?

JEREMY DUDA: I don't think anyone knew so far. Again, this is the same debate they've been raising for years, and we've had the same problems for years. If 2010 didn't do it, when these three inmates got out and murdered two people, I don't know if this is going to change the debate when money is tight, the budget is going to pulled in a lot of directions.

BOB CHRISTIE: And the driver really isn't the ongoing costs of operating the prison because it costs more. The driver is it costs 100 or 200 or 300 million to build a new prison. And the state doesn't want to put that money up front. Those private operators come in, they either with an independent company themselves build the prison and lease it to the state for 20 years. At the end of 20 years, give it to the state and it's there.

MIKE SUNNUCKS: If you talk to folks on the right they'll say two things. There's a lot of problems with publicly government run prisons, Lewis and the media folks like us are scrutinizing the private prisons here. They'll say that, there's all these problems because people in prisons are bad people. The second thing is there's not a lot of sympathy for people in prisons. They put themselves in prison and we're going to worry about how they're treated and stuff? That empathy factor is lacking.

TED SIMONS: Last we've word of MTC in this particular incident?

BOB CHRISTIE: I don't think so. They sent me a couple of pretty fiery statements today. They are not happy with the way they've been treated with this report. They still have the contract for Marana. Unless they go in there and examine that and find problems, they're going to be around state for goodly time.

TED SIMONS: Alright, the baseball season is almost over but spring training still exists as far as the Medicaid expansion case is concerned. Judge earlier said basically whatever he decides, whether this is a constitutional method or not is kind of like spring training because they're going to go to Supreme Court today. He made his decision. What did he decide?

JEREMY DUDA: First of all, he decided that his decision was going to be a little more impactful than maybe he let on in those oral arguments joked about how the Court of Appeals should stick it in a drawer. He put a lot of thought into upholding this hospital assessment that funds Medicaid expansion. This came down to two questions really. Was the assessment a tax and if it's not, does it fall under an exemption? It requires a two thirds vote for a tax increase and both counts, he decided this passed with flying colors, it's an assessment not a tax. And that it falls under this exemption which was kind of strange because you have these two provisions in this part of the Constitution that kind of conflicted with each other and he said even if it's not written that well, even it contains a loophole, that's the way it's written. It does not require two thirds, it's good to go.

TED SIMONS: And again, the other side, Goldwater institute representing Republican lawmakers challenged this, saying the legislature can basically raise pseudotaxes without that two thirds majority.

BOB CHRISTIE: Which they have been doing for 10 or 15 years now. And this was just one that got everybody upset. So now, it's in court. The Goldwater argument and the argument of the lawmakers, Andy Biggs and the rest of the conservative Republicans who opposed this, he's the senate president, Andy Biggs, saying listen, this is about the Constitution. The Constitution says you cannot raise taxes without a two thirds vote of the legislature and we think that this is clearly a tax. They're going to the appeals court. They're going to the superior and Supreme Court and, of course, this is the two courts that allowed them to sue after a Superior Court judge initially said you don't have the right to.

TED SIMONS: And the hospital association, the hospitals in general are saying it's a fee, we're paying it. A tax is something that we would be fighting. They're saying this is a fee.

MIKE SUNNUCKS: Fee, levy, an assessment. It's everything through the lens you look through. Republicans will say if it quacks like a duck, it's a duck, and it's interesting because there's interesting arguments on both sides and we'll see what the appeals court and the Supreme Court say but, you know, both sides have an argument on this. It looks like it's a tax. You can say that but it would if they did -- undo all these user fees to help kind of solve budget problems in the past and those same Republicans have been okay with those.

JEREMY DUDA: It's not going on appeal immediately. Like you said this is exactly what happened last time to start out is the Republican lawmakers in the Goldwater institute, they lost in superior court. It looked like they weren't even going to get the right to challenge this case. It got overturned in the Court of Appeals, got overturned, that decision was upheld in the Supreme Court, and they're hoping this will happen again. One interesting side note in this ruling is when the judge was talking about this exemption and whether or not he should interpret it as not applying to this, he basically accused the Goldwater institute, the paragon of judicial conservatism of advocating for judicial activism, he didn't mention them by name, mention why it's ironic to accuse them, you're asking me to read into this provision words that aren't there, doing so would invite outcries of usurping legislative authority.

MIKE SUNNUCKS: That happens every case like this where you do have gray area and the one side that wants an activist decision would like it. Sometimes, the right is on the wrong side of those things.

TED SIMONS: Go ahead.

BOB CHRISTIE: And the one thing he said at the very end, even if I hadn't gone through all the exercise to uphold the law, remember judges are not supposed to overturn laws if there's a rational basis not to. That's what the core of the argument is. There's a rational basis to uphold this law; therefore, judges shouldn't overturn it.

MIKE SUNNUCKS: But certainly that shows the starting point where he's coming down.

TED SIMONS: Play ball now, the regular season starts as we get to the Supreme Court. Inflation adjustment, education talks, the gag order on the whole thing, we never knew what was going on. They're over. What happened?

BOB CHRISTIE: They are over. These have been going on since January. There was a judge who was about to issue a ruling who said state, you may owe $1.3 billion in back school funding. The judge had already ruled that the state owes $330 million as of January 1st and another $336 million now. They put on hold, they've been behind closed doors for seven months and, of course, in the meantime, none of that money has been going to schools. They broke down this week and we're back at square one. This is what the governor in the state of the state address said settle this lawsuit.

TED SIMONS: He said settle this lawsuit because I don't want to go back to square one because that means $330 million as of now.

JEREMY DUDA: Now, they're back to square one. Of course, this still has to play out in court again more appeals. The issue here is you know, the Supreme Court has already said you guys unlawfully withheld years' worth of inflation funding that was required by an old ballot prop from back in 2000. Now, the issue they're trying to decide is where should the baseline that you use to determine the inflation be set? The legislature says there were many years during the good economic times when Napolitano kept raising school funding, we've raised that far past what we were required to, the Supreme Court said, no, you don't. We reset the baseline now based on that and that's what they're trying to fight and that's a big difference. They increased inflation funding by $74 million and that leaves them $250 million to go if they lose.

MIKE SUNNUCKS: $325 million surplus at the end of the fiscal year but the optics on this for the legislature and for Republicans, even for the governor are really not good. They're fighting so hard not to fund schools. They continue to just not blink at all. It appears, the optics on this.

TED SIMONS: But the optics change when the same folks, many of the same folks who are fighting this out come with a new education plan that includes a whole variety of ideas that may or may not have been included in the negotiations, we don't know that but we do know now that they're trumpeting a new education funding plan.

BOB CHRISTIE: They are and it's kind of a hybrid plan. Part of it we're using general fund money. $100 million of general fund money, not new money but a little more than the $74 million we gave them this year. We'll take the governor's trust plan proposal and we'll take a couple hundred million dollars out of that, and then we'll go to first things first, which has tobacco tax that funds early childhood education and some education programs, some teacher training, and we'll take their excess money. Well both of those two things require voter approval, which kicks it two years down the road further.

MIKE SUNNUCKS: They hate voter approved things, that's where they're going to take the money from first and they hate funds, reserves. We see this in the highway fund, the job training thing, they raid it from there. And they don't really want to spend any new money, it's shifting, and it's kind of robbing Peter to pay Paul.

TED SIMONS: There is an irony there is there not that a plan that requires two public votes is needed because a public vote in the past was not held, they didn't hold their previous obligation?

JEREMY DUDA: That has been noted. When you talk about first things first, they've tried to dip into that before and were rebuffed with prejudice by the voters. In 2010, what they're talking about now is taking some of their money. In 2010, they wanted to abolish this entity, put it on the ballot, 70% of voters said no and the folks at first things first are saying the exact same thing is going to happen this time. The other thing, as you mentioned, the land trust thing. And that's where Governor Ducey is going to come down on this. This has been his baby for the past few months. This is fresh new money, fresh new money and I wonder how he's going to feel about that being used to repay money that the judge said you guys already stole this from schools, it's money you already owe.

MIKE SUNNUCKS: They've always disliked first things first, viewed this as a democratic sponsored thing, the tobacco tax was always the Democrats and the Republicans down there always champed at the bit to get rid of that thing. It will be interesting to see, if they approve all these things, do they have another set of ballot measures to raid those for their next financial crisis?

TED SIMONS: The bottom line on this new education funding plan with all the stuff from first things first, continue the $74 million, boost funds, what it doesn't include is a tax increase. And that really seems to be the most important aspect.

BOB CHRISTIE: It is. And the groups who sued which are school boards and teachers unions and all that who sued when this money got cut, they came out with a proposal and said okay, use some of the governor's trust fund money, raise sales tax by four 10ths of a penny and that will get us to the money that we need. It's not that big a deal. Phoenix just raised their taxes for school. If you can't raise taxes for schools, what can you raise them for?

TED SIMONS: Let's talk about Phoenix real quickly. Greg Stanton wins in a landslide over two not well known opponents, didn't seem like Stanton campaigned all that hard. He wins that prop 104, the transit tax,that wins, as well. We're surrounded by don't tax here and Donald trump there. A democratic governor and it's kind of interesting, isn't it?

MIKE SUNNUCKS: The majority of Phoenix's council are Democrats and Greg won easily. The prop 104 which funds light rail and street improvements and bus lines, bike lanes, 55% of the vote. You know, having it in August, in an off-year helps. If it was on the same ballot as Donald trump, maybe that little more conservative upswell when you have a down ballot but, you know, it's the transit advocates liked it, the chamber supported it, the majority of the council supported it. They had a lot more money at ASU, the Cardinals all backed it. The only opposition was they had no money. But it showed the core of the valley of Phoenix is politically moderate. It's a little bit pretty blue, actually.

TED SIMONS: We'll have the mayor on Mondays to talk about prop 104 and his victory and the whole nine yards there in Phoenix. We want to get back to state issues, though, and keep your hands off me.

BOB CHRISTIE: I was just trying, you don't have the forecast. He's referring to Diane Douglas and the board of education, which met on Monday and during the midst of this discussion of whether or not the board of education's teacher investigators can access the education department's computers so they can investigate those teachers, Diane Douglas apparently depending on who you asked refused to give up the floor, the president of the board of education reached over to pull the microphone and according to Douglas, hit her arm. She has filed a complaint with the department of public safety. There will be at least some type of investigation into whether Greg Miller was guilty of a crime because he touched her arm. But the bottom line is this is just more theatrics around the education system.

JEREMY DUDA: Dysfunction between superintendent Douglas and the board of education gets ratcheted up to a new level it seems pretty much every week and this isn't the first time Douglas has accused Miller of doing this during a meeting. Back in April she also said the same thing, keep your hands off me as he took her microphone away as they were arguing during this meeting. The arguments have gotten worse, going to court, fighting who has control over which employees, she already tried and failed to fire two top employees over there. Now, there's a dispute over whether or not they have to be headquartered in their building or a different one. Does she have to help them with the computer system, anything like that? It's getting worse and worse.

TED SIMONS: Is this something, could a recall? I didn't think this had a chance early on.

MIKE SUNNUCKS: She may have jumped the shark on this deal. It's starting to accumulate a little bit and this is an office that doesn't really have a lot of impact on classrooms, on school districts and they tend to fight about everything. It kind of feels like a small town council that doesn't get along with the city, that's where she came from, city council but the governor, other Republicans, it doesn't matter, she seems to be ready to pick a fight with everybody.

JEREMY DUDA: Now, there is a very nascent recall effort that did begin I think before she was even sworn in, which seemed kind of silly but these folks have told us they are going to start collecting signatures on Monday. Now, this is a tremendous effort, it seems very unlikely they are going to be able to get enough signatures, hundreds of thousands of signatures in the middle of the summer against someone who was just elected, even if it's been kind of a trainwreck, it's still such a tough hill to climb to actually get a statewide elected official on a recall ballot.

TED SIMONS: This is not fair because the corporation commission is a complicated beast but one commissioner conflict of interest claims, another commissioner apparently pulled an agenda item that would require dark money, the notification and clarification and this is someone who's been associated with dark money himself. Wrap it up for us.

BOB CHRISTIE: The corporation commission which regulates utilities in the state has been criticized for months now because APS apparently spent a bunch of money to elect some of the new commissioners. There's no disclosure of that money. There's allegations this week that Susan Bittersmith, one of the commissioners, has a conflict of interest because she lobbies for a cable company, which part of it is ruled by the public utilities commission, the corporation commission. The other issue is do we force disclosure of spending? And that was put on an agenda, pulled, and then there was a docket open. We're going to see some discussion. They're going to some heat over there.

TED SIMONS: Real quickly, is this firing up over there?

JEREMY DUDA: Definitely seems like it. Susan Bittersmith put this on the docket to talk about, not even forcing but asking the public regulating companies to disclose, another commissioner pulled it over and they said we're going to open a new docket on this and have this discussion.

TED SIMONS: We should mention that KJZZ came out with the Susan Bittersmith story, she has no conflict of interest, no direct relationship with Cox, she's a lobbyist for Cox, but we'll see where that goes.

BOB CHRISTIE: It doesn't look good.

TED SIMONS: Gentlemen, thank you so much. Great stuff. That is it for now, I'm Ted Simons, thank you so much for joining us. You have a great weekend.

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

Jeremy Duda: Arizona Capitol Times (@jeremyduda)
Bob Christie: Associated Press (@APChristie)
Mike Sunnucks: Phoenix Business Journal (@mikesunx)

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