Three local journalists will discuss the week’s big stories.
TED SIMONS: Coming up next on "Arizona Horizon's Journalists' Roundtable," state revenues exceed projections for the sixth straight month. And the courts rule that a tax that helps fund sporting venues is unconstitutional and needs to be refunded. 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." Mike Sunnucks of the "Phoenix Business Journal". And Bob Christie of the associated press.
TED SIMONS: State revenues continue to exceed projections, and this seems to be a reoccurring theme here, Jeremy. Were projections wrong? Are collections improving? What's happening out there?
JEREMY DUDA: Well, the projections are wrong all of the time. That's why they're just projections. Over the past six months or so, in some areas capital gains and a couple of other areas looking better than expected. Based on this, after you account for the structural deficit in the budget at the end of the fiscal year we're expected to have, based on current projections, about 266 million dollars. Which, of course, sparks the debate on exactly what do you do with that? You have a lot of folks in the legislature, democratic side who say well, we have been shortchanging schools and other people and we need to start putting more money their way. Governor, republicans in the legislature, a little wearier. They're very concerned about a structural deficit that is supposed to go through the end of next year. Don't want to make any plans. One-time revenue. Too early to start making plans.
TED SIMONS: We've talked to economists, what they are saying this is all exciting, but what it does is fill the holes left by the previous downturns. Pretty much where we should be.
MIKE SUNNUCKS: We have kind of bounced back. Most of the gains on the corporate side, capital gains. Some businesses doing better revenue-wise, talk to people about the economy, getting better, not getting worse it's not as robust as other places. In terms of projections from the legislature, republicans down there, yeah, fiscally conservative. Folks on the other side, they don't want to spend money, don't want bigger government. They want to justify the cuts that have gone on, including this past session. That is their backdrop of that, so that's why they don't project higher.
BOB CHRISTIE: That's correct. The governor this week said no, let's wait and see before we talk about how we spend that money. 266 million dollars more than we expected, but that includes 322 million dollars in extra revenue. And, so, if we bring that through next year, that's 600 million dollars if it continues in one year. That will fill a huge hole in schools that the governor has avoided talking about, other than his plan which will come two years from now to use the state land trust. He wants to do more tax cuts. He ran on having tax cuts every year. He had a small, 30 million dollar a year tax cut that got slipped into the -- a bill at the end of the legislative session. Nobody really noticed that it was really in there. 30 million dollars, that adds up. What does he want to do next year?
JEREMY DUDA: What I'm hearing from a lot of republican lawmakers, if we are going to use this on anything, and right now they're not so sure it should be, you need to look at one-time expenditures. This is one-time revenue. You obviously can't use that for -- when they put the numbers out a few weeks ago. A big dark cloud looming over the capitol, the school funding lawsuit. Who knows when that comes down, if the hammer gets dropped on the legislature on the funding issue, this money could come in handy.
TED SIMONS: Is this money now affecting those negotiations? You talk with X and all of the sudden you're talking and you have Y.
BOB CHRISTIE: Those negotiations are as secret as they come. Nobody who is involved in them can talk. We keep getting -- I keep getting hints that maybe they're making progress. That's 300 million dollars a year that they're supposed to be paying as of January 1st. They should already have been paying that. So, this money, this extra 266 million dollars could take care of one year of that. But I don't think that it fixes it going forward and it surely doesn't deal with the back money. Don't know where we're going to go with that.
MIKE SUNNUCKS: The universities make a push -- they took big cuts. What the business community does, they have loved the tax cuts that we kept. Do they look at something, one-time spending. We're leasing our buildings out to lenders and landlords, is there a push for that? I think you will see for the most part, the republicans will want to hold their chips right now and not make any big bets.
BOB CHRISTIE: We will see from the governor, I think, coming out fairly soon over the next few months, more news on his revamping of the school funding formula. He did it last year, he said classrooms -- earlier this year, classrooms first. Classrooms get a 5% boost and then took or 6% away from the money that goes to run the buildings and the air conditioning and all of that, buses. I think we will see some shell game there. It will be important the details of what those proposals are.
JEREMY DUDA: When you talk about using this one-time revenue for this year's budget or next year's budget, Governor Ducey keeps stating pretty much his top priority is structurally balancing the budget. His goal to have it structurally balanced by the end of the next fiscal year. There's a lot of pressure. Budget being pulled into a lot of different directions already. Governor and others may want to push for some tax cuts -- who knows how much money will be going around for anything.
TED SIMONS: We know there is enough money now for new carpet at the house. This isn't a 2 million dollar gymnasium complex or whatever, shower room, whatever.
MIKE SUNNUCKS: Multipurpose room.
TED SIMONS: It is nice carpet.
MIKE SUNNUCKS: $640,000 legislative leaders went down to Home Depot and looked at a few of them. 640,000 dollars for new carpeting at the legislature, I think that would cover the tuition for 61 ASU kids. What happens when they do this stuff is when people question their priorities and then the cuts they make, the war on the poor with some of their proposals. Cuts to universities and schools. These types of things pop out to people. You look at the priorities and $642,000, whatever it is, isn't a ton of money, but it is when you look at the behavior and some of the policy decisions they make.
TED SIMONS: It is when you count in all of the other renovations. We are getting near a million now aren't we?
BOB CHRISTIE: Correct. They have put off some of them. Just put new carpet in the house chamber itself last year or early this year. This session -- beautiful carpeting, but, you know, the staff kept walking around and kicking little spots of it. Apparently they rejected that carpet.
TED SIMONS: It was hideous.
BOB CHRISTIE: They ripped it all out --
TED SIMONS: Flawed --
BOB CHRISTIE: I couldn't see anything wrong with it. I walked around with the guys. A couple of spots where you could see the seams, but it appeared to be fine to me. I'm not a carpet expert.
TED SIMONS: Showers and the multipurpose rooms are gone. What about the folks that weren't happy with the speaker and his whole ideas of renovations? Are they still complaining, the carpet that wasn't any good and now the new carpet that should be better?
JEREMY DUDA: I haven't heard much of that yet. Pretty new. Last time this happened it was up to 2 million dollars for showers and rumors of gyms and all kinds of crazy plans and that did not sit well with a lot of the caucus. I remember there was a revolt against speaker Gowan, a number of them signed a letter. Maybe we 625,000 is a lot of money, but not as much as 2 million.
BOB CHRISTIE: A lot of people would have said listen, we're just coming out of a recession. Cut schools, cut charter schools, cut everything that you could possibly mention, don't you think you could wait a couple of years?
JEREMY DUDA: Worth noting this money doesn't come out of the general fund. House, Senate, governor's -- independent budgets with an automatic appropriation each year. What we recently looked into the fact whatever they don't spend, they get to keep and rolls over and rolls over. The house is sitting on 7 million or so. Early in the year that was the figure. Even though this doesn't come out of the general fund, it still looks bad while everyone else is tightening their belts, they are spending this and especially not giving up the rest of the budget.
MIKE SUNNUCKS: It's funny how they don't raid their own rollover money like they raid other people's money, like highways, tourism and stuff like that. A bit of envy down there because our state capitol, complex, our buildings, it doesn't have a governor's mansion, doesn't compare favorably to some other state capitols. Folks every once in a while want to get down there and improve the palace a little bit.
TED SIMONS: You are down there all of the time. Is it that bad? Are the renovations needed?
BOB CHRISTIE: I think there are some areas, I mean especially in Democrat land which is in the basement -
MIKE SUNNUCKS: Those are dirt floors
BOB CHRISTIE: that really needed some renovation. The second, the first floor second floor, third floor, maybe is a little warn. I mean, we've all tightened our belts.
TED SIMONS: Let's keep it moving here, Mike this is very interesting, this idea that the rental car tax that supports the sports and tourism authority, not the tourism and Sport Authority now, this rental car, which has been in operation for so long which helps build stadiums and helps with youth sports, with tourism, unconstitutional, we knew that because it was rolled out last year, they got to refund the money.
MIKE SUNNUCKS: About 160 million dollars. This thing was passed in 2000 by the voters very narrowly to fund they threw in the cactus league and youth sports to get the cardinal stadium approved. The levy was a %3.25, something like that, on car rentals so you come to visit Phoenix for a game or a convention and hey look at this line item, I have to pay a little extra and that goes to fund the stadium and ball parks. Now it's illegal. They are going to have to refund it. They will probably appeal this thing. We talked about this a little before the show. The money will not go back to the tourists or consumers or business travelers. It is going back to the car rental companies because of standing in the case.
TED SIMONS: Bob, what is this all about?
BOB CHRISTIE: That's a little detailed. What happened, originally a lawsuit filed back in by consumers. It went up to the court of appeals and the court of appeals said no you can't sue because you really didn't pay the tax. Rental car companies paid the tax even though they collected it from the consumers. So, they had to come back, rental car companies had to sue. About 110 rental car companies part of the lawsuit. Argument of the lawsuit is that the state law says that any fees collected for motor vehicles have to go to roads. Of course, the sports and tourism authority and the department of revenue will say well, there is a lot of things that we collect on cars that doesn't go to roads and has for a long time. The court that declared it unconstitutional and this week said they have to retroactively put all of this 150 million dollars back got it wrong. This is going to the appeals court. It will probably go to the supreme court and we will be talking about it two years from now.
TED SIMONS: And two years from now, between now and then, they will continue to collect this tax, Jeremy, and that just means they're collecting tax money that they will likely -- possibly have to pay back again.
JEREMY DUDA: Yeah, they may want to start planning ahead for that. For now, they need this money, you know, in lieu of a better plan, because, you know, this is about a third of the revenue that the tourism authority gets for paying back these bonds on U of P stadium and the other stuff, about 12 million dollars a year. If you stop collecting that, where are you going to get the money? We were talking about the different directions the budget is being pulled, demands on minimal revenue. Now 12 million more here. No one in the legislature is going to want to pay that --
BOB CHRISTIE: Sports and tourism authority. Very interesting, the way it works, funds come in, and there -- the number one priority is the bonds for the university of Phoenix stadium. Even if this rental tax goes away, that gets the first shot. What's next is the cactus league stadiums, and next is the sports programs for kids. Next is their own administration. So, the stadium is not going to go into default.
MIKE SUNNUCKS: You have cities out there that have built ball parks for the cactus league waiting on money to help cover their costs of that. They would take a hit on that.
TED SIMONS: It can't be good news for Glendale.
MIKE SUNNUCKS: No, they're sitting out there --
TED SIMONS: What is it called
MIKE SUNNUCKS: Camelback Ranch --
BOB CHRISTIE: Tempe got money from them for their stadium.
MIKE SUNNUCKS: Peoria is going to redo the sports complex out there. They've relied on these numbers, at least to justify what they're doing. It is -- it does seem kind of not very fair that the consumers are not getting any of the money back but it will go to national rent a car.
TED SIMONS: I don't understand the idea that the rental consider companies pay the tax thus they should get the refunds. They didn't pay it out of the blue.
BOB CHRISTIE: They charge their customers, but they're the ones who wrote the check to the department of revenue. Legally they are the only ones that can sue. That is what the court of appeals said.
TED SIMONS: Keep it moving here. Corporation commission, for a commission that usually is low profile, no one really understands what they do or most folks don't at least. People run for the office and they have stealth campaigns and it works the best for them. They are making a lot of headlines here.
JEREMY DUDA: Low profile days of the corporation commission are long gone now. Most recent chapter, a possible push to crack down on Arizona's public records law. What we've seen this year is the checks and balances project submitting a lot of record requests against commissioner Bob Stumps to find out who he was texting with and what they said. We know who he was texting in, a lot of people involved in campaigns for corporation seats last year, ties with APS supporting them, potentially putting a lot of dark money into the race. Checks and balances project wants to get those texts and working on retrieving these from commissioner Stumps cellphone. Commissioner Burns is saying well maybe enough is enough. Maybe they're spending a lot of manhours and money to comply with the records request. He is proposing a possible legislation for next year that would potentially require some kind of gatekeeper to sort through the requests kind of the way a judge does when a police asks for a warrant. Is this a legitimate request? Do we have to comply with this?
TED SIMONS: This is a public entity trying to keep the public from getting public information --
MIKE SUNNUCKS: Pretty much on the mark. This all stems back from the solar city APS fights. And they're doing some fishing and looking into how much influence APS has over folks on the all-republican corporation commission and how much they may have coordinated campaigns improperly between existing members and some of the new members that were elected last cycle. That's what they're doing. You have seen some bills at the legislature complaining about public records requests. A lot of these public records request date back post Watergate stuff, sunshine laws that came in. You are starting to see especially folks on the right rebel against these things. These are public entities with public records that the public has the right to know and media has the right to know and they are basically trying to stop access to. The gatekeeper, administrative judge that we have to go to their chambers, what political party might they be from? Would they be from the same party as Mr. Burns and the corporation commission.
BOB CHRISTIE: I think the issue for a lot of the entities, not defending them, an explosion in records, cell phones, computers, home tablets all of those things become public record when they do public business on them. They've allowed all their members. They allowed Mr. Stump have this device, didn't archive it, didn't have a public records section that you need to keep all of that stuff. Somebody asked for it. Wait a minute, do you have to give it? Yes, you do. They shouldn't have been skirting the laws in the first place. A way to archive the things and readily available, it wouldn't be an issue for them.
JEREMY DUDA: We've seen in the last few years -- public records law -- some have been driven -- one particular gentleman in Yuma, who's known for bombarding city hall with records questions -- fishing expeditions. Where do you draw the line? Who decides where that is? The way we found out about this, Bob Burns was looking at this, public records request that got an email of that.
TED SIMONS: Interesting. Basically he is saying that the public has no right to know?
BOB CHRISTIE: He is saying there is too much of a burden on his entity, corporation commission from all of the public records request. We need to put some type of gatekeeper, some type of filter so that we are not hit with the huge number of questions --
MIKE SUNNUCKS: They need a private email server. That is what they need.
BOB CHRISTIE: Or maybe go the other way, which is archive in the first place. Somebody walks in the door and wants them, here you go.
MIKE SUNNUCKS: Obviously it looks like you are trying to hide something, you have something to hide. Most people would quickly turn stuff over and say fine. Looks good. When you try to make it tougher on folks, you start to sniff around a little.
JEREMY DUDA: Even burns acknowledged some of the number of emails or texts that stump sent to some of these folks does look kind of fishy.
TED SIMONS: We'll see how far that goes. I find that quite curious, nothing is curious more so than the Department of Education. Now a reading skills web site that they usually maintain, but now they are saying we are not going to maintain this, oh, but we will if we win the court case against the board of education. If not we're not going to do it.
BOB CHRISTIE: There's a program called Move on in reading, federal funds, requires that school districts file plans every year with the Department of Education saying this is how we are going to improve reading skills among our third, fourth, fifth graders, primarily third graders. This was paid for with money funneled through the board of education, and set up by the Department of Education. We know the big fight between Diane Douglas and her chief of staff and the board of education and he sent a letter to -- Christine Thompson, executive director of the board sent a letter to him and said hey, when are you going to open that? Open at the beginning of the school year every year so districts can file their paperwork. He sent back to her, let's talk about that. That costs a lot of money. I don't think I will. The Board president sends back a letter with the best quote of the year, which is put your big pants on and do the public's on.
TED SIMONS: They put their big boy pants on and they did get it done but it made the Department of Education look so petty.
MIKE SUNNUCKS: It seems like there is a turf war to -- it seems to be their first path. You think about the education challenges we have with test scores and kids meeting attainment levels and teacher pay and funding in this state, front-line stuff, and it seems this is all kind of back room fighting over small things.
JEREMY DUDA: As you mentioned, put their big boy pants on but the fight may not be over yet. Michael Bradley, Diane Douglas, department of ed, yeah, we're going to do this but you guys need to pay for it. There was a line item in the budget for 500,000 dollars that goes to the department of ed, some that is used to administer this. And Michael Bradley, sounding the alarms to every recorder in the capitol about the possibility this is going to get cut. This rift, board of ed, asserting itself as a separate entity, separate building, now that you're a separate entity, we don't have to pay for this anymore --
TED SIMONS: Before we go. A minute left. Latest poll, post-debate poll, Donald Trump, still number one.
MIKE SUNNUCKS: I think he was in the first one, down to after the McCain comments and the Megan Kelly stuff. Still ahead. You saw Scott walker and Jeb Bush drop.
TED SIMONS: Walker by %, and I think bush lost % in Arizona. MARCO Rubio is up. This trump thing is not stopping.
BOB CHRISTIE: You have to look at his negatives. If you ask people who will you not vote for among republicans, he gets % no from among republicans. Interesting.
TED SIMONS: We will stop it right there. Gentlemen, thanks so much. Good to have you here. Monday on "Arizona Horizon," senator Jeff flake joins us in studio to discuss a variety of issues, including the Iran nuclear deal and the raising of the American flag over the U.S. embassy in Cuba. Senator Jeff flake Monday at 5:30 and 10:00 right here on "Arizona Horizon." 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.
In this segment:
Jeremy Duda, Arizon Capitol Times, Mike Sunnucks, Phoenix Business Journal, Bob Christie, The Associated Press.