Three local journalists will discuss the week’s big stories.
TED SIMONS: Coming up next on "Arizona Horizon's" Journalists' Roundtable. An appeals court rules that the state does not have to immediately pay inflation-adjusted funds to schools. And three Corporation Commissioners deny that they're biased in favor of APS. 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 legislature does not have to immediately pay a court-ordered $331 million dollars owed to Arizona district and charter schools. That's according to a state Court of Appeals ruling. Jeremy, this stay signifies what?
JEREMY DUDA: I don't think much. I don't think this was much of a surprise. It's kind of a procedural turn of the screw in the case. It would have been stunning if they had ordered that money paid out right now and that would have been complete chaos but the appeal process is still working its way through. The Court of Appeals has to hear this case and it will go to the Arizona Supreme Court, whoever loses that. This is more time for everyone to not just prepare the case and try to figure out a solution, you know. Everyone has a plan, the governor has a plan, the legislative Republicans have a plan, Diane Douglas has a plan, I don't know if any of you has a plan, they're working on a special session to try to enact somebody's plan. This is more time, and I think it was pretty much expected.
BOB CHRISTIE: I agree. I think it was pretty much expected. You know, the interesting part is the court of appeals put this case on hold in January so they can go through mediation. They mediated it for seven months, it came to nothing and we're a year and a half after the original ruling which says the Arizona legislature, pay the schools $331 million on January 1st, $336 million six months later and ongoing every year after that. So far, the schools don't have the money, and I think the call for new money for schools is just -- it's resonating so much that there's incredible amount of activity at the capitol as they're trying to come up with a deal.
TED SIMONS: So basically, you've got the courts saying without saying we're giving you more time here, figure it out?
MIKE SUNNUCKS: A little more time, kick the can a little bit more but I don't know how much political will there's been to get a settlement on this. Obviously, there's proposals out there. The budget surplus and the better fiscal use certainly kind of helps that along and for a lot of people it's kind of a common sense thing. We've got this pot of cash and hey, we owe the schools money. Maybe we should give that to them but there's folks in the Republican caucus down at the legislature this is one of the line in the sand things and they're challenging this and voter mandates and what their powers are in terms of budget making and spending. It rubs up against that. I wonder if this is going to be one of those things where it's a political brinksmanship thing where we'll take this all the way to the end, go all the way to the Supreme Court, but politically will they do this early? Or will they do this at the last moment?
JEREMY DUDA: Obviously, the legislature, their grand hope is to ultimately win this case and the only inflation is similar to the $74 million they put in increased K-12 funding the past year but people are still hoping to find some sort of out of court solution here. The negotiations that fell through a couple of months ago, that was the legislature and the schools. Now, you're seeing Governor Ducey a lot more involved. His office along with legislative staff have spent a lot of time meeting with the AEA, the alphabet soup groups, been a lot of meetings at the governor's office, more this week. I think as they're also on the dual track trying to figure out the parameters of the special session, the hope is they're going to find a solution before this goes all the way.
BOB CHRISTIE: The real concern is if we don't get a settlement, remember the Court of Appeals and the Supreme Court have already ruled year and a half, two years ago that the legislature violated the Constitution by not providing this inflation funding to schools and it went back to the courts to figure out exactly how much money was owed. If the Supreme Court comes back in a year from now and says yes, legislature pay this money now, we have potentially a constitutional crisis because the legislature thinks that it's not owed, if they get an order from the Supreme Court that says you have to owe it, what happens now? Who's first? They don't want to get there.
MIKE SUNNUCKS: Especially to see where the education lobby, whether they blink on this. There's compromises. Will they take this all the way to the end to get the max amount and there's something in body politic, in Republican Congresses, legislature where they like these types of crises where it is a constitutional crisis. You see this with the government shutdowns in Washington. We're going to challenge voter mandates, we're going to challenge what's the power of the voters and sometimes, the courts and who gets the power of the purse.
JEREMY DUDA: But running this out all the way to the end could have some dire consequences for the legislature. It's not just this extra inflation funding. Once that plays out we've also got the other part of the case, which is does the legislature owe all this money that was withheld all these years since the lawsuit started? And you're talking about $1.3 billion. That is a heck of a lot of money and nobody has any idea where we'll get it if they have to pay it.
BOB CHRISTIE: And the schools have offered to forgive that if they would just settle. For the coming five years are owed $1.3 billion. For the previous five years are owed $1.2 billion. They've offered to give up half of it. That seems like a fairly reasonable deal. It's not good enough for the legislature.
MIKE SUNNUCKS: And politically, if you're a Democrat, the Republican legislature just continues to fight funding schools is now you can cast this. Whether it's legislative powers or constitutional crisis, they're fighting sometimes tooth and nail you could say to prevent funding schools, which are chronically underfunded, we're always near the bottom in terms of classroom spending and teacher pay and you saw Diane Douglas a Republican saying take some of this surplus money.
TED SIMONS: She said that this week on the program this week as we talked to Diane Douglas. The First Things First situation, but it sounds as though what is First Things First? How much money does this agency have? And where is this money going?
JEREMY DUDA: First Things First is a program that the voters approve in 2006 funded by an 80 cents a pack cigarette tax. It's early childhood development and health, which covers a lot of territory. Councils all over the state to figure out how to give out the grants from this money. Right now, we have, you know, between 330, 350, $360 million or so. Thy bring in 120, 130 or so a year and the legislature wants that or at least Andy Biggs wants that which was one of the four prongs of their four part plan to put more money into education. We're going to put this on the ballot and ask voters to take away some of this money and put it into K-12.
TED SIMONS: And First Things First says we're not happy with this idea. We're going to fight you tooth and nail.
BOB CHRISTIE: Absolutely. They say that the board of First Things First, first off voters approved this, they voted to tax themselves to create a new string of money to do these early childhood education programs. In 2010 the legislature came and tried to ask voters to take a lot of the money away. The voters rejected it by 70 to 30%. I mean, a huge margin for an initiative. Andy Biggs thinks they're sitting on too much money. He basically wants to take $200 million of the 330 that they have right now this year or next year, as soon as the voters approve it and then take $75 million a year of their ongoing revenues. So half of their revenue.
TED SIMONS: President Biggs basically calls it a fiefdom built on taxpayer money and unlike the previous attempts to get rid of it, this wouldn't necessarily kill First Things First, just take a whole bunch of money.
MIKE SUNNUCKS: It would just kind of neuter it. This is what they warn about. Every time we have an education proposal, they always warn that the Republicans are just going to take money from elsewhere and you're not really going to get any increase so we're robbing Peter to pay Paul and this is something they've done a lot at the legislature. They've raided highway funds, heritage funds to balance budget. They look to these pools of money in order to get answers, except this time they're going after another voter mandated thing which they don't really care for down there.
JEREMY DUDA: Biggs likes to mention unlike the 2010 measure, 70% of people voted no, this wouldn't abolish the program. It would sweep some of the money but all the money they have in the bank right now and a lot of the ongoing revenues they had, which is more of a slow death than an immediate death because it's relying completely for its funds on cigarette taxes which are going down every year. For the last few years they spend more than they bring in and if you talk to the First Things First folks, they're budgeting long term. When this proposal first came out I spoke with Nadine Basha, one of the board members and she said we're more fiscally conservative that the legislature is. We're planning and they seem to be surprised that we're not spending every dime we get the second it comes in. We're planning for the long term.
TED SIMONS: Does First Things First have a point when they question why the legislature doesn't spend unused money? The legislature is going after them for not spending unused money and they're saying that in return.
BOB CHRISTIE: The legislature now is expected to have $650 million in the bank by July 1st that is not mandated to be spent on anything. That's enough to settle the school funding lawsuit and to provide the schools $250 million going forward. The legislature doesn't want to do that. They say there's a lot of other needs. They are willing to pony up maybe $100 million of that. I don't think the governor would be too opposed to some extra cash on top of his trust land deal, which is his big push. I think what we're seeing right now as far as the deal, First Things First is problematic. To even get it out of the legislature and get it to voters, we saw what happened last time. I think there's negotiations going on that maybe we'll get some kind of compromise where First Things First is off the table. We get $100 million or so from the surplus. We get a smaller version of the trust land proposal and maybe we get some money to schools.
TED SIMONS: With that in mind you mentioned $650 million. We had a group of economists, the financial advisory committee, basically saying that if all things go as swell as could be, $650 million cash by FY17, or not?
MIKE SUNNUCKS: Well, that's a far cry from the dire predictions we had right before the budget was passed when we cut universities and all of that. That's quite a reversal of fortune. We came into a windfall. There are some uncertainties about the economy. They're hoping we can get 4% growth annually. We're not close to that right now. We're behind the rest of the country. The real estate recovery has been slow. We've had some windfalls because of capital gains, because of the stock market. Stock market is down now. You know, there's a mixed bag, we've got some money but, you know, spending a lot early on, all that money early on, there is some wisdom against that but, you know, there's some priorities the legislature has to choose to get back to the education thing. They've chosen to keep tax cuts, you know, in place, they cut universities, they don't want to pay $300 million to the schools yet their answer for it is to rob, take money from the preschool program. So their priorities, you know, maybe voters can look at that.
TED SIMONS: But back to these economists looking at the state finance and again, 4% growth the next two years, that's asking for an awful lot and JLBC says that is asking for a lot. They're saying the structural balance is $47 million. What is going on? How are the state's finances as seen by economists and the JLBC?
JEREMY DUDA: There were two messages they put forward at this meeting. One was in a few years look at all this money we're expecting to have. The second was don't spend all of it. They tried to scare everybody because over the next few years, it's very likely we're going to have some sort of financial downturn. It's going to dry up and remember this is how we got into the mess that we've been in for the past six years is during the heady days of the massively growing economy and spending went up to $10.1 billion in revenue in '08, and after that just hit a cliff.
MIKE SUNNUCKS: You always wonder how ideologically things are colored within any political chamber down there. When things are bad we cut down the government. When things are good, we don't want to spend it, we want to cut taxes and when we've already cut taxes, we don't want to spend any more, invest anymore so you see these numbers out there and there is wisdom in being prudent sometimes but you don't want -- you always think that maybe their conservative ideology down there colors it.
TED SIMONS: The JLBC though, I don't care if you're talking tax cuts, I don't care if you're talking spending increases, don't miss too much with the money.
BOB CHRISTIE: They are predicting about a $65 million surplus by the next fiscal year. That's a total amount. They say only $240 million of that is ongoing revenue. So they say you can either cut taxes or increase spending by that much and I expect we'll get a mix from the proposal from the governor because the governor has pledged to try to cut taxes every year so you've got $240 million that you can divvy up going forward. That's where we're at.
TED SIMONS: And how much pressure do you think there's going to be down there at the capitol for either tax cuts which would use some of the money or spending increases?
JEREMY DUDA: There are a lot. This projected surplus right now, this is already being pulled in so many different directions. We talked about all the pressure to put more money into K-12, department of child safety wants another $100 million or so. You're going to have the higher Ed, the board of regents, they want more money because they took a major $99 million hit last year, you're going to have corrections stuff and that's nothing unanticipated. There's only so much you can do with that relatively small pot of money.
TED SIMONS: It looks like everyone and their brother is running for Congress in congressional district one. We're talking about the big old massive sprawling district and it appropriately has a massive sprawling group of folks, especially on the Republican side.
MIKE SUNNUCKS: It's the size of Illinois or something like that. It runs from window rock all the way down to southern Arizona. It's got part of pinal county. The sheriff in pinal is running. Quite a national stature on immigration. We know him from his exploits the last time he looked at running and house speaker Gowan lives in Sierra Vista but he's not too far, maybe an hour away. And you don't have to live in the district, that's never stopped anybody before here. It's a spread out district. There's no media market. You can run some ads in Phoenix. It's Kirkpatrick's district.
TED SIMONS: Is relatively conservative.
MIKE SUNNUCKS: Gosar won there. It's socially conservative, kind of your old Reagan Democrat types are there. So it's kind of wide open right now. Ken Bennett is in the race so that's a name people might know.
TED SIMONS: David Gowan, Speaker of the House. He's not going to resign?
BOB CHRISTIE: He will not resign. He doesn't have to. And you wouldn't think that he would because I mean, we've got a legislative session coming in that runs from January to April or May. He also has power that comes from being house speaker so that gives you exposure in the media, it gives you ability to fundraiser. It makes no sense to step out of the race.
TED SIMONS: How accomplished, how celebrated is he as Speaker of the House? I seem to recall the budget battle and they rolled right over him.
JEREMY DUDA: He's had a pretty rough first year as speaker. He had kind of a revolt from half of the Republicans, they wrote a letter complaining about a bunch of plans for very expensive renovations, they accused him of spending money like a Democrat, that's not going to go over well in a republican primary. There was issues with how he ran the chamber, things dragged on for so long in the house that the Senate said whatever, we're going to adjourn and we're going to take our ball and go home and you guys can stay here as long as you want.
BOB CHRISTIE: That left a lot of Republican priorities on the floor, some election bills which the Republicans wanted passed. That did not show great leadership from the Republican team in the house, either Mr. Gowan or Mr. Montenegro or Mr. Livingston, the leadership of the Republicans in the house.
TED SIMONS: As for Paul Babeu he's got his own set of problems, he's got his exploits of the past. They're going to hammer him aren't they?
MIKE SUNNUCKS: That was kind of the reason he kind of got out last time, that was expected. And another sprawling district, if he gets any wheels at all in this and he's got name I.D., I think you've seen some early polling, take it with a grain of salt from his camp or not. He's got pretty good name I.D. Him and Bennett would be the ones people would know. You're going to see a ton of people kind of go after him.
TED SIMONS: Those photographs are going to pop up all over the place.
BOB CHRISTIE: He'll get some attacks from the self-portrait that circulated. Gary Kuhne from Springerville out in far eastern Arizona ran last time. Three-way primary and the Republican was beaten by Andy Tobin, not by a lot, but he's got money. So it's a four-way Republican race.
TED SIMONS: As for the Democrats, tom O'Halloran, I know Barbara McGwire is thinking about this. Again, this seat is being held by a Democrat. All these folks are fussing and fighting on the Republican side. Could a Democrat hold on and win this thing?
JEREMY DUDA: There's only one Democrat in the race tells you how many Democrats feel like it's a good opportunity for them. Senator McGwire could get in but the only one who pulled the trigger is O'Halloran, a very liberal Republican who ran as an independent for state Senate but he has done a very good job of kind of building up a lot of establishment democratic support from some of the bigger names in the party, Fred Duval, Terry Goddard, really rallying the Democrats around him as their candidate. It's going to be tough to make up some of that ground I think if another Democrat gets in.
MIKE SUNNUCKS: The key is Ann kirkpatrick was effective, getting the vote out there. For Democrats to win, they have to get a pretty good turnout up there on the Navajo lands.
BOB CHRISTIE: This is one of the few true swing districts in the country and that means you can't run as an ideologue on either side. You can't be a liberal or strong conservative and that makes things like speaker Gowan, running on the scene the only true conservative in the race, sheriff Babeu running on his anti-immigration platform, that's not going to play, as well.
TED SIMONS: And Christine Jones is thinking of running against Kyrsten Sinema?
MIKE SUNNUCKS: There's been some polling, she's the former godaddy vice president, legal counsel, ran for governor in the Republican primary, spent a lot of money, had a lot of ads, made a lot of waves, and then fizzled towards the summer that Ducey won the primary pretty easily. That should be a swing district. It kind of leans a little bit democratic but it's Tempe, south Scottsdale, P.V., Arcadia, those parts of east Phoenix, and the Republicans have put up not the best candidates. Vernon Parker lost the open seat, that was kind of close. Last time, Sinema won easily. Someone like Christine Jones who can spend a lot of her own money and has a little name I.D. after the governor's race could challenge her there.
TED SIMONS: Another election issue. Open primaries. That particular campaign looks like it might be joining forces with a campaign to force dark money disclosure, correct?
JEREMY DUDA: This is the top two primary, jungle primary, whatever the former Phoenix mayor Paul Johnson ran in 2012. For a while he's been working to put this back on the ballot. It lost pretty badly in 2012. You also have former attorney general terry Goddard who ran for secretary of state last year. His big issue was dark money. He's been working for a while. Now, there has been talks about them trying to somehow join forces, and I think this would bring a lot to the table. Something to the table for both of them because what Goddard is lacking is money. There's not a lot of money out there. He doesn't really have a campaign, but the open primary folks, they're going to have access to a lot of cash, folks who are into this cause. But obviously that lost about 2-1 in 2012. What Goddard has I think is that going against dark money to the extent that a lot of voters know what that is, that's a popular cause. They're going to bring the best of both worlds.
TED SIMONS: And the idea, their polling says that both would do better if they were both out there working for each other.
BOB CHRISTIE: Well, obviously, you could combine the messaging, if you are two separate people, you have to spend money separately, if you can come up with a smart P.R. campaign to combine the two issues. Let's fix the elections system, let's get the anonymous corporate money out of it, let's do a top-two primary which is an interesting thing. California adopted it several years ago and it was specifically designed to get the -- to get the extremes out.
TED SIMONS: We'll keep an eye on that. Real quickly before we go we've got to talk about this, commissioners denying they have a pro-aps bias and there's a saying we shouldn't recuse ourselves for anything.
JEREMY DUDA: Two commissioners backed by the solar folks want them to recuse themselves because they have made indications in the past that they support APS in this fight against solar. Bob stump wrote an allegory about the unfairness of utility companies paying for it. Commissioner Little has made statements in the past and they say we're not biased. This doesn't show bias because we can still fairly rule on this. These people all run on platforms. You have the solar team a few years ago, I think back in 2008 -- their opponents were very pro-solar, now it's the fight in that primary. The Democrats ran very pro-solar as well. I don't think this shows anything different.
TED SIMONS: I believe commissioner Stump said that you know, the idea was his Facebook posts showed a pro-APS, pro-utility bias. And his quote was interesting. My Facebook page is private.
MIKE SUNNUCKS: That kind of works against the whole social media thing when you sign up for a Facebook or Twitter page, you kind of put yourself out there so you can have friends and communicate things and maybe run a campaign or show your ideas out there. And if you don't want -- if you want your ideas private, then don't have a Facebook probably.
JEREMY DUDA: It's not like somebody broke into his house and read his diary. It's on Facebook, it's public.
BOB CHRISTIE: And if you don't want to be a private individual, don't run for public office.
TED SIMONS: I think probably a better quote from his side was that his musings do not mirror APS positions. That probably is what he meant to say?
BOB CHRISTIE: That's what he hoped to say.
TED SIMONS: So basically, they didn't take up the motions to recuse them. So what happens next?
BOB CHRISTIE: The people have a couple of different ways to go. They could go to U.S. district court, a superior court, try to start a litigation thing. That will drag out. I don't know what they could really get out of that, that's going to take a lot of money which the solar people apparently have. In two weeks, they're going to take up the APS request to have a full hearing and look at whether actually solar power shifts costs to non-solar customers.
TED SIMONS: He says his opponents are fragile flowers which whither before the sunshine of vigorous debate.
JEREMY DUDA: That sounds like Bob Stump.
TED SIMONS: Good to have you here. Monday on "Arizona Horizon," we'll check out a fusion of art and science that explores the relationship between earth and Mars. And we'll hear about a new effort to find a solution to hunger in Arizona. That's Monday at 5:30 and 10:00 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.
Jeremy Duda, "The Arizona Capitol Times"; Bob Christie, The Associated Press; Mike Sunnucks "The Phoenix Business Journal"
