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Ted Simons: Coming up next on Arizona Horizon. We have the Journalists' Roundtable. The governor released his state budget plan, we'll look at the numbers, and see how they line up with what the governor said in the state of the state address earlier this week. The Journalists' Roundtable is next on Arizona Horizon.
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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 from the Arizona Capitol Times, Luige Del Puerto. All right, Governor Ducey today released a state budget plan that he says is structurally balanced, values based, and solves problems. What are the other people saying?
Jeremy Duda: Well, depends on who you ask, if you talk to house speaker, President Biggs, they will tell you the same things, if you talk to the University, they are playing nice. And you talk to JTED advocates, for the so much, Democrats, you will hear none of those things.
Ted Simons: Overriding thoughts on this plan?
Jeremy Duda: Governor Ducey, for months, and especially in the state of the state has been talking about holding the line on spending even though we have extra money to spend, not a spending spree. He very much showed that today. And last year, we had this massive budget crisis, a lot of people took very deep cuts, and not a lot of that is coming back this year despite having some money to throw around, and even the spending will be one-time, designed that way to avoid, you know, ongoing expenditures.
Bob Christie: Right, and that's true. This is a really modest series of increases in the state spending. The Universities are getting $4 million in supplemental this year and 8 million for the next year, and last year they lost 99 million, so they are barely making up the -- the Governor is talking about changing the trend line on the University funding, while this is a small change in trend line. It's not down. It's up. But it's very small. And other, other folks, other agencies also got some more increases. The schools got 90 million next year, but half of that, was required, under inflation funding and the lawsuit that we just finished. We just settled out, and the other 45 million is pretty much in special programs. It is not spread around the schools.
Luige del Puerto: And there is money for the schools, 90 million for the schools. This is on top of what the schools would be getting assuming that the voters' dismay approves the settlement proposal, k-12 inflation litigation settlement proposal, that's going to be on the ballot this May.
Ted Simons: Any big surprises what was the biggest surprise that you saw?
Luige del Puerto: Well, to me, what was the biggest surprise of what's missing, during the budget meeting, was that we did not see any proposals for tax cuts, not yet anyway, but keep in mind, that the Governor's proposal estimates that by the end of fiscal year 2017, assuming this budget is the one that is passed, we're going to have 173 million in balance, and that -- and at that point, we are structurally balanced. I think he may be saving some of that for pushing for tax cuts.
Ted Simons: What do you think? Tax breaks? We don't see anything here, but will we see something in the final product?
Jeremy Duda: Oh, most definitely, the Governor has been very open about wanting to do this, going back a couple years ago when he started the entire campaign for Governor, and that was one of the pillars of the campaign, one of the pledges, every year I am Governor I will, or cut taxes. Definitely not raise taxes. But he's going to cut taxes, he said that in the state of the state, we'll cut taxes this year and next year and the year after, and but, for now, we were told, we are going to have to wait and see what they can negotiate during the session.
Ted Simons: And why would you wait and see on this? Why don't you say, well, here's what I have got?
Bob Christie: You know, there is a couple schools of thought. One is, you don't want to put a tax proposal out there that could get beat down by opponents. You want it to be negotiated. You want the deal to be in place before you do it. And but, it is kind of odd that it's not part the budget package because that means all these numbers that we just heard, here's our balance, and here's our money coming in and going out, and we'll all have to change because of that, and unless they come up with a way to raise some revenue, which is rare in this state.
Luige del Puerto: And of course, you have to understand, some lawmakers, even the Republicans, the Republican ones, may not necessarily be onboard with tax cuts. We're hearing from some folks, they are saying, look, we're getting more revenues now but let's, you know, let's not spend too much, and when they say spend, they are referring to both actual expenditures as well as the tax cuts.
Jeremy Duda: We could see, also, something phased in where you lay the groundwork for the future cuts, and we saw that four or five years ago, and with the big package of the tax cuts, and some folks, weren't so happy when they had to pay the piper, continually, and even when the fiscal crisis hit last year. And that's always an easy way to do that and push off the cost later on.
Bob Christie: And we have 300 million of tax cuts being phased in over the next three years, 98 million or so each year, and as revenue comes back, with the expansion, the housing market is finally stable, the state is growing, adding jobs, and the state's revenue is really way up. There are 555 million over what they thought that they were going to be, and they will have a carry-forward if they don't spend it, as of June 30, like 500 million dollars, that's extra. That does not include the rainy day fund, which is 460 million.
Ted Simons: I noticed in the budget with 30 million for the CTE, career and technical education, and that sounds similar to what was cut last time.
Luige del Puerto: Similar but not quite. So last year they cut 30 million, from the JTED program. And the Governor is proposing not to restore 30 million to that, but he's putting forth a grant program. So, it's a competitive grant program. The JTEDs have to apply to get the money, and they have to have matching funds from businesses, and the Governor's office said that matching funds doesn't mean dollar for dollar contributions there. They could count whatever support the businesses are providing to them, and in training and students, to later work in their industries, and it's a three-year grant program, and it's 10 million, every year.
Ted Simons: So to qualify, you have to have a business that wants what you are offering, and who decides whether or not this is -- this passes the grant?
Luige del Puerto: It will be the governor's office. They will have to look through, essentially, they said, show us that you are working, that you are, your program is creating what it is supposed to create, and show us that you know, businesses want the, the programs, courses that you are offering.
Bob Christie: That's going to be a tough sell at the legislature. There is already a bill to restore that, both 30 million in funding, that takes effect, the funding cut takes effect at the end of this school year. And they are these technical education districts which are, you know, especially the rural areas, and also in Maricopa and Pima County, that say they might shut down if the funding is not restored, and there are a lot of lawmakers, Republicans, a lot of Republicans, as well as Democrats who want the funding restored now.
Jeremy Duda: And there were not a lot of Republicans. They made that their big issue for the session, as you were saying Bob, several bills introduced, and Governor Ducey mentioned this during the state of the state that he wants to invest more in the JTEDs, that was one of the biggest things of the day. This is not what they were thinking about.
Ted Simons: One-time grant is not necessarily what was on the table there. And is this going to be a point of contention?
Luige del Puerto: I think so. It's not on the Republican and democratic lawmakers, who are wanting to see this budget, this cut restored. But, the businessmen, who are quite satisfied with what the programs are, are producing, and you know, I spoke with one from the construction industry, a couple of days ago, and the businessmen was saying look, we need graduates out of high school, that can work in our industry, and this is the program that offers that path for some high school students, they are saying the graduation rates are higher for those students, and those that choose not to go into the industries, they go to college, so this is a program that has a high return of investment, and something that should be not just the moneys restored to it, but the funding of more.
Jeremy Duda: This addresses some of the concerns that we were hearing from the Senate President Biggs, is that some of these are supposed to be a narrow focus, career or technical education, a lot of them are getting away from their core mission, with a general University education, and you know, and he told us he was talking about how he wants to ensure if they are putting this funding in, the original purpose, of these things are supposed to be for.
Ted Simons: He mentioned that in the Chamber of Commerce luncheon, we got into it with Eric Meyer, talking about this aspect, and we heard from some folks that the career and technical education that day and they weren't happy with what the Senate President was saying that it is not necessarily accurate.
Bob Christie: No, and we were all surprised when this $30 million cut appeared in the budget because it was not in the Governor's original budget proposal, and then when the package was presented, bam, there it is, in, after the deal was done, and so there was little time to fend it off. You know, President Biggs, is very sincere and really believes that there is some -- there is a lot of waste but this proposal, from the Governor, doesn't really address that, and it does something different.
Ted Simons: What about the border strike force. It looks like plenty of money there, not plenty of money, lots of money there.
Bob Christie: We're finally seeing some numbers on this, and it took, you know, there was an announcement a couple of months ago by the Governor, the Republican, and myself had gotten early versions of it before that, but we never had any numbers or structure on it, and we got the structure this week, and I got the plan from the Governor's office after, oh, trying for weeks and weeks and weeks, and laid out exactly how they are going to structure it. This budget contains 31.5 million for that, 1.5 million is going to go to the county sheriffs for their operations, to help pay deputies who are on this part of this force, and the other 30 million, 20 million of it is for start-up costs, essentially, equipment, communications devices, those things, and the other 10 million is supposed to be ongoing. So, we are dedicating 10 million a year, going forward, to this new program, which you know, I don't know, maybe 100 officers.
Luige del Puerto: Right, and this money will only go to the sheriffs from border counties, so the sheriff from Pinal County is not --
Ted Simons: I thought he was a border sheriff?
Luige del Puerto: By his definition, he is.
Ted Simons: So, again, we got this money, what is it, 30 some odd million?
Bob Christie: 31 million.
Ted Simons: And how much is going to the corrections?
Jeremy Duda: The corrections, I believe that they are getting 32 million next year, and the Governor wants 2,000 additional prison beds, and in the next couple of years, and in addition to 1,000 more, they are going to be going online, a bit later this year, and now, to offset that, he talked and will lead up to the state of the state about prison reform, wanting to tackle this contentious issue that's becoming more popular, and we see 1.6 million for this, and he wants a community corrections center in Maricopa County, modeled after a program in Pima, that gives you know, parole violators, an alternative to prison, only 1.6 million, and who knows how much impact that's really going to have on this trend line.
Ted Simons: So, let's make this clear, 1.6 million, for helping and this sort of thing, this center for folks, trying to rehabilitate these kind of people. 30 some odd million for prison beds?
Bob Christie: For prison beds, and of the total budget of about a billion dollars, for corrections, so the Governor made this big push in the state of the state address where he says we have got to cut the number of, the growth in prison beds, and this is a program where people, we can keep the program from people, from reoffending and getting back into the prison system by giving them drug abuse treatment, and it gives them 1.6 million, and it's a tiny, tiny, tiny investment that does not really show the commitment to this, in a big way.
Ted Simons: Will that change in the process? At all?
Luige del Puerto: No, I don't think so. 1.6 million is a small sum, and I do wonder if this is just the start, what I mean by that, is prison reform, it's such a huge undertaking, and something that the Republicans, specifically, are weary of, and they don't want to go into the reform and be painted as somewhat soft on crime. There are states, red states, deep red states that have done this, Texas, for example, a great example, and they have done prison reform, and their experience shows that they can bring down the, the growth of their population, and spend less money on prisons. Now, of course, the big problem is that a lot of people that get out of prison re-offend. This program may be a small one, like I said, I wonder if this is just the start, and the Governor would ask for some more in the next few years.
Jeremy Duda: And this is a way to kind of take on this issue, without giving a lot of the Republican legislators heartburn, when I spoke to these lawmakers, after the state of the state, that was the one thing where people seemed a bit hesitant, and they knew, you know, I would like to see the details, what they heard, they liked, and they wanted to make sure it was not going too far. It's a very tentative step but it is a step, but it seems like something that he can get past.
Bob Christie: Another state, besides Texas, that has done this, but in a very big way, is California. Our neighbor to the west, who was the subject of great criticism by the Governor, all through his state of the state address, but California, has dropped their prison population by 10 or 15% by doing these things, they shifted, less serious inmates to county jails, shifted parole violators into community corrections facilities, so that they could get treatment, and these are the things that they were forced to cut their population, and by the Federal courts but also, because they just could not afford 10% or 20% of the state budget, going to prisons any more.
Luige del Puerto: And the Governor really is serious about weighing in on the growth of the prison population, this wouldn't cut it. It would have to be something more dramatic, something similar to what Texas has done, and California has done.
Ted Simons: So 1.6 million for a treatment center here, as far as social services in general, are concerned, kids' care, are we the only state without a kids' care?
Bob Christie: We are, and that was not in the budget. What -- that is a subject of a legislative push by a Republican from Lake Havasu City or bullhead city, Regina, who is pushing that, in this package there is nuances around the edges, not a lot. And there is some money to, to help, to restore dental care for disabled people, out of the Medicaid program, which is real important, but there is a shift, 25 million, from excess welfare money cut from welfare payments, general relief payments, to the general fund, 25 million of that. And the job training program that the Governor promised during his state of the state, that gets about 12 million.
Jeremy Duda: I think the biggest move that we have seen in social services is the stuff for dcs and more for the kids taken from their homes, so I believe that over, between this year and next year, it's about 87 million or so, to increase -- to care for them, and we're seeing more money, at least, for the department of child safety, which has been embattled since the creation a couple of years ago. They have been asking for more money, a lot of lawmakers are not, even Republicans on the Ducey side are not really so keen on giving it, but they need to get rid of this backlog, and this might take a small step towards hiring some new folks.
Ted Simons: And any strings attached to the dcs money? Child safety money?
Luige del Puerto: Not so far, so the Governor has several goals for dcs, one of them, is to reduce the backlog of the reports. Now, reports, not cases, and reports are, basically, the cost to the hotlines, and he wants to reduce those, meaning solve those reports, as soon as possible, and so, he's investing, he's proposing to invest 4 million to, to add the field staff capacity, and then another 4.3 million that he wants to -- dcs could use to help to hire -- also, keep this, retain the staffers.
Ted Simons: Okay, with this in mind now, we have got the budget, and we can talk about the economic development, do we see anything regarding the commerce? Aca2.0 here.
Bob Christie: I saw nothing in the budget for the aca, but we have, as you can tell, the numbers are running around, there is a lot in there. Did you see anything on there?
Jeremy Duda: I don't think that -- I didn't see anything for that, but I don't know that there is anything -- they really need money to do. What the Governor is talking about and the folks in the legislature were talking about is changing the direction and the focus, and promote and marketing, they had a legislative hearing, and they just got raked over the coals, people want a lot of conservatives want them to change their focus from kind of dishing out, you know, incentives and other goodies to try and help people cut red tape and make it easier for you know, small businesses to start up and succeed, and some of these folks have never liked the commerce authority since it was created or what it was really about, and this is a chance to really change the direction, in a way that might not actually take much, if any, money.
Ted Simons: Let's talk about the legislature's reaction to the budget, and the impact of the budget on this session. What do you see?
Luige del Puerto: Well, I think that Republicans, like we mentioned, the big issue would be tax cuts. I think that if the Governor could find a way to -- we don't know what that tax cut would be, but if he could find a way to get the Republicans to support his tax cut proposals, I think that the Republicans would be supportive of this plan.
Ted Simons: What do you think Bob?
Bob Christie: I think that I agree with Luige, there is a couple of things in here that are going to -- that don't solve all the problems, that the technical education part, and that's going to be an issue, and there is no, there is no tax cut, but it's a good starting point, especially for the conservatives. Andy Biggs and speaker gallon are going to be close onboard with this, so let's move money around the edges, and we'll make some people happy here, and this could be quick, but we have not seen what the real things are yet.
Jeremy Duda: The conservatives like this on the moderate wing. That's where I could see some issues, and especially University funding, one of those areas, that's where we saw the holdouts last year on the budget, and the head of the last stumbling blocks, and the more moderate Republicans wanted, and now there is more money around, and I think that, you are going to see folks wanting more than just 8 million dollars. It's the old, you know, people fight more when there is new money than when there is money to cut, and this year might demonstrate that.
Ted Simons: So we're going to see a lot of horse trading?
Luige del Puerto: There will have to be horse trading. This is a starting point for all sides, and previous to the Governor's proposal, Republicans and Democrats have said, we'll wait for what the Governor is going to lay out, and at that point, we know what we're dealing with. There is going to be a lot of horse trading. I wonder if there will be an appetite on the part of the moderate Republicans, to fight for, and to hold the ground on the University spending. I wonder if that's going to happen.
Bob Christie: That could happen, the one interesting thing is last year, remember, this, this is the second year of a two-year cycle so we had a lot of freshmen in their first year, and when leadership came to mend, we were talking Republicans when, leadership came and said we have got to pass a budgeted now and now, and now, it came out on Tuesday and passed by Friday morning, some of them went home, and they had some heartburn, and so, they may not be so quick, if they don't get what they want.
Ted Simons: That's a good question. Are we going to see a speedy session not only because of that, but also, because the numbers that showed up, showing a bit of a surplus here, came after all of this rush to get this budget in, and is that a lesson learned, as well?
Jeremy Duda: I think that it is. As Bob said a lot of people were not happy about that. We were hearing it, and everyone was, and think that this year they are going to push back more if leadership and the Governor try to ram this through so quickly. The more experienced, I think, we will see a quick session, but it's not going to be as quick as last year, and part of it is, and part of it, I think, is because there is more to fight about and the rank and file numbers will want more input into this.
Luige del Puerto: That's exactly right, I mean this is the first year that we are going to fight over where to allocate the funds, rather than looking for places to cut. Many of the members of the legislature have not had that experience, and many of them weren't around when we were cutting, so rather, many of them had only been around when we were cutting the budget, and they have not really had a chance. Many of them, to allocate resources, and I think that that's going to be a reason why, probably the budget, that's not going to be as smooth as we had it last year.
Ted Simons: Do we see any fund shifts in this budget? What happened to HURF, the highway fund?
Bob Christie: Well, that's one thing that's, obviously, missing from the Governor's budget proposal, there was, you know, the state has been taking highway funds that normally went to counties and cities to pay for road construction for several years, and there was a deal two years ago, to give that money back slowly over three years, and the last year, Governor Brewer, was in office, gave, gave them 30 million of 120 million, and last year, they were supposed to give them another 30 but they stopped that. And there is no sign that they are going to continue that this year, and that's going to be a big bone of contention for the rural folks, especially.
Ted Simons: All right, before we go, then, let's talk about the state of the state address, on Monday, and what you heard then, and how it translated into today's budget plan.
Jeremy Duda: Like I said, I think that they are holding the line on spending, and that translated on, and we heard things that didn't translate with the tax cut. And I think that there is still a lot of questions to sort out, and --
Ted Simons: Yeah. And the state of the state, are we talking, we talked about this earlier, there were certain recurring themes, one of which was bashing California, at every possible opportunity, and is that, is that all-together wise to do?
Bob Christie: You know, I don't know. I think that you reach out to California companies, and say we're better than them but -- I think that he thinks it plays well. But, I don't see that it really -- if we were to sit down and compare the budgets of California and Arizona, in the last three years, as we have recovered from the recession, their budget is in a lot better shape.
Ted Simons: You can't even compare the economic growth.
Luige del Puerto: Right. And in fact, we look at this real quick, and because, as you mentioned, the Governor mentioned California, seven times, and basically, said well, Governor brown, he's my partner in Arizona because California, companies are fleeing. And they are moving over here. We looked quick at what others have said about the economy of California, and they are doing better, than us, and you know, their GDP is better than us, the Governor's office did forward to us a study that showed that there had been like 1500 disinvestments, companies that have decided to leave California, number of the to go there, or to expand elsewhere, and supposedly, we had benefited from that.
Jeremy Duda: One thing that I thought was interesting, maybe a little more interesting than the drinking game where you drink every time Ducey bashes California is another group that got targeted, cities here in Arizona. They are not so keen on, at least a few. He kind of raked the City of Phoenix over the goals for not allowing uber x and sky harbor, and then he took aim at folks like Flagstaff, people, where they are considering a municipal minimum wage, and he made a very serious threat, which is, if he start doing things like this, we're going to look at taking away the state shared revenue and that is the holy grail of municipal politics at the state capital.
Ted Simons: Oh, yeah.
Jeremy Duda: Which is protecting the state's share.
Ted Simons: And that was a big red flag, and we only have a minute left, but, is it wise for that kind of rhetoric to be thrown around?
Bob Christie: He's the Governor, and the Governor can make, I mean, he was on your show the other night, and he said, I want -- I want to speak clearly, and that was as clearly as a Governor can speak, if any city decides to do this, their revenue, I am going to do everything in my power and use all the political power that I have, and I am going to go after their share of revenue. And he's dead serious that that's not going to happen on his watch.
Ted Simons: Good gentleman, great conversation, good information. Monday on Arizona Horizon, it's our Martin Luther King Day special. Join us as we discuss the struggle to celebrate Martin Luther King day in Arizona, and hear about recently discovered audio tapes of Dr. King's visit to Phoenix and Tempe in 1964. A Martin Luther King special Monday on Arizona Horizon. Tuesday, a conversation with state Senate President Andy Biggs. Wednesday, our legislative update with the Arizona Capitol Times, that returns. Thursday, democratic lawmakers discuss their priorities for the legislative session. 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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In this segment:
Luige del Puerto: Arizona Capitol Times; Bob Christie: Associated Press; Jeremy Duda: Arizona Capitol Times
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