Ben Giles, a reporter from the Arizona Capitol Times, will give us an update on the state legislature, a regular Arizona Horizon feature every Wednesday during the legislative session.
Ted Simons: The state legislature is in session, which means it's time again for our weekly legislative update with the "Arizona Capitol Times." Here now to kick off our look at this year's session, "cap times" reporter Ben Giles. Good to see you.
Ben Giles: Good to see you.
Ted Simons: Thanks for being here. We appreciate it. The reaction at the capitol to the governor's budget submitted last Friday, a few days to look it over. What's the response down there?
Ben Giles: Typically you have different responses from Republicans and Democrats. The Republicans I think largely like the budget. They like that they have common goals with the governor, especially GOP leadership, common goal to have a structurally balanced budget, which this would do by the end of the next fiscal year, fiscal 2017. And that would just mean the state is bringing in more money than it is scheduled to spend. And it has been about 10 years since 2006 and since that was the case, Arizona went through the recession, struggled with that. So that is a real accomplishment. On the other hand, the Democrats are complaining because there is a pretty big cash balance that the state has, and there needs to be some kind of determination what to do with that, essentially to keep a structural balance, $600 million or so that is just floating out there that the state might not do much at all with, and there has been a lot of cuts in the last couple of years to get to a more balanced point. And Democrats would like to see some of those cuts restored and then maybe spending in new areas.
Ted Simons: $600 million, upwards of $600 million, different projections, does that include the $400 some odd million in the rainy day fund?
Ben Giles: No, that is in addition to that. That is one of the suggestions is to beef up the rainy day fund. $600 million, some of it is ongoing. There is some revenue that could in theory be spent year after year. Some of it could be one-time funding. But that is going to be the fight and that is what leadership, folks like Senator President Andy Biggs have been talking about at the capitol. The weeks leading up to the session, it is my job to fight back what he calls the spending lobby, people who want to spend us back into a deficit and spend us out of this pretty good financial situation the state finds itself approaching.
Ted Simons: We had the Senate president on this week and he talked about that. 2008 and 2013 things were looking flush and the next go round you are in a big debit hole.
Ben Giles: State analysts admit that there is money to -- estimates vary but some money could be spend going forward but they also warn that given the cycles of the economy, there could be another recession in the not too distant future, and rather than maybe spend Arizona's way into a problem in 2008 and 2013 that they did, they want a cautious approach. They always advise caution to prepare for the worse.
Ted Simons: I hear people say what is going on, a billion dollar surplus in the next year or two. That will be an invitation for governor and leadership to call for tax breaks again. Are you hearing that?
Ben Giles: They are not even waiting. They are calling for tax cuts this year. That was one thing that was missing from the governor presenting his budget on Friday, and now on this tour this week in Tucson and Flagstaff presenting the budget to people and local governments there. We don't know what the idea for the tax cut is. And in the same way that some of the lawmakers are cautious about spending too much, there is a sense that some are also cautious about cutting taxes too much because it -- you can spend your way back into a deficit, but you can cut your way back into a deficit as well. If you cut your revenue too much, you are going to be in just as much trouble.
Ted Simons: I know there is -- governor also talked about trying to roll back regulations, trying to roll back, you know, licenses and these sorts of things. Is that gaining traction at the capitol? People paying attention to that?
Ben Giles: I think we're waiting on a bill from representative Warren Peterson who is expected to introduce that and basically it would be a requirement that in the next year local governments comb over all of their regulations for occupations for businesses and things like that to make sure that everything isn't too burdensome. One of the frequent complaints we hear from the governor's office and from other Republicans is that there is just too many regulations for too many different types of businesses and, you know, deregulation is the buzz word as far as boosting the economy and helping to put people to work when it is coming from Republican lawmakers at the capitol.
Ted Simons: It sounds as they they're trying to change the burden of proof, maybe to more on the government as opposed to I want a license. Okay. If I'm denied a license, the government has the burden of proof as opposed to me on it. Does that make sense? Is that what is going on down there?
Ben Giles: Essentially, yeah, but I think it also is trying to see -- not as much the burden of proof but just are there too many regulations? What is -- what does this regulation accomplish? Who is it protecting? You know, a lot of regulations for these industries are designed to protect the customers from getting a bad service from someone who really isn't qualified to do something, but I think what the goal is to look at those and see is this really protecting someone? Is this really necessary? Are we getting complaints from customers who say, yeah, you know, this business isn't regulated enough. That's not often what seems -- what seems like that is not often the case.
Ted Simons: Any opposition down there to something like this?
Ben Giles: I think it depends on what the regulation is. I expect this will pass and then we will have a year's worth of studying and local governments. It is not actually calling for immediate changes. It's calling for a study of future changes. So, probably little reason that there would be opposition to something like that.
Ted Simons: The mood down at the capitol. What -- are people encouraged? Are they optimistic? Do they think things will go smooth and quickly, efficiently like the Senate president likes? You talk about efficient, comes out on Tuesday and it is done deal by Friday. Will that happen again this go-round?
Ben Giles: We are not hearing as much the speed of business talk that was the topic of 2015. A lot of lawmakers are thinking maybe even if the honeymoon between the governor and the legislature -- legislators isn't over, it is going to take a little bit longer to get things done this year. And especially with the caution of all of these people wanting to spend money and propose how to spend that cash balance, what ongoing revenues might be available. It might take some time, the Senate president said to fight back those efforts. But it really depends on when the budget happens. It really depends. It was a surprise last year to see a budget pass in March. And there are whispers that it could pass just as quickly. I think that the tax cut is going to be really telling as far as, you know, what the lawmakers and the governor can come to an agreement on or not. When the budget gets passed, tax cut will be telling.
Ted Simons: I was going to say, any tax cut would also have to be careful with that if you are also promoting Prop 123, correct?
Ben Giles: Yes, that could be problematic as well. That is one of the reasons that lawmakers cite they're not keen on tax cuts. People want to keep the status quo in a lot of ways and I think you're right, I think that extends beyond just the immediate debate on education. I think it extends to the larger debate of how the government is spending, or not, taxpayer dollars.
Ted Simons: Is that much of a debate down there? It sure seems like there is an ideology and mindset and it is holding sway.
Ben Giles: What we saw last year with the governor following through in a sense on his promise, campaign promise to cut taxes every year he is in office was -- and adjustment of sorts more than an extreme tax cut, than something like the big picture ideas we hear at the Capitol, like phasing out income taxes, or cutting out the income tax entirely, that's the dream of a lot of Republican lawmakers. That's the sort of big picture tax cut that probably will get put on the back burner for a year as people wait to see does Prop 123 pass in May, and do we get all of this money from the land trust.
Ted Simons: Good stuff. Good to have you here. Thank you for joining us.
Ben Giles: Thanks, Ted.
Ted Simons: Thursday on "Arizona Horizon," hear from legislative Democratic leaders on their priorities for the current session. And we'll learn about the making of a new movie on the founder of Durant's Restaurant. That's on the next "Arizona Horizon." That is it for now. I'm Ted Simons. Thank you so much for joining us. You have a great evening.
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Ben Giles: Reporter at Arizona Capitol Times