Join us as three local journalists bring you up to date on the news of the week.
Ted Simons: Coming up next on "Arizona Horizon's" Journalists' Roundtable. How budget talks are being affected by a growing surplus of state revenue. And we'll look at a lawsuit by democrats over last month's troubled presidential preference election. 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. Alia Rau of the Arizona Republic. Howard Fischer of Capitol Media Services, and Rachel Leingang of the Arizona Capitol Times. New revenue numbers show that the state may be looking at a bigger surplus than expected. Might be, I mean it's a done deal. There's more money than expected, correct?
Alia Rau: It's by the end of fiscal 17. It's still a prediction. The joint legislative budget committee said this week we think by the end of next fiscal year we'll have an extra $35 million in surplus money, that brings the total to $660 million, assuming no new programs, no new spending, that's kind of extra money in the pot.
Ted Simons: The governor's budget calls for what, $160 million in spending? Something along those lines? That's a lot of head room there.
Alia Rau: It is and a lot of people are wanting that money.
Ted Simons: I'll bet they are.
Howard Fischer: And everyone's being cautious about it, we've talked about it about the state economy up and down, up and down and if you put it into something permanent like more money for universities or a tax cut, and then you need that money, then it's not there, whereas opposed say you put it in highway funding, fixing some potholes or paying down the state's debt or rainy day fund and that's the fight we're going to have over, you know, can we depend on these revenues?
Ted Simons: Will there be a fight over the governor's promised tax cut, whatever it may be?
Rachel Leingang: You can bet there will be a fight over pretty much everything that's going to be in the budget and he still has this $30 million that will be some nebulous tax cut, nobody has given any information on that. I think that's why there's so much trepidation now, we just don't know what it's going for. They haven't really made any indications about that.
Ted Simons: And that was in his budget originally, $30 million, we're not telling you where?
Rachel Leingang: Right.
Howard Fischer: It didn't even have the 30 in there. He just said there will be a blank line. The $30 million has emerged from some documents that we've been able to see where we're seeing some spread sheets but that supposedly is a ceiling and it may be something left.
Alia Rau: There are a lot of bills that have other teeny tiny tax cuts. There's probably $30 million in tax cuts from other bills and we have no idea if that's the tax cut Ducey wants to propose or if there's another one of those coming.
Ted Simons: With that idea, could there likely be a no cut, no spend budget? I mean, it would be hard to say you need to start cutting more taxes.
Alia Rau: That's the thing. The governor has promised tax cuts every year but we've got conservative Republicans, Senator Don Schuder saying maybe we don't need to cut anymore, maybe we don't need to spend any, maybe we should sit tight for a while.
Howard Fischer: There's going to be some tax cut. Maybe one of these little technical things, we have this so-called Section 179 which gets businesses get to write off their expenses faster, their capital. That could end up being it. There will be a tax cut because this governor has promised it.
Ted Simons: Something will happen where he can say I told you so.
Howard Fischer: We're indexing income tax brackets for inflation. Look I've cut taxes.
Ted Simons: There's an update that raised a few eyebrows regarding corporate income taxes and basically saying these corporate income taxes are equaling lower revenue.
Rachel Leingang: It was more than $300 million less in revenues because of these corporate tax cuts and that's like don Schuder saying if I had to do those cuts again, I wouldn't have done it and for a predominant Republican to say that that's a pretty big deal. We've got to imagine there's other sentiments out there like that.
Ted Simons: We should mention it's obvious you lower the corporate tax rate you're going to get less in the way of revenue but the idea was you would get more in the way of revenue, the Laffer curve.
Howard Fischer: This was passed in 2011, in the middle of the Great Recession with the promise that we will bring more companies here; we will bring more high-paying jobs here. The corporations will come here. We're cutting the effective corporate tax rates from 7% down to what's going to be 4.5% I think at the end of this. Then we're also allowing certain multistate corporations to say well, we don't sell anything in Arizona, we shouldn't have to pay anything here so what they've done is say okay we've made it attractive so where are the new corporations?
Ted Simons: That's the theory, where are the jobs? They say...
Alia Rau: They say that, you know, we're not seeing it. We're seeing a decrease in this amount; we think it might be related to the tax cuts. There is nothing making up that money.
Howard Fischer: Here's the other half. We just found out this past week that the largest share of new jobs this year and next, people who don't even require a high school diploma. So for all this high-tech, education economy that we've promised to create, it ain't there.
Ted Simons: So if it ain't there, they say it's not exactly working as it was designed to do. You're saying some relatively conservative lawmakers are thinking twice? If they're thinking twice about past actions, what about the future?
Rachel Leingang: It's possible, especially since we don't know what this cut is going to be that they might not be on board with it but this governor is very popular, he's very well connected and budget negotiations are ongoing. There hasn't been any indication that there's a lot of opposition to that smaller cut but negotiations as they are can be very -- they change on a dime.
Alia Rau: The opposition we may see, too, is on May 17th with prop 123. There's a lot of people, a growing number of people I think who are saying you want us to do this, that's $300 million, hey, wait that's the same amount we're seeing lost coming from the corporate taxes and you're asking us to cut more taxes, is that something we should do?
Ted Simons: $346 million a year?
Alia Rau: By 2019 they're saying the number would be about $300 million that we're seeing lost.
Ted Simons: Talk about the impact on prop 123, especially if there is a tax cut, what is it, 600 some odd million dollars right now and let's raise something to get money?
Howard Fischer: This is why it's going to be very crucial, optics are everything here. If you cut taxes for corporations, on top of everything we've seen, and then you go to voters and say you know how we're going to fix the fact that we didn't properly fund schools? We're going to take it out of a school trust fund and we're going to basically pay ourselves and look we've done no tax hike. But we've had to cut taxes here. We keep laughing about the Laffer curve. If you follow that to its illogical concern that the lower the tax rate, the more money you get, we take the tax rate down to zero, we should be infinitely wealthy.
Ted Simons: Prop 123 hovering over the session. Is it getting a little bit weightier?
Rachel Leingang: The people against it are not well funded so it's a matter of trying to come out and say no against more money to schools, which is a really tough proposition to say don't give money to schools when the other side has money for schools. So I mean, there could be opposition, it has to be well funded and they would have to come up with an argument that really makes it seem like we got a worse deal through prop 123.
Howard Fischer: I'll tell you the other thing that happened that's going to make a difference even without the money. When a group like the League of Women voters and says this is a bad deal, that there was a better deal to be had, that you can't get the legislature get away with ignoring a 2008 voter mandate to fund schools for inflation and say oh, olly, olly, oxen free we fixed it and that's going to make a difference.
Ted Simons: Olly, olly oxen free?
Howard Fischer: I'm older than you are, Ted.
Ted Simons: Didn't we have a half-dozen of the last treasurers, they said don't do this.
Alia Rau: Even there's not a big money group behind this, we're seeing a lot of information. Even the governor at a business event said this is not going to be an easy election. We need to talk to people, we need to get our word out, it's going to be a tough fight.
Ted Simons: All right, just before we went on the air we heard that there was going to be a citizen's initiative regarding solar, and this is one being pushed by folks who are tired. The Corporation Commission is becoming this headline maker that it never was in the past. Talk to us about this solar initiative.
Howard Fischer: This deals with the fact that major companies in town, UNS, which is the parent company of APS, wants to change the rules. Right now if I put solar on my roof, I get to sell back the excess to the utility at the same rate they're charging me and I pay the same rate, a base rate for the service and I pay, however, men electrons I sell back. The utilities want to impose a demand charge. If you happen to hit a peak, we're going to charge you for that. They want to buy back my excess at wholesale rates, and then they've been dragging their feet, at least according to Chris Mays, in terms of doing the installation because they really don't like this whole distributed generation. This would amend the Constitution to basically say you will buy back the power at retail, you will not impose a demand charge, you will install within 45 days and if you're paying some sort of additional charge like the $5 they're charging now, that's all you can charge.
Ted Simons: And basically the initiative says you will go around the Corporation Commission.
Rachel Leingang: Right. It takes all of the tactics that utilities have been using like Howie mentioned and it says you can't do those. So what's left is pretty much nothing, unless they can come up with other mechanisms to go about this and they don't have faith in the Corporation Commission to weigh in on these policies.
Ted Simons: If you have solar and I don't, they've got to make it off of me to maintain the grid, to maintain the power plants.
Rachel Leingang: Which is the idea of a cost shift. If I am not taking, somebody is paying it. It's not coming from the right people essentially.
Howard Fischer: Chris Mays, who was trained as an attorney, had a legal term for what that claim was. He called it a bunch of hooey. He said look, there have been studies that show properly done, there is no cost subsidization. The other point that gets lost in all this is to the extent you have people generating power on their rooftops, you're not building a $4 billion power plant which gets put into the rate base which then the customers have to pay for over 20 or 30 years.
Ted Simons: This all goes back -- if the Corporation Commission had not been seen and people are calling the thing corrupt, they're saying they're bought and sold for. If this had not bubbled to the surface, you probably wouldn't have seen an initiative like this, would you?
Rachel Leingang: Possibly but this isn't the only state. As solar has become more popular the idea of how to manage solar and how it works with utilities and the grid has become sort of a hot-button issue and it's not just this commission that people are calling corrupt. In Nevada, for instance, they're calling regulators corrupt. Pretty much wherever the regulators are that are considering these fees, those regulators' integrity has been called into question.
Howard Fischer: And the fact is Salt River project has done this, they're not within the purview of the commission, they wouldn't be affected by this initiative so this is not strictly an ACC problem. Now, certainly, the commissioners have done themselves no favor. APS has done themselves no favors by neither confirming nor denying.
Ted Simons: The images have been negative coming out of the Corporation Commission and do you think it has a chance to pass? What do you think?
Rachel Leingang: It depends on how much money they can get and how the opposition from the utilities will be because undoubtedly the utilities are not going to be okay with this. APS is saying this lines the pockets of California billionaires and they're definitely not fans. So if they can get enough money, if they're ready to put people on the ground to gather signatures, it could get on the ballot.
Howard Fischer: Let me tell you. There was an old Steve Benson cartoon that talked about the power bill and it has the guy coming through the mail box with a large screw through his chest saying the power bill is here. If it's a choice between solar and your power company, what are voters going to do?
Ted Simons: We'll see how it goes from there. Speaking of Corporation Commission, Commissioner Bob Burns has basically come out; he's asked for the records from APS regarding political campaign donations. He's demanded the records. He's been ignored both times. He says he's not going to vote on anything.
Alia Rau: He basically crossed his arms and said if you won't give me the records I want, tell me where did you guys fund these Corporation Commissioners, whose money is it, I'm not going to vote on anything related to APS unless there's a district customer benefit.
Ted Simons: And it's already impacted one vote.
Alia Rau: One vote went down. There was a commission member who was absent so his no vote basically killed is it.
Howard Fischer: Because that gets to the other particular issue which deals with our friend Andy Tobin who has a son-in-law who works for Solar City who has a brother who works for Cox and depending on which lawyer you talk to either does or doesn't have a conflict, there's a bill to take care of that at the legislature, which is frozen somewhere. The question is at what point does his conflict become substantial enough that he should remove himself? And so now, he's starting to rethink it. Because his vote is needed, all of a sudden, well, maybe I can.
Ted Simons: APS loses because they didn't have enough people there and the right people there and, all of a sudden, now Tobin says I should be allowed to vote.
Rachel Leingang: And he's saying that the attorney had told him after the meeting you know you probably shouldn't have recused yourself on that one anyway, they thought Solar City had intervened but actually they hadn't and you can go ahead and vote. In reality, Commissioner Bob Stump hadn't voted, either. He likely would have voted for this. So if it were to come back on a future meeting when he was not out sick, it would have had the three votes to pass anyway, but it's not good optics to say that rescinded vote I would like to make after this item failed.
Ted Simons: As for APS have they responded to burns basically saying if it involves APS, I'm not voting?
Rachel Leingang: They said they're cooperating with everyone in good faith. And you can make your own assumptions on if they are or not and they think it's unfortunate that he's decided to do that. Everybody was really surprised when he made that announcement and at one point the attorney said this is off topic, what are you doing here? Everybody was a little taken aback.
Howard Fischer: The fact is he's frustrated. He made a nice request. He made a nasty request. He said give it to me. APS has basically told him what he can do with his request. So what's he going to do? You exercise the powers you have. Now remember there's also a request for an attorney general's opinion that Mr. Burns put in to find out if the A.G. can if he can demand the records not only of APS but pinnacle west.
Ted Simons: It's been considered yes, you only need one commissioner to do this. He wants to make sure.
Howard Fischer: You've got attorneys on both sides and Rachel is seeing these opinions, too, where yes, you can, no, you can't. The opinion will make a big difference.
Ted Simons: The Arizona presidential preference election continues to rear its head. It sounds like Democrats are now suing over the election?
Alia Rau: Yes. A group filed a lawsuit today I believe in federal court. They're actually looking at some constitutional issues in terms of did some of the practices discriminate against minority voters? Some things like where the polling places were located, the number of polling places, the lines, and then also a new bill that became law that basically said I can't take my neighbor's ballot and turn it in for them.
Ted Simons: The ballot collecting law.
Howard Fischer: And this is interesting because up until a couple of years ago, any of these changes, the number of polling places, the ballot harvesting law would have had to have preclearance by the department of justice. Well, the Supreme Court in a 5-4 ruling said well preclearance doesn't make any sense; it's an old thing going back to the civil rights act. Civil rights law still applies but preclearance doesn't. 90 polling places versus 400 or whatever.
Ted Simons: 60, actually.
Howard Fischer: That's true. And so you've got a situation where the democratic national committee, the state committee, the Ann Kirkpatrick Senate committee is there, you can still enforce it your honor and what they did, by rejecting the provisional ballots, what's the rules on that? The number of polling places?
Ted Simons: And they also want to make sure according to the lawsuit I guess from what we read it doesn't happen again come November.
Rachel Leingang: And the recorder's office said this would have passed preclearance and it was bad overall. It was messed up. It wasn't specifically targeting minority voters. So they just don't agree with that line of reasoning. So yeah, I mean they want to make sure that come November, these things don't happen because they tend to disproportionately affect the kinds of voters that vote democratic.
Howard Fischer: And this is going to make the debate over the ballot harvesting crucial because that will take place in July. If they can preclude that, if a judge issues a preliminary injunction, it means that in November, ballot harvesting will not be a felony.
Ted Simons: Both the Clinton and Sanders campaigns have joined in on this.
Alia Rau: They said they will. They haven't quite yet.
Ted Simons: All right. This was such a big story for a while. You.
Alia Rau: Me.
Ted Simons: You! You were a threat apparently to lawmakers.
Alia Rau: Apparently, I'm very scary.
Ted Simons: Because you had undergone criminal background checks but then you didn't. What was going on down there with this idea of background checks for reporters at the Capitol?
Alia Rau: So basically, Speaker Gowan, his staff sent us a note and said we are taking away your badges and we have these badges that give us access through some locked doors to the floor of the House and kind of through some hallways that give us direct access to lawmakers' offices and said we're turning them off, unless you sign an agreement to do a background check. The first version we got wanted access to everybody who has ever met us, potentially Social Security numbers, anything. They revised that and brought us another one, we still had some concerns with it, we declined to sign it and basically, we ended up locked out upstairs for a few days in the gallery with the lobbyists.
Howard Fischer: And what's nice is that we all did hang together. This was aimed I believe at one reporter.
Ted Simons: Everyone thinks it was aimed at one reporter. Even one reporter thinks it was.
Howard Fischer: The fact it not only they wanted the traffic background checks and they listed which crimes would disqualify you from ever being on the floor. Rape, assault, trespass? Hank Stephenson has a class two misdemeanor trespass conviction for a bar fight and we thought a lot more of Hank after we found out it was a bar fight, this was aimed at Hank and so I think that Gowan thought well we'll just dump Hank over the side and everything will be fine. No. It doesn't work that way.
We should mention your colleague has been all over Speaker Gowan for his travel curiosities.
Alia Rau: Hank first reported before the session started about Speaker Gowan using state vehicles possibly to campaign around the state. And from the beginning when that came out, they've retaliated against him in some people's views. The speaker's office said that's not the case and they're being out of abundance of safety for everybody they want everyone --
Ted Simons: When they said that was not the case, did anyone explain why trespassing? I think it was eavesdropping trespass was included on this list of other relatively higher profile crimes.
Howard Fischer: What they said was that trespass could mean you might be hiding in the House after the House closed. And eavesdropping, you might be overhearing things, never mind that legally it involves an electronic advice, we know what we want, we will back fill in the story and the other funny part about us being the threat is this all started, I know we talked about last week with a disturbance in the gallery, which is not where the press sits, which is an area that anybody can walk in that building with a submachine gun and not be stopped and take out everyone. Yet we were the problem.
Ted Simons: And we should mention that Speaker Gowan, the quote is he still stands by his original security plans.
Rachel Leingang: And it's clear that some of his members didn't agree with it. You had the person who wrote this letter that they used as kind of the crutch for the background checks saying that's not what I meant by that and I'm not afraid of Hank, I don't know if anybody really is afraid of him.
Howard Fischer: And here's the other funny footnote to the thing. When the Democrats brought up the issue of the floor access, there was one other rule change they said. They said why are members carrying guns on the floor? And Speaker Gowan and several of the members said if somebody comes in the gallery we're here to shoot back. So for all the fear of the press, we're not the armed ones. I can list the names of a few of the people on the floor who are.
Ted Simons: All right, so we can do so many analogies there but we will wrap up today's show with a good friend of ours, Bruce Merrill, he was a fixture on this program and a fixture in political circles for years because of his polling data and when you are a pollster and he actually mentioned this a long time ago, and people oh, you pollsters, biased, liberal, conservative, you can't be biased if you're a pollster because then no one will hire you as a pollster. They want accurate information.
Howard Fischer: Bruce tried to be very careful to not only first; it's how you phrase the question. If you ask people the question, do you want more money for kids? People are going to say yes. But he tried to make sure folks had the information they needed to be able to do it. Also comes down to making sure you're getting the proper sampling, making sure as the technology changes, we're getting people with cell phones who didn't have landlines and Bruce tried to make sure that everyone understood this isn't about me trying to prove a point to do this but I'm just taking the temperature and also making the point I'm not here to tell you how the election is going to go. I'm here to take the temperature on April 15th.
Ted Simons: It's a snap shot. And four decades, nearly four decades, a professor at ASU at the Walter Cronkite School of Journalism and Mass Communication, the professor here, political science, those polls do have an impact, don't they?
Alia Rau: They do. I mean, he's kind of, you know, one of the last of a shrinking group who did these in-depth, you know, as unbiased as possible polls as opposed to the quick one day telecalls, you know, you can do for pennies on the dollar kind of a thing. Yeah, he had a huge influence on issues, on communities and the results of some of these elections.
Ted Simons: Bruce, a good friend and sorry to see him go but he had quite a career and quite a life. Good to have you here, thanks for joining us. Monday on "Arizona Horizon," we'll update the financial aid collaboration between ASU and Starbucks. And we'll hear from the author of a new book on the turbulent times of a black entrepreneur. That's Monday on "Arizona Horizon." That is it for now. I'm Ted Simons, thank you so much for joining us. You have a great weekend!
