Horizon, Host: Ted Simons

February 3, 2009


Host: Ted Simons

Corporation Commission

  |   Video
  • The Arizona Corporation Commission's new chairperson, Kris Mayes, talks about the commission's responsibilities and her top priority - to make Arizona a leader in renewable energy.
Guests:
  • Kris Mayes - Chairman, Arizona Corporation Commission
Category: Sustainability   |   Keywords: solar energy,

View Transcript
Ted Simons:
In January, Kris Mayes was selected by her colleagues as chairman of the Arizona Corporation Commission. Here what's she had to say shortly after taking over as chairman.

Kris Mayes:
As everybody knows, I’m a major proponent, like some of my colleagues, of increasing the amount of renewable energy we do in the state of Arizona, the amount of energy efficiency and water conservation. But those are my objectives as a colleague. It's not my role as the chairman to try to force those issues. It's my hope that together we can reach consensus on those issues. I do believe that Arizona can, over the next couple of years, become the solar energy capitol of America. And we have to do a couple things to make that happen, including encouraging more renewable energy transmission. But I believe -- and it's been my experience over the last couple of years -- that the best way to make big policy changes is to gain consensus of the commissioners. And 5-0 votes are better than 3-2 votes. I'll be looking to try to achieve that kind of consensus on big issues like renewable energy and energy efficiency and water conservation.

Ted Simons:
Joining me now is chairman of the Arizona corporation commission, Kris Mayes. Good to have you on the program, thanks for joining us.

Kris Mayes:
It’s great to be here, Ted. Thank you.

Ted Simons:
Busy, huh?

Kris Mayes:
Oh, boy! It’s been a great start, yeah. It’s been a fast start. Things are very busy at the commission.

Ted Simons:
Let’s start with the concept of the renewable energy standard and increasing that from what it is now, to what, 25% by 2025?

Kris Mayes:
Well, right now it's 15% by 2025, and I have called for increasing it to 25%, which would put Arizona sort of back at the front of the pack among all of those states. There are about 30 states right now that have a renewable energy standard. Right now we have the most aggressive requirement for solar rooftops. But, as a total overall requirement, the 15% is not necessarily very aggressive among the 30 states that already have a renewable energy standard. I think we ought to look at taking to it 25%.

Ted Simons:
There has been some fussing and fighting over even the 15%. Is 2025 doable?

Kris Mayes:
I think it is. And you're right, there has been some fighting over that. We're being sued by the Goldwater Institute as we speak for doing what we did. Some people think that we didn't do enough, some think that we did too much. Maybe that says we did exactly what with we ought to have done. But I think it's time to start looking at that. It's pretty clear to everybody that our utilities are capable of doing more renewable energy. Some of them now are so much on the bandwagon that they're actually willing to do more than we have required, so I think we ought to shoot a little bit higher.

Ted Simons:
For those who say we should hold off on shooting for anything until the cost of this stuff goes down, you respond.

Kris Mayes:
First of all, the cost of it compared to fossil fuels, already is beginning to look competitive, at least with regard to wind. Solar, we believe within the next four years, will be cost competitive. And when the federal government passes a cap and trade program, which will put additional expenses on coal-fired electricity, it's going to make renewable energy look very cost competitive. And t would make us look very foolish if we didn't do this now.

Ted Simons:
So in other words, if you wait until it becomes competitive, you are already behind the game.

Kris Mayes:
We would be way behind the curve. One of the things we're trying to do with the renewable energy standard at the Commission is drive the price of renewable energy down. When you drive up demand, you create a demand for technology. Some of that technology is being developed right here at Arizona State University, in our School of Sustainability, in our engineering school here. So, what we're trying to do is drive down the price of renewable energy so it's cost competitive, and so that we can really mainstream the technology into our utility system.

Ted Simons:
What are the latest thoughts regarding transmission issues with alternative energy?

Kris Mayes:
Critical piece of it. And probably a lot of folks don't realize how important transmission is to making sure that Arizona becomes the solar energy capitol of the world. Because you can have all the standards in the world; you can have 15%, 25%, but if you can't get the energy to the cities and the people who need it and who would use it, what's the point? A lot of the energy, we know we've got about 10,000 meg watts in the desert between Yuma and Phoenix available for solar energy. There's 10,000 meg watts of solar energy there but we need the powerlines to get that into Phoenix and then even potentially into Los Angeles. When you do that, you will start to see 100-megawatt, 200-megawatt projects built out in the desert. Then I believe you will start to see manufacturers of that solar equipment locate in the state of Arizona. That's what we want to see. We want to bring ourselves out of this situation we find ourselves in where we're totally dependent and tied to the housing industry. Why not diversify our economy with something that we have?

Ted Simons:
But you know that there are those who say, these are great ideas, once the free market gets there, they’re going to be wonderful ideas. But right now the free market isn't there.

Kris Mayes:
The problem with that argument is that we're not talking about the free market, we're talking about utilities. If utilities had their way, they are monopolies, so they don't operate in a free market. They would never do renewable energy, because it's not what they know. My job as a regulator is to say, look, you're going down a foolish path. We need to diversify. We also know there are huge environmental benefits associated with renewable energy. The renewable standard as it stands now we prevent the emission of 93 billion pounds of carbon dioxide into Arizona’s atmosphere alone. Imagine what would happen if we increased that standard. The same goes for knocks and socks and water saved.

Ted Simons:
Yeah, and I want to get to water conservation here in a second, but you mentioned that some of the utilities are almost too gung ho on some of this stuff. What kind of response are you getting from utilities?

Kris Mayes:
A very different response than we saw five years ago. They were coming dragging their heels and kicking and screaming into this new era. Now, frankly, I do have to give some credit to companies like Arizona Public Service, which has taken a lead role. They went out and signed the contract with Solano, the Spanish company Abengoa is going to build that near Gila Bend. So those companies have seized this, not necessarily because they are controlled by a bunch of environmentalists, let's face it. What they see is that it's good for their bottom line. What they see coming is cap and trade, which is going to make carbon-fired electricity much more expensive. The fact of the matter is, solar energy in four years is going to be cost competitive. Let's start building it now.

Ted Simons:
When we talk about alternative energy conservation being green, these sorts of things, we don't think much about water. Yet that is a crucial aspect and something I know the commission is very much involved in here. Talk to us about conservation issues regarding water.

Ted Simons:
First of all, we regulate 350 private water companies in the state of Arizona. We have a huge role in water conservation. The commission quietly has become a leader in water conservation. We have gone beyond any branch of Arizona government in requiring our companies to adopt water conservation measures. We have a provision now that tells our water they companies cannot use groundwater for golf courses, and we are making companies that are outside of an act of management area adopt more water conservation measures that are actually required by the Arizona Department of Water Resources. I would like to expand that. We just have to. Regardless of the snowpack we got this year, we're still in a drought and we probably still will be.

Ted Simons:
When it comes to conservation measures what kind of response are you getting from water companies?

Kris Mayes:
They have been a little bit reluctant to adopt those. But when you allow for some degree of cost recovery associated with those conservation measures, they are a little bit more sanguine about it. The fact of the matter is, like with electric companies, when we ask them to adopt energy efficiency programs, the water companies are losing revenues when people don't use the water. So it's a tough -- it's a difficult balance to strike.

Ted Simons:
Speaking of a difficult balance, the state is in a financial crisis right now, we all understand that. How do you get conservation measures, how do you get thinking about the future, those sorts of ideas involved in a situation that's pretty tough right now when even the present day is hard to figure out?

Kris Mayes:
It is hard. Whether it's our renewable energy programs and trying to get people to put solar energy panels on the rooftops or our energy efficiency programs with the utilities that we’re trying to expand, or water conservation measures, it becomes more and more difficult when people just don't have that discretionary cash to spend. We have to be more creative about how we adopt these programs. In the case of solar, I think we'll encourage the leasing of solar panels to folks and loan programs. In the case of energy efficiency, you just have to go out and make the case, this is going to save you money over time. And it will. And it will save the state of Arizona a lot of money over time. Energy efficiency is the cheapest form of electricity that we can produce because it's not producing electricity.

Ted Simons:
That’s the nega-watts, correct.

Kris Mayes:
Exactly, the negawatt, which is basically negative energy. It comes at price of about a cent per kilowatt hour, very cheap when you compare that to the eight to nine cents it generally costs us to produce electricity. We have to go out and offer people rebates for C.F.L. light bulbs and air-conditioning systems that are efficient, and to help people make their homes more energy efficient.

Ted Simons:
Very good. Kris, thank you so much for joining us. We appreciate it.

Kris Mayes:
Thank you, Ted. Good to be here.

Ted Simons:
That’s it for now. Thank you so much for joining us, I’m Ted Simons, you have a great evening.

Tax Advice

  |   Video
  • Bill Brunson of the Phoenix IRS office and Dan Zemke of the Arizona Department of Revenue explain changes in tax laws and offer tips on filing your taxes.
Guests:
  • Bill Brunson - Phoenix office,Internal Revenue Service
  • Dan Zemke - Arizona Department of Revenue


View Transcript
Ted Simons:
Hello, and welcome to "Horizon," I’m Ted Simons. Last year 58% of taxpayers who were eligible filed their taxes electronically. In Arizona, about 64% of taxpayers are expected to e-file their returns this tax season. There are some changes in e-filing and there are new tax laws on both the state and federal levels, including one that could benefit homeowners who have already paid off their mortgages. Recently, Bill Brunson of the Phoenix office of the Internal Revenue Service and Dan Zemke of the Arizona Department of Revenue sat down to talk about those changes.

Ted Simons:
All right, Bill, changes in federal tax laws that we really need to know about.

Bill Brunson:
There is an additional standard deduction for individuals who have paid off their house. If you are an individual who can’t itemize, and are paying local and state property taxes, then you're eligible for an additional standard deduction of a thousand dollars for a married couple filing jointly, or an additional five hundred dollars for other filing statuses. There is a recovery rebate credit. Last year it was the economic stimulus payment. Now it's changed to the recovery rebate credit. Let's say you didn't claim that economic stimulus payment. You still have an opportunity to file your 2008 return and claim that credit on the 2008 return you're filing this year. If there's been a change in your lifestyle, such as in 2007 you were being claimed as a dependent and now you're not, you may be eligible for this type of money. If you adopted a child or had a child during the year, that could cause an increase. There's a worksheet to go through to determine if they have additional monies coming to them. That is online as well as in the paper form, to see if you do have additional monies in this area.

Ted Simons:
Real quickly, back to the housing change. It's the primary home only, not a second home, not a vacation home?

Bill Brunson:
We’re talking about a credit on real property taxes paid. To the best of my knowledge, it's going to be on any sort of real property taxes that you're paying, so that may include that. But I’m not certain. That's why we have a phone line established for folks to call about stuff that I don’t know and that you’re going to ask. And that's 1-800-829-1040. Or they can log on to our website and probably they can find the answer there, too.

Ted Simons:
We do have that website and we'll get it up there as soon as we can. Dan, as far as Arizona tax laws, any big changes?

Dan Zemke:
There really were no big changes this year. The standard deduction was increased slightly for inflation. You'll notice the green party is now there as someone you can make a political contribution to, and you can take a deduction for contributions to a 529 college savings plan, up to $750 as a single individual, $1500 as a married couple filing jointly, and it doesn't matter, it isn't limited to the Arizona 529 plans, it can be from any state.

Ted Simons:
Okay. Good. As far as e-filing, we talked about changes to e-filing. First of all, let's talk about e-filing in general, and what kind of changes we saw.

Bill Brunson:
Electronic filed tax returns are fast, accurate and secure. They’re fast in the sense that, 48 hours after you've transmitted that item to the IRS, we can let you know we've received it and are processing it. They’re accurate in the sense that the software does the math for you. There's almost no error associated with an electronically filed tax return. And it's secure in the sense that if you have a refund coming, those monies can be directly deposited in your savings or checking account in as little as 10 days, and that check can’t get lost or stolen in the mail. Also, by electronically filing you're saving the federal government money. It's about a 35-cent cost for the government to process an electronically filed tax return. If you submit it on paper, it's about $2.87. So you’re saving the federal government money, which in turn saves your tax dollars. And it's a much more accurate and secure means.

Ted Simons:
Dan, are more Arizonans e-filing? Are more figuring it out here?

Dan Zemke:
Yes, they are. Each year the number increases. In fact, last year it went from roughly 45% of the people to 55%, and we expect more this year.

Ted Simons:
How does that compare nationwide?

Dan Zemke:
We run slightly behind the IRS, largely because they were involved in it before we were, and they get a lot more publicity on it than we do.

Ted Simons:
What is Free File?

Bill Brunson:
Free File allows a taxpayer to go to IRS.gov, click on a Free File icon and choose now between two ways. They can go through assisted Free File, which offers 20 different software providers. The key here is that your adjusted gross income must be $58,000 or less in order to use that particular item. Now we've come out with a new item. It's called fillable forms. That allows anybody, without any sort of constriction on income amounts, to fill out forms and then they automatically will calculate. And then you can transmit and get a copy of that item back. It's the same as if you were to use the assisted Free File. It's an electronically filed return, so you now have two options when you click on the Free File icon on IRS.gov. The key with the unassisted forms is that we're looking at individuals that most likely have filed a return in the past themselves, and don't need that by the hand assistance, if you were to go to the assisted Free File.

Ted Simons:
Are those programs that help online: are those free?

Bill Brunson:
Yes, they are. There is an agreement with a consortium of tax software companies that they don't charge for their services that they are providing. The key is that you have to go to IRS.gov and click on that Free File icon. If you go to one of those software providers outside of IRS.gov, then it's whatever they are willing to charge and you're willing to pay.

Ted Simons:
All right. As far as scams making the rounds, I know there was an e-mail scam out there of late regarding, you know, we're the IRS, contact us. It doesn't sound right.

Bill Brunson:
People should always be hesitant when they receive unsolicited e-mail. Especially if they are going to, say, ask for something that the IRS already has, like your social security number. If you receive an unsolicited email asking you for specific information about your personal finances and your identity, don't click on that link. Don’t click on that attachment. Don't respond to it. You can send that item to phishing@IRS.gov. This will allow our system to shut down that website and hopefully catch these tax crooks. But the key here, folks, is that it is unsolicited e-mail that you're receiving from an unknown third party. Don't fall for it.

Ted Simons:
Okay. As far as payment, now, you can pay by credit card, correct?

Dan Zemke:
That’s correct. You can pay by credit card. By electronic check. Basically you go to the website and go to the payment area, determine how much you want to pay, and when you want to pay it, as long as you choose a date before April 15th. And the money will be taken from your account at that particular time. You don't have to send in a check. So it's much easier for you, and easier for the state, as well, because we don't have to process that check by hand.

Ted Simons:
State and federal, start with state: what happens if I can't pay?

Dan Zemke:
If you can't pay, please file on time. That way you eliminate any possibility of a late filing penalty. And contact us after you've filed that return and say, I know I owe this much, I just can't pay it right now. What kind of arrangements can I make? We will make payment arrangements so that you can get that liability taken care of.

Ted Simons:
Does it make sense to just pay as much as you can, and then contact? Or do you contact before you pay as much as you can?

Bill Brunson:
You need to file the tax return to establish the amount of the liability. So that's why Dan and the IRS would suggest to the taxpayer that, when you file the return, pay what you can of that liability that you think that you owe, then contact either the Arizona Department of Revenue or the Internal Revenue Service to determine the exact amount, and then we can work out a payment arrangement with you. We do this all the time.

Ted Simons:
Lots of folks have lost their homes through foreclosure. What do they need to know?

Bill Brunson:
Well, there will be a particular form they will have to attach to their return this year. It deals with indebtedness that is forgiven. There will probably also be an information return, a 1099-C issued by that mortgage lender to that particular individual who lost their home due to foreclosure or some sort of short sale. In the past, any monies that had been forgiven that you didn’t have to pay, you had to include that amount into your taxable income. That's not the case anymore. If we're talking about a foreclosure after January 1st, 2007, and it was on a principal residence, not on a secondary house, and if the mortgage was $2 million or less. So if you have a situation like that, which I think would meet most criteria here in the Phoenix metropolitan area, then you have to describe it, show it to the IRS with a particular new form. But it's not going to cause you any additional taxes.

Ted Simons:
Someone lost their job in 2008; again, what do they need to know?

Bill Brunson:
If you receive unemployment compensation, that is taxable and includable on the return in the year that you receive it. You should alsoreceive an information return from the payor, a 1099-G, giving you that amount. It's the same thing with severance pay, it’s the same thing with vacation pay, sick pay. Those amounts are fully taxable and includable on your return.

Ted Simons:
Okay, but, things like public assistance, things like food stamps: those are not, correct?

Bill Brunson:
That’s correct, Ted, they are not taxable.

Ted Simons:
Okay. Expenses for a job search? A lot of folks are looking for jobs.

Bill Brunson:
Generally speaking, that could be an itemization, but what you’re looking at is a threshold of 2% above your adjusted gross income before those costs give you a tax benefit. On the federal side of the house, you have to exceed 7.5% of your adjusted gross income for medical expenses. Now, that's different from what is on the state side, right, Dan?

Dan Zemke:
Correct, the state allows 100% on all out-of-pocket medical expenses. A number of people will itemize on the state return that don't itemize on the federal return. If you take standard on the federal return, you can still itemize state. If you’ve got medical expenses, it's a good idea to at least look at it.

Ted Simons:
Last question, from both of you: what do people look for in a tax advisor? What should you look for? What should you look out for?

Bill Brunson:
That’s an excellent question, because this is the time of year that people are going to go to a paid preparer for that sort of assistance. Choose wisely. Choose like you're choosing a physician for your family. Look for somebody that's been in the business for a long time. Look for somebody that's going to be there after the filing season. Look for somebody that's gone back to the schoolhouse to learn about the new tax laws, that can explain those items to you as they relate to your specific facts and circumstances. A paid preparer, by law on the federal side, is required to sign that return and should do so willingly. They should also provide you with a copy of the return. You, the taxpayer, never want to sign a blank return, nor do you want to sign one in pencil. You want to look out for the bad tax preparer. These are the guys who say, I can get you the biggest refund in town. Or, let me base my fee on the amount of the refund I can get back for you. Those are red flags. The bottom line here is that you are responsible as the individual who signs that return. Review it before you sign it. If you have any questions, ask them. Then you shouldn't have a problem.

Ted Simons:
Seems to make sense.

Dan Zemke:
Just remember, you are responsible for your tax return. Not the person -- the person who prepared it.

Ted Simons:
Thank you both, good information, thanks for joining us.

Bill Brunson:
Thank you.

Dan Zemke:
Thank you.

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