Ted Simons: Hello, and welcome to "Horizon." I'm Ted Simons. Joining me tonight are Casey Newton of "The Arizona Republic." Mark Brodie of KJZZ radio. And Matt Benson of "The Arizona Republic." State deficit now at $2 billion and counting. Who is doing the counting, Matt? Where are we getting these numbers from?
Matt Benson: The finance committee. A panel of experts from around the state. University of Arizona, Arizona university, large corporations -- all of their financial gurus get together a few times a year and come up with these economic and fiscal forecasts.
Ted Simons: We had 1.5 billion for a long time, now we're up to $2 billion. What happened?
Matt benson: The economy continues to slide and a big part, state revenues continue to under-perform. So the forecast goes from $1.5 billion to $2 billion.
Ted Simons: Fiscal year 2011, over $3 billion?
Casey Newton: $3.3 billion is what we're being told. It starts on July 30th of next year. By that time, in theory, our lawmakers have to cut $5.3 billion from the budget. The $2 billion budget deficit we have is equal to one-fifth of the entire general fund.
Mark Brodie: Yeah, as Casey said, the whole budget is only $9 billion to $10 billion in a single year. That's a big chunk out of a state budget.
Ted Simons: What reaction are we getting from the lawmakers and governor?
Matt Benson: Well none of this is a surprise. They've known the numbers were getting worse and it was expected we were looking at a $2 billion shortfall. Basically, if you're the governor, this reinforces what you've been saying. We need a temporary tax increase. Lawmakers are saying, Democrats say we're on board, and the Republicans are also pushing for proposition 105 reform.
Ted Simons: Interesting with the Democrats. I mean, does it sound like with these kind of numbers coming in, that could be a tipping point for them?
Matt Benson: It may be, but the question is, is it too late in the year? We're already practically out of 2009 and you may be looking at a situation where you get something on the ballot that helps you in 2011 which starts in July. But in terms of 2010 they may be alone.
Casey Newton: I talked to a democrat from Phoenix and he said he's hoping these new deficit numbers give some leverage to the Democrats who were hoping to sit down with Brewer and work out a budget agreement that would be more favorable to them. Get the tax reforms they're looking for that don't just involve a tax cut.
Mark Brodie: One of the issues that a lot of Democrats had initially with the temporary sales tax increase that the governor proposed, their concern was that whatever money raised would go to fill in money that would leave because of the repeal of the statewide equalization property tax. So, now that the governor has vetoed that -- she vetoed that along with a couple of other budget provisions during the special session -- it might lead some Democrats to get back on board.
Ted Simons: Some other ideas… I know representative Kavanagh was showing that this shows that it's got -- we've got to get to the voters and show them what's going on. Special session has it happen -- when it happens, what changes?
Matt Benson: It probably has to happen before Thanksgiving. If you don't get it done before Thanksgiving, it’s probably not going to happen at all because then you get into the holidays and then you're in the regular session in January. Do we do some of the fixes from the individual agencies that have cash crunch problems or get into broader issues, calling a special election, as representative Kavanagh wants and really taking a big whack at the shortfall.
Ted Simons: Is it your impression with these number, with crisis sometimes comes consensus, compromise? Are you sensing that or do these number further entrench both sides?
Casey Newton: I'm afraid that might be the case. If you're a Republican, this points to the need to cut government even further. We simply don't have the spending to pay for the programs is what Republicans tell you. Democrats say exactly the opposite. This just shows that revenues aren't paying for the programs we need to provide our citizens with.
Mark Brodie: I'm not sure consensus is the word I would associate with what's going on at the capital.
Ted Simons: Even with $3.3 billion for fiscal year '11 and still, it's my way or the highway, huh?
Mark Brodie: Well, depending on -- yeah, a couple of potential different highways but I think the Democrats have what they want to do. The Republicans, what they want to do and there's probably some ideas from each that the other can support but overall, we saw -- we saw this story in the regular session and the special session earlier this year, the problem was not as big, but still a big problem and very little consensus.
Matt Benson: We're coming into 2010, the governor's office will be up. The attorney general will be up and Terry Goddard is running for governor and you have huge political implications and it's not the right atmosphere you generally see for a lot of consensus.
Ted Simons: I know that representative Kavanagh also suggested maybe 15% cuts that the governor requested be submitted from agency heads to show what would happen, he's saying if it's this bad, we may need 15% cuts. We have DES and DHS, the latest to come on board show what happened. A lot of things would happen with that %15 cut.
Casey Newton: That's right. You take your pick of the social programs, it's probably in danger of being reduced or eliminated. The department of economic security, one item, they're talking about reducing cash assistance to needy families that make less than the federal poverty level. If you've gotten that assistance for three years, you would not be eligible for it. So overnight, if they get red of this, 10,000 families and 17,000 children simply wouldn’t get that assistance anymore.
Ted Simons: And we've got cuts for services to the elderly and domestic violence victims, folks with developmental disabilities. DHS cutting services and housing for the mentally ill. Regarding the 15% scenarios, critics say it's just a way for the governor to scare folks into saying call their representative.. Are these scare tactics, A, and are they working?
Casey Newton: Maybe you could say they were scare tactics based on a $1.5 billion deficit. But the deficit is now one-third larger than we thought it was last week. Even somebody like John Kavanagh, who said we're not going to need to cut all that $5 billion dollars, now it’s 2 billion. So picture looks different.
Matt Benson: In 2011, most of the federal money has run dry. This is the cliff that everyone has been talking about it. We've known it's coming. The economy is still laying on its back and the federal money runs out.
Ted Simons: I know at KJZZ you're doing more in the way of audience interaction shows. Are people starting to pay -- the governor is doing this so that we can see the cuts -- oh, don't do that. Are they doing that, or are people just still not paying too much attention do you think?
Mark Brodie: I think to an extent people are paying attention. As much as they ever do. I think when you hear about specific programs like Casey referenced, that are near and dear to people's lives, I think people definitely talk about them. And the other thing, following up on what Matt said, not only is there a federal stimulus cliff coming in a year for two, but also a lot of the budgeting techniques and gimmicks had been used up and those are things that the lawmakers and governor won't be able to do to fix the deficit that they had done in previous years and even up to this year.
Ted Simons: One small corner, I guess, of the budget is state parks and perennially under-funded and getting worse. What are you saying, license plate surcharge? Do I have to pay this?
Casey Newton: You would be able to opt out. This is a proposal that bubbled up from the Morrison institute at ASU. The state parks foundation hired them to try and come up with ways to generate revenue. They said what if you were able to pay $10 or $15 every time you registered your vehicle and then you would able to enter a park without paying an additional fee and that might be able to pay the maintenance of the parks. Which have already been closed down in some cases since there’s not enough money to pay for them.
Ted Simons: And the idea is that you need a stable funding source for Arizona state parks which are at or near the bottom in terms of -- the idea of going to the legislature and saying, hey, let's put a surcharge on vehicle license. How far is that gonna go?
Matt Benson: It's hard to say. This is an idea that's floated out there. The reaction, I don't know that many lawmakers have had much time to absorb this, let alone react.
Casey Newton: The ones I spoke to yesterday all said if we're going to do it, it has to be something you can opt out of. Even Democrats are not going to support a fee that's mandatory. There are many rural legislators who have these state parks in their districts and those are sources of economic development and tourism for them, so they may face pressure to keep them open.
Mark Brodie: Some of the rural districts, you talk to them, and -- districts and they're major sources of economic movement and a source of money and in some cases, the biggest one in there. You might see support from sources that you might not otherwise think you would.
Ted Simons: Also, we kinda discussed this earlier two-thirds -- we need a two-thirds vote from the legislature on this. Is this taxing? What do we got here?
Casey Newton: This is a subject of some dispute. It would be a fee increase. There's a law that says if you're going to generate new revenue, you need a two-thirds vote from the legislature. So the author of this report said in his opinion, and he's an attorney, you would probably need a two-thirds vote of the legislature. On the other hand, as Matt points out, sometimes the legislature raises fees without getting their approval.
Matt Benson: And we just saw the fee increase on childcare centers. How does that differ from that? I think it's a matter of dispute.
Ted Simons: No dispute here, the governor has a new chief of staff. Old is out and new is in.
Matt Benson: You're talking about Eileen Klein who was the budget advisory. Now the chief of staff. The former chief is out. He's going to the Republican governor's association.
Ted Simons: Is that a surprise?
Matt Benson: It was abrupt. There’s been unhappiness with Kevin Tyne, there's been allegations of micromanaging and the governor's office has come under scrutiny for not having a more cohesive agenda. And he's taken some of heat for that.
Casey Newton: They said they had more contact with the governor's office in the last 48 hours than the last seven months with Kevin Tyne. And he was seen by some as somebody who was hard to work with.
Mark Brodie: He's seems to have taken the blame for what happens when the governor is out of the loop, for people who think she was. For those who think she was and those instances and negotiations that she had with the legislature and the hope is now with Eileen Klein in that office, having that fiscal background, the budget background, that maybe things will move a little bit more smoothly.
Ted Simons: Often in these cases, the question is, did they jump or were they pushed? In this case, it's curious, because he's going –Tyne- somewhere where he may be able to help the governor even more. And that is in terms of the election.
Matt Benson: Absolutely, the Republican governor's association will play a key role in the 2010 race for governor and him being there can only help Governor Brewer in terms of helping make sure that some of that funding make its way to the Arizona race to benefit her. The question will be kind of, A, when does she get in? Does she get into the race and what I'm told she is going to run.
Ted Simons: Ok. We'll keep an eye on that one. We had her on this week and I asked her, and she didn't respond. I gave her an opportunity to announce right here on "Horizon," and she didn't take it. Does it sound like it's a de facto, I'm going to run?
Casey Newton: I think so. If you've got a person in a position to do a lot of fund-raising for you and work easily with the legislature, I think that sends a signal and there was some polling this week that shows that the governor is outperforming others that might want to get in the race.
Ted Simons: Would you be surprised if an immediate thawing was seen in the budget negotiations?
Mark Brodie: I'm not sure I would be surprised. It would probably be welcomed by a number of members of legislature, but I also wonder if enough of them would be open to a thaw, because a lot of, especially Republicans were really upset when the governor vetoed the bill that had the equalization property tax repeal in it. They were ticked off by that. So I think it will be interesting to see whether or not there is able to be a thaw.
Casey Newton: The legislators, the question isn't has the chief of staff changed. It's going to be has Jan Brewer changed.
Ted Simons: Alright, good point. Speaking of chief of staff and governor and head of states, got another poll out here and it shows that Terry Goddard, it really is his election right now – very early- but it really is his to win or lose.
Matt Benson: It certainly seems that way. The poll you're referring to a business group, showed that the closest opponent to Terry Goddard among Republicans was state treasurer, Dean Martin. Six points, which is not significant, but far closer than other candidates.
Ted Simons: Why is he doing reasonably well and why are folks like Ken Bennett, back there, 15 some odd points, a relatively well known name and you have John Munger, who’s not the best of known names up here north of Tucson, why are these guys floundering and the Dean Martins doing so well?
Mark Brodie: I kind of go back when we talk about stuff like this, a year or so out, that's so long in political terms. John Munger recently, a month or so ago, started his campaign. Ken Bennett, for all that people at the capital know him, he's not necessarily the most high-profile person in the state. And I think when we get considerably closer and everybody who is going to announce has announced, I think that’s when we need to look at what the polls are saying.
Casey Newton: I think the terms of this campaign haven't been set out. We can guess, but people are talking about them in any systematic way so it's difficult for voters to gauge which of the potential Republican candidates might be better than the others.
Matt Benson: One of the key things from the poll, is, yes, Terry Goddard is up significantly on every Republican that was in the poll, but only about 50% against Symington in the head-to-head match-up. And everyone else he's under 50% and that's usually seen as a critical threshold because a lot of people are still undecided. And that means a lot of people are still waiting out there, they haven’t made up their minds.
Ted Simons: Is there someone waiting out there to announce their interest? Is there someone snooping around?
Matt Benson: The big name is Dean Martin and, of course, he's one we've been waiting on. We expect him to get in. Outside of that, I don't believe there's anyone else of true significance.
Ted Simons: We should have mention that paradise valley wasn't even mentioned.
Matt Benson: He's one that is exploring, I do expect him to get in the race.
Ted Simons: We had the press conference Wednesday regarding illegal immigration. Matt, you were there.
Matt Benson: Yep.
Ted Simons: And describe the scene. This was very interesting, some very hawkish folks on stage and in front of the microphones and saying, one way or the other, we're going to get this done.
Matt Benson: It was an emotional gathering. And you don't typically see that, but you had dozens of folks in yellow shirts with the no sanctuary city slogans on them, in some cases getting into arguments with the media. A couple of women standing in front of TV cameras and wouldn't move. It was -- this was a crowd that was angry. And so in that respect, it was quite interesting. Russell Pearce, Sheriff Arpaio, Andrew Thomas-county attorney- J.D. Hayworth was there as well as long as with other folks. Three-pronged kind of attack here on illegal immigration. And this is Russell Pearce's doing.
Matt Benson: This is legislation, his bill. And then running side by side with that will be a citizens' initiative. And basically this is three things. One saying cities cannot have a sanctuary city policy where they basically don't enforce federal immigration law. Or have a policy of not enforcing it or criminalizing the presence of illegal immigrants in Arizona, saying they can be arrested for trespassing and going after toughening the state employer sanctions by giving prosecutors subpoena powers to go after records and witnesses.
Ted Simons: How likely is this to make it through the legislature?
Mark Brodie: Well a couple already have. The trespassing issue has been in the legislature before. I don't remember off the top of my head if it's passed or not.
Casey Newton: It has, Napolitano vetoed.
Mark Brodie: It has. And employer sanctions, not this particular element of it because it's addressing the law that's on the books now. But these are issues that have been before the legislature as Matt said and some have been approved by the legislature only to be vetoed by Governor Napolitano. But, I think one of the interesting things will be how much of this upcoming session will be on non-budget policy type issues. You have to think Russell Pearce would be able to get his bills heard and probably approved because he's got a lot of juice down there. But that's one issue that might be worth keeping an eye on.
Ted Simons: Is this the kind of thing that the threat of initiative that could help push lawmakers? You can change the law but the initiative is going to be difficult to tinker with.
Casey Newton: Yeah, I think that's the case. In the past, the Arizona voters are overwhelmingly in favor of these kinds of measures and even if lawmakers don't for whatever reason manage to pass these in the next session, if it gets on the ballot, there's a good chance most or all will pass.
Matt benson: There was an initiative out there, running side by side and a lot of lawmakers, even those with problems with the bill went ahead and approved it, knowing, hey, this might not be perfect, but we can fix it later. If this initiative goes through, it's there.
Ted Simons: That becomes the threat. Quickly, we don't have too much time, but I did want to get to Andrew Thomas and the board of supervisors saying they're too expensive and don't live in the county and we don't like them and get rid of them.
Casey Newton: Right, they cited the various arcane rules and procedures to say you can't hire these prosecutors and Thomas’ people shot back, and said yes we can and people are brandishing various law dictionaries at each other.
Ted Simons: And the board is basically saying no more suing, no more lawsuits. And the county attorney is saying I’ve always wanted mediation, so does this ever end? Ever stop?
Mark Brodie: It's been going on for so long and there's so many issues between the county attorney and the county sherrif and the board of supervisors and the county manager, and at some point people start forgetting what the original issue was and just remember they don't work together well.
Matt Benson: And who wants a county with no more suing? How fun would that be?
Ted Simons: That's true.
Casey Newton: If Thomas decides to run for attorney general --
Ted Simons: He's saying they're stalling and waiting for him to do that. My question, will Don Stapley get arrested again?
>> It's been several weeks.
>> Before we go, I know you were at the opening of the first Microsoft retail store in the country, right here in the country?
Mark Brodie: First in the country. Hanging out at a mall for work.
Ted Simons: Describe that scene for us.
Mark Brodie: It was interesting because there were a lot of people. I got there about two, two and a half hours before the store opened and there were people stretched sort of through the -- sitting in front of the various stores in the mall and once that curtain came down, it was people streamed into the store and there was almost like a receiving line of Microsoft employees and they were high-fiving people it was very loud and people seemed very excited. The one thing I found interesting, among the people waiting in line, there were more than a few people using apple products to pass the time. Had their Macbooks out or whatever. A lot of the analysts I’ve talked to is the goal for Microsoft is, A, to connect to its customers and stop being seen as a monolithic company. And it's got to make itself cool much like Apple has done with its retail stores.
Ted Simons: Have you been in an apple store?
Mark Brodie: Yeah.
Ted Simons: Compare and contrast.
Mark Brodie: They look similar.
Ted Simons: Doesn't apple sell mostly if not all apple stuff?
Mark Brodie: Yeah.
Ted Simons: This sounds like a best buy.
Mark Brodie: Microsoft doesn't make a lot of things. They make the little music player, the ZUNE. But you can get Sony computers and all different kinds of brands and accessories.
Ted Simons: Was the P.C. guy there from the commercials hanging around there?
Mark Brodie: Neither he nor the Mac person were there.
Casey Newton: They should have found a look-a-like for him. I'm a diehard -- I'm celebrating by buying a new iMac tonight.
Ted Simons: That's the way we like it here on the Journalists' Roundtable. Thank you very much.