Ted Simons: Good evening, and welcome to "Horizon," I'm Ted Simons. Joining me tonight are Mary Jo Pitzl of the "The Arizona Republic," Luige del Puerto of the "Arizona Capitol Times," and Mike Sunnucks of the "Business Journal." Well, a special session to balance the budget ends this week, Mary Jo, with no balanced budget.
MARY JO PITZL: Right. They didn't go in knowing they would get everything balanced, but the hope was they would come really close. They finished up after two weeks still with $700 million yet to close in this year's budget. But the big win from the special session was the vote of a sales tax that will happen in May. If it passes it'll bring money in for next year's budget, another big problem.
Ted Simons: And Luige, borrowing a big one, as well in terMike Sunnucks of future lottery proceeds.
LUIGE DEL PUERTO: They authorized borrowing from the revenue stream of the state lottery, and also are going to create a new state lottery program and extend it until 2035 if I'm not mistaken. And then borrow from the revenue stream off of that. They will do additional sale lease-back of state assets to generate about $300 million.
Ted Simons: The borrowing aspect especially, sounds like it was a close vote and a lot of folks were maybe going back and forth?
LUIGE DEL PUERTO: Borrowing for some is problematic because they think it's a moral issue, it's gambling. They don't think the state should get involved in gambling at all. You always have with gambling or borrowing, people, mostly Republicans who are going to object to it.
MIKE SUNNUCKS: You've had all of these Republicans against these gimmicks in the past, our previous governor proposed a lot of these things. They don't have the money, they have just passed the sales tax thing. They have got to find some new ways. Maybe three years ago Republicans would have thrown their arMike Sunnucks in the air if Napolitano proposed selling state buildings or –she even proposed borrowing against the lottery and they came out against that as early last year. The reality is they have to change a little bit.
MARY JO PITZL: Given that, it was interesting that there were Republicans who said, even though there aren't many options left, they are against the borrowing not only for moral issues, but it's going to cost more down the road and obligate the state for 20 years. Last month the state sold $735 million worth of investment in state buildings, but there is an interest cost with that and there’ll be interest on this, too. For the amount of debt we're taking on, we're going to have to pay back about $3.8 billion of that comes out of the state general fund. That's going to be paid by future generations.
MIKE SUNNUCKS: Some of these guys are against any borrowing, they would do absolutely none. If you look at a business or a person's life, you take out a student loan, a mortgage, a loan for a car. Sometimes you take out loans to get things done, but some of the Republicans down there, I don't think they vote for any borrowing ever.
MARY JO PITZL: But they’re borrowing to just keep the lights on, they are not borrowing to buy a car or make a building, they are borrowing it just to keep salaries going, and some say that is really a bad idea.
LUIGE DEL PUERTO: The interesting thing about these options, they would never have been considered two or three years ago. Passing a sales tax, bonding, borrowing, rollover, this is something that it just shows you that the state is in dire straits. Lawmakers are facing a very difficult problem, the options are very few. In fact, if you really get to it, there are only two options: either increase revenue and do what they have done, or cut. I think they have cut as much as they could.
Ted Simons: Let's talk about the final budget balance bill, which did not go through. The drama is both enormous and complicated. Everyone gets a shot at this. Luige, make it as plain as possible.
LUIGE DEL PUERTO: There is a bill that would roll over a deferred payment to K-12 and universities in the amount of $450 million. House amended that two days ago to say that if we are going enact this bill, it is conditional on a separate bill becoming law. That's the House jobs package bill that House Speaker Kirk AdaMike Sunnucks has introduced. It's difficult not to say that the House is using this special session bill as a leverage to get that jobs package bill out of the legislature. What they did was they amended that particular bill so that the onus was on the Senate to either approve that change or basically kill the bill. The Senate decided there's still time to do it, they killed the bill by adjourning sine die.
Ted Simons: Ok, May Jo, that’s one version now let’s hear your version.
MARY JO PITZL: That pretty much covers it. They tied the cut, this cut which is the education rollover, needed to make this year's budget balance, they tied it to a jobs act that has even yet to see the light of day in the Senate. And the Senate president said we’re not even going to get to that until we balance the budget. It was a bit of a stare-down between the two chambers. After the Senate killed the bill, everybody went home and had a good night's sleep, or maybe a bad night's sleep, and on Thursday the House came back and shut it all down. That's why they still have a budget hold.
MIKE SUNNUCKS: Everybody assumed when the AdaMike Sunnucks jobs bill came out it was somehow linked to getting Republicans to support the sales tax referral. Raising a sales tax even via a referendum is distasteful to a lot of conservatives. The way to get some more of them on board or at least not block it was to say, look, we have these tax cuts to create other jobs. I think we're starting to see those shoes kind of drop here.
Ted Simons: It wasn't the idea from the Senate side that President Burns got Democrats to get on board, especially with the sales tax, not linking it with the jobs bill. Now, out of the blue with this other bill, here comes a link.
MARY JO PITZL: It was really great, great drama. And what was sort of held hostage was the sales tax election. Although the vote to call a sales tax doesn't need any kind of time frame to take effect, doesn't need the Governor's signature, the bill that authorizes them to spend the money and do the mechanics for the election needed to be out of the legislature by this coming Tuesday. For a while it looked like that wasn't going to happen. It raised all kinds of questions as to will we have a sales tax election. I think the bottom line of this is that the House Republicans are really trying to make the point that this jobs bill is very important to them. They want to see this happen this session. They are not going to let this year go without getting the tax cuts and the incentives in that bill.
LUIGE DEL PUERTO: I had a long conversation with Senate President Bob Burns about the jobs package about three days ago. I said, why are you basically holding up the bill? He gave me two reasons. One reason is he gave a commitment to the minority that he's not going to move a tax cut bill during the special session. The other thing is that we are going to finish the budget first, and by that he means fiscal year 2010, the current budget and fiscal year 2011 and after we've done with that then we go ahead and move with this jobs package bill.
MIKE SUNNUCKS: This is AdaMike Sunnucks' baby here, he thinks this is the weapon to grow us out of our financial crisis. We're not going to bring in new revenue unless people are spending money and businesses are creating jobs, et cetera. His argument is we have to get the economy going. I think he's going to be pretty steadfast in getting this through. How linked they are indirectly or directly remains to be seen, but he's not going to give up on this.
LUIGE DEL PUERTO: I've talked to several senators about this jobs package bill, and they are not very hot about this whole thing. Senator Payton told me that the House bills, they never pay attention to them until after the Senate bills are over to the House bills. Then they start to worry, thinking their Senate bills may not get approval at the other chamber.
Ted Simons: Last point on this: How upset is the House with Senate President Burns? How upset are Democrats with speaker AdaMike Sunnucks and everything going on in the House?
MARY JO PITZL: I think the Senate has been saying for the last couple of weeks that the house needs to deal with anger management. It's not so much a partisan split as it is the House and Senate having sort of different views on things. This little event was a way for the House Republicans to try to get Burns' attention. It only served to further entrench his position. You heard the House Republicans yesterday say we're on track to get the budget done, and we'll have next year’s budget done in two weeks.
Ted Simons: Two weeks?
MARY JO PITZL: Two weeks. Mind you, they still haven't closed the deficit for this year's budget. They have a lot of work to do on the 2011 budget, that's not yet begun really. They think they can get it done in two weeks. That’s another way of saying look, there's going to be plenty of time for you in the Senate to deal with this jobs bill.
LUIGE DEL PUERTO: There is one point I want to make very quickly. I talked to Kirk AdaMike Sunnucks about what happened over at the House. Well, the other day, not yesterday, but the other day when the Senate was trying to adjourn the special session. He basically told me that -- I said, one of the state senators is saying that you're taking the Senate hostage by doing what you did. He said -- he didn't directly answer the question. He said there is a legislative process, there was an amendment offered and it passed. So basically he's saying what happened, happened because it's part of the legislative process. He also said there's no disagreement between the Senate Republican leadership and the House and the Republican leadership as far as the content or the policy in the jobs package bill. The problem or disagreement is the timing.
MIKE SUNNUCKS: Interesting to see what Governor Jan Brewer is going to do on this. She’s got a tough primary against Dean Martin and she's for a sales tax increase, which doesn't bode well with a lot of the right wing of her party. If she gets behind this job package and links it to a budget she wants, you know, it can burnish her anti-tax credentials a little better because she's out there pushing a lot of things that the conservative and business wings of the party really like.
Ted Simons: And she's got her own ideas with regard to job growth and the commerce department. We've got legislative turnover, Mary Jo. We’ve got Ed Bunch replacing Jim Waring in the Senate. Who is Ed Bunch?
MARY JO PITZL: Ed Bunch runs a printing business in Cave Creek. He was interested in being appointed to the legislature a couple of years ago when David Burnell Smith was booted because of elections violations. He got the nod I think in large part because he said he would not seek that Senate seat. The other two contenders are Nancy Bartow and Ray Barns, already both running for the Senate seat. Seemed like a safe way, to pick the guy that's not going to be in the race.
Ted Simons: David Brasswell, already making a little noise, photo radar, a little bit of a to-do there. Making his mark I guess already, huh?
LUIGE DEL PUERTO: He's clearly not afraid to speak his mind. If you will, there was a bill that was heard in committee yesterday or the day before, it tweaks pretty much the current system but doesn’t due away. It's one of the very few bills I think that don't try to get rid of the photo enforcement system. There was this one guy, Sean Dow heading a citizens group trying to get rid of photo enforcement. He's saying, you shouldn't be passing bills that would expand photo enforcement. He got into a bit of an exchange with David Brasswell. He didn't like the black and white approach, if you will, that Sean Dow presented during the committee hearing. There was a bit of an exchange there until Linda Grey intervened and said let’s cease with this conversation and let us move on.
MIKE SUNNUCKS: And there's indication that these new appointees might help the budget. Folks like Gorman and Waring are waiting for Shattuck to retire, they were eyeing the seat. They had a lot of political considerations including not wanting to be for tax increases in a Republican primary. They have some newbies in there that maybe won't be as steadfast in opposition, maybe a little more flexible.
MARY JO PITZL: And I think you’ve got to remember who’s appointing these fellows it’s the Maricopa County board of supervisors, where did Jan Brewer serve before going into state government? She was on the Maricopa County board of supervisors and remains tight with members of that board. So you got to figure there’s a bit of an alignment there of interest.
MIKE SUNNUCKS: And the counties, like the cities, are worried about the cuts and the state taking their money. These folks might avoid big cuts.
Ted Simons: We've got to keep it moving here now. What's going on with the business of making it more difficult to get a divorce? What is this all about, Luige?
LUIGE DEL PUERTO: Representative Bartow introduced the bill. What it does, it would I think say that you need 60 days to proceed with a divorce proceeding, and it would extend that to 180 days. The State clearly has an interest in keeping families together and divorce is costly. And the emotional trauma on kids, it's clearly apparent. On the other hand, critics are saying this is another intrusion on the part of the government in lives of private citizens and in some cases marriages may be already hellish, if you will. If you added a few more months to that it will become more difficult.
MIKE SUNNUCKS: It’s basically social conservatives. Like marriage, they want people to stay together, they have an agenda and are basically telling people what to do.
Ted Simons: Speaking of social conservatives, they also push an adoption bill that would favor married parents over a single person if both were equally ready to go, as far as an adoption was concerned. This bill and the divorce bill, a chance of getting out there?
MARY JO PITZL: It’s an election year, Ted. There’s probably a good chance. They are not having a whole lot of opposition through the early committee process.
MIKE SUNNUCKS: I would expect the adoption bill to face a lot of legal challenges. Equal protection type stuff , you know a single person has enough right to try to adopt somebody as a married couple. But there's enough social conservatives down there. Like Mary Jo said, it's an election year, and you can see them glomming on to that.
LUIGE DEL PUERTO: The Governor is a social and fiscal conservative, and this is the year, or last two years have been -- the social conservative members of the Republican Party are seeing this as an opportunity, the fact that the Governor is there, she's a Republican governor. They see it as a chance to really push ahead with their conservative agenda.
Ted Simons: Looks as though everyone and their brother and perhaps their sister and nephew and niece, very prepared to run in congressional District 3 for Shattuck's seat. Phoenix Mayor Phil Gordon making a little noise for a run, perhaps as an Independent?
MIKE SUNNUCKS: He's set up an exploratory organization, as you do at the federal level. He's been doing some polling. He's out there testing the waters. He has high name I.D., he can raise a lot of money and he's a moderate. That could appeal to a lot of parts of that district. He could make a decision in three or four weeks. He can run as a Democrat or test the waters as an Independent. Running as a Democrat is not easy nationally right now, but Phil could possibly buck that trend.
MARY JO PITZL: For the people in the race, there's an Independent yet. There's room on that Independent side. On the Republican side, that roster gets bigger by the day.
Ted Simons: It got bigger today as the son of Dan Quayle, Ben Quayle will be announcing a candidacy.
MIKE SUNNUCKS: His dad announced it on Fox News. Not the candidate, his father. The former vice-president was kind of interesting. He's an attorney, he's an executive at a venture capital firm in Scottsdale, he's 33. He's not really out there other than he's part of the Quayle clan in Paradise Valley.
Ted Simons: He around political things?
LUIGE DEL PUERTO: Like Mike said, I know very little about him except what I've read.
MARY JO PITZL: Got some name I.D. there, though.
MIKE SUNNUCKS: Such a crowded Republican primary. If he's a good candidate, young, personable, he could stand out. Looking at somebody getting 20% could possibly win that thing.
Ted Simons: There could be even more names jumping in.
MARY JO PITZL: Representative Adam Driggs is still weighing the bids, leaning heavily towards getting in. Pauline Morse serving with the Maricopa County Health Board is in the race. One of the few females along with Gorman to seek that seat.
Ted Simons: It suggests that everyone seeMike Sunnucks to think they have got a shot.
MIKE SUNNUCKS: Turnout is going to be important in that. It's going to be a way crowded primary for Republicans. If you can get folks out, or if you've got Gorman who's pretty conservative and can get her base out, you could surprise in this. Somebody like Quayle with a name that, might be enough if he's a decent enough candidate with a lot of money.
Ted Simons: Set to announce, J.D. Hayworth challenging for John McCain's Senate seat.
MIKE SUNNUCKS: Arpaio's sent out a fund-raising letter. He's on the circuit talking to people. This is the official announcement and they will cut the ribbon at the campaign headquarters up on cactus Road. McCain is taking this seriously. He's got a bunch of events scheduled for the same week as J.D.'s announcement, including picking up some endorsements from your typical Republican suburban mayors. McCain is not taking this lightly.
LUIGE DEL PUERTO: The race seeMike Sunnucks to be getting a lot of national attention. Hayworth is running against a guy who was the Republican nominee two years ago.
MARY JO PITZL: I was just going to note I think McCain has an event happening at the same time as J.D.'s announcement on Monday.
MIKE SUNNUCKS: The big challenge for J.D., immigration has been his issue for a long time. He's railed and railed against that. McCain complained about the bailout and the TARP payments. Every piece of information J.D. sends out he talks about the bailout.
Ted Simons: Moving back to policy issues, it sounds like Arizona is quitting, but not totally abandoning the Western Climates Initiative here. What's going on?
MARY JO PITZL: I don't know how new this is, but the Governor issued an executive order and says Arizona is not going to be part of the initiative, in the sense that Arizona is not going to participate in a lot of prograMike Sunnucks and emissions reductions that this effort is leaning towards. But Arizona is still going to be at the table. They want their representative there. She started signaling that last year when she came into office. It's a sort of cautious, go-slow approach on this. The sense is by staying at the table Arizona may have more voice and influence.
Ted Simons: And won't endorse any plans that raise costs and endorse fewer regulations and more of a focus on renewable jobs. Not really a surprise here.
LUIGE DEL PUERTO: Not a surprise, she's been trying to accommodate -- many people in the Republican Party has been really upset by what Napolitano did, be very aggressive in the way states have been dealing with climate change. I think she's trying to accommodate that. She's also -- her self-expressed her objections to what was done before. This is like Mary Jo said, the State's not actually going to withdraw from the Western Climate Initiative. We are just not going to do what they are wanting us to do.
MIKE SUNNUCKS: She's mentioned she didn't like cap and trade and is forming a commission. It'll include a lot of folks from industry that don't want to see a lot of these things going through. You can kind of tell she's not on board.
Ted Simons: Mary Jo, what do we look for now as far as balancing a budget? The House says two weeks. We've got that out there. What else do we look forward to?
MARY JO PITZL: This $450 million rollover for schools, it has to happen by March 31 to have any effect. But there should probably be some action on that. There's a lot of talk about trying to do an 18-month budget and deal with what's left of this year, four and a half months, and next year's all at once. We'll start to see more moving on that but -- but I don't know what the first marker is going to be.
LUIGE DEL PUERTO: The choices for lawmakers are clearly going to be difficult either way. I think it's going to continue to be difficult that challenged in the Senate. There was some flicker of bipartisanship in the last few days with Democrats on board with the sales tax referral, as well as other bills to the Senate. Last year there was virtually no Democrats on board. It would be interesting to see whether they, the Senate, can continue that kind of bipartisan spirit, if you will, in the Senate.
Ted Simons: You think bipartisanship will rear its head any time in the Senate?
MIKE SUNNUCKS: No, I think the wheels are going to fall off the bus again. Their past M.O. is they can't keep it together for that long.
LUIGE DEL PUERTO: I think there's a realization on the part of the Democrats that the Republicans will really only come to them if their votes are needed, as well.
MIKE SUNNUCKS: The governor can step in. She finally cobbled together enough votes to get the sales tax referral through. If she can kind of start to save this project before it starts to fall apart.
Ted Simons: We didn't get a chance to talk about this too much, but Terry Goddard was in the news. This week we find out he wants an agreement on the wire transfers with Western Union. Mary Jo, I think the idea from the Goddard camp is, see, we're not campaigning because we're doing things.
MARY JO PITZL: He was in the news in his role on the State Attorney General to say, look, we've won this settlement and it is going to bring money to the state and resolve some of these issues on the border. I'm a leader working quietly to make progress, but not out banging a drum on the campaign trail.
MIKE SUNNUCKS: He's going down next week to meet with the Attorney General of Mexico, so it's -- I'm not being partisan, it's that I'm trying to solve probleMike Sunnucks.
Ted Simons: We should be having Attorney General Goddard on the program next week so we'll find out how the visit went. Thank you so much, great conversation.
LUIGE DEL PUERTO: Thanks for having us.