Ted Simons: A one-cent increase in the state sales tax sought by Governor Jan Brewer is headed for the ballot, with the campaign to get voters to approve the tax already underway. A report by ASU economists shows that cuts to the Arizona Health Care Cost Containment System could lead to billions of lost dollars and thousands of lost jobs. Here now to discuss those 2 stories and more is Arizona Governor Jan Brewer.
Jan Brewer: Good to see you, Ted.
Ted Simons: I know you've just come over here from budget meetings, what's going on, what can you tell us?
Jan Brewer: We're working trying to get all the I's dotted and the T's crossed. And try to come to an agreement. The leadership is trying to get the information out to small groups and to their members. I am encouraged that we will get this thing done and I’m hopeful that it'll happen soon.
Ted Simons: We've heard maybe even by the end of the week. Is that possible?
Jan Brewer: I believe that is possible.
Ted Simons: The idea of maybe a two-track system, with triggers in place, should the one track -- which includes the sales tax -- not happen. Is that what you're seeing, as well?
Jan Brewer: Absolutely. I think we probably all agreed and determined at the beginning that was the track we should go down, to have the budget that we present, and then send the voters the proposal that would allow them to decide if they wanted to either support a one-cent temporary sales tax or cut another $1 billion out of the budget that was passed. It all rests in their hands.
Ted Simons: Will these triggers be somewhat clear, because it does rest in the voters' hands, it'll be clear to them what happens if the vote either passes or fails?
Jan Brewer: Exactly, it will.
Ted Simons: We've had Treasurer Dean Martin on talking about a one-time refinance of debt as way to not only avoid cuts but to keep from selling off buildings. What do you make of that idea?
Jan Brewer: Well, it's no different than you or I consolidating our debt. It increases our debt $2.5 billion more dollars than we're already in debt for. It's not a solution or anything new, not anything that we has taken very seriously. It was just probably thrown out there and not well thought out. A common person would say no to a solution like that.
Ted Simons: The solution is obviously within the details of the budget we will be getting eventually. The big solution for you has been this temporary one-cent sales tax for three years. Are you comfortable being the leader of this campaign?
Jan Brewer: Well, you know, I had to take a position and get my hands around this situation early on. I, too, resisted for the first months going in, and realizing just how catastrophic this situation was, I kept having the finest people, economists in my office and from the universities within the state saying, we've got to figure out how we can do this. Every one came back and said there is no way you're going to turn the state around without decimating the State of Arizona unless you get more revenue in. Every time they showed me the numbers it just never changed. Finally I determined, someone who has never voted for a tax increase in her life as a public official, I had to be a leader and tell the people the truth and move forward. I believe that based on the information that's been provided to me and my history of being a fiscal conservative, that I will take that message out there and take off my political hat, put my political career behind me and try to solve the problem we're all facing. It's important to me; I'm a truth-teller.
Ted Simons: You mentioned politics, it is political. Already we're hearing a lot of people, and they’ve been saying it all along that you will be presiding, you're pushing for the largest tax increase in Arizona history. How do you respond?
Jan Brewer: It's the right thing to do. Sometimes when we're faced with challenges it's really a test of your values and a test of your character. Doing the hard thing is not an easy thing to do sometimes, it takes courage but it's the right thing to do. I just give people the facts, the information, and they can decide. You know, we have already reduced a billion dollars out of the budget in the State of Arizona and that made a lot of people uncomfortable. I've cut government more than any other governor in the history of our state. Now I'm preparing to cut another billion out of the current budget that we're in session for right now. That's real painful, real difficult. We're going to take 310,000 people off of AHCCCS, were going to take 47,000 kids off of kids care, 17,000 SMI, seriously mentally ill people off insurance, that's half that population. A 5% pay cut, employees laid off, getting ready to close down the Department of Juvenile Corrections, send it to the counties. We have done some really dramatic cuts which are necessary. Then if this tax does not pass, that means that we're going to have another billion dollars on top of it. It's dramatic. We are worse off, Ted, than any other state in the country. We're worse off than Michigan and California, per capita. That's really bad. It's been, you know, five years prior to me becoming governor of spending outrageously, spending the rainy day fund and it wasn't even raining. New programs, spending, spending, spending. No one could say no. And now today we're faced with the economic downturn and now we can't sustain it. Then of course we have to live with the mandates. The mandates from the federal government. We have to live by the mandates from the voters propositions that are voted on and protected by Proposition 105. So it's more complicated than what it sounds at the first blush.
Ted Simons: You mentioned that no one could say no as far as spending increases were concerned, for many years in Arizona, when it comes to personal income tax especially, no one seems to want to say yes to increasing those particular taxes. There's a line of thought a line of reasoning out there, if those tax cuts had not happened so regularly and effectively, there still would be -- the state would be in a better position. I want to ask you, you were in the legislature. Would that Jan Brewer, knowing what you know now, in this situation, as a fiscal conservative, never voting for a tax increase, some of those votes do you look back on and say, maybe we should have bumped things up a little bit to avoid a bad situation when the entire economy around the world goes in the tank?
Jan Brewer: I think when I was in the legislature things weren't as crazy as they have been in the last 12, 10 years. There was a more realistic approach to it. We've always known the Arizona tax system is out of whack. And it’s something that needs to be addressed. I've called for tax reform. People say, and I agree, we need to go in and look at tax cuts to make it more profitable and competitive, if you will, for businesses. That's what brings jobs into the community into the state of Arizona. We have to reward those businesses that have stuck it out with us during the tough times. Then we need to be competitive with Texas and New Mexico and Nevada to bring new businesses into Arizona. But it's got to happen -- and I'm all for it -- but it's got to happen on a delayed basis. We need to look at the whole structure and reform how Arizona operates to be successful. That's what I've been saying for a year and a half now.
Ted Simons: You mentioned the health care, the budget cuts there, and the plan that you have. I know we had an ASU study coming out, ending as you mentioned 300,000 -- health care for 300,000, behavioral health services for 40,000 adults and kids, mixing kids care, that’s gone, the ASU study said that could cost the state $2.7 billion in lost jobs and just a hit to the economy. What do you think?
Jan Brewer: I agree. It's going to be tough. What are you going to do when you don't have the money? These are tough times; you have to make tough choices. We are limited with resources. When you don't have the money and you have to present a balanced budget, you've got to cut. And where are you going to cut? You're going to cut from the areas where the money is. Those are the areas that contain most of the money. Its education and health care, public safety.
Ted Simons: When the Arizona Hospital and health Care Association says if you do that we're going to have a flood of folks into the emergency rooms, our costs go up, we will have to pass those costs on to folks with insurance and folks who can pay, medical care, health care is going to skyrocket if this happens. Is it pragmatic to go ahead and go through with these cuts? Along with that, the idea that if we make cuts we lose more in federal funding, matching funds and then some. Are we cutting off noses to get rid of a face here?
Jan Brewer: We don't have a choice. Any governor in the state of Arizona has to present a balanced budget. That's their responsibility written by the constitution. When you have X amount of dollars, which is right now estimated at about $6.7 billion, you have to present a budget that you can fulfill that with . We have voter mandates, some of those things we cannot cut. But the things that we can cut, we’re going to have to do that. We have to present it to the legislature and they can kick it around, you know? I was hoping that that wouldn't have to happen but you know, the checkbook is overdrawn. The credit card is maxed out, and we've mortgaged the house. What are we going to do when you don't have the money? You have to present a balanced budget. These are tough, hard choices and very, very painful. Of course dealing with the hospitals, which puts money into our economy, is a very important part of our job source here in the state of Arizona. But we can't maintain it. It has grown and grown and grown.
Ted Simons: So in the case of federal matching funds and stimulus dollars, if you have to spend $2 to get three, you're saying that's a great idea but we don't have the two.
Jan Brewer: Exactly, absolutely. It's difficult, you know, and painful. You sit there and you think of the fallout from all of that, but the reality is, is that if we don't turn our state around now and make those hard choices, it's going to be very, very difficult. I've tried to mitigate it by saying, I'm taking off my political hat and being a truth-teller to the public. It'll even be worse if we don't get that temporary revenue source of another $1 billion to tide us through for the next three years. And by the way, Ted, it is a temporary sales tax. There's a lot of skeptics out there saying it'll never be a temporary tax. It will be written into the Arizona State Constitution with a date certain to expire. So it'll start June 10th and end in May 2013.
Ted Simons: Critics are saying, mostly Democrats against this tax for a variety of reasons, are saying if this tax goes through and a job recovery act is being moved around in the house and getting some play in the legislature -- which again, calls for more business tax cuts and personal income tax cuts which we’ve had a steady decline in personal income tax for the 20 some on years -- if that goes through, this sales tax increase means nothing. How do you respond?
Jan Brewer: Well, you know, and I'm all for a jobs program and all for tax reform. I believe that they are trying to encourage the legislature to look at kinds of approaches to encourage businesses to stay here and encourage businesses to come here. I'm not going to comment on what I would do or how I would react until it comes to my desk. But you know, it's pretty obvious that I believe that as I said in my own case with that issue, I think it would have to have a delayed enactment down the road so it wouldn't be tit for tat. It doesn't make a lot of sense to go for a tax increase and going for tax cuts at this particular time. It's very important that we do tax reform we need to encourage businesses. They are the ones that bring the jobs. A pro-growth plan is exactly what we need and we're working in that direction.
Ted Simons: Some folks would say the legislature is moving in a different direction, especially considering a bill recently moved out of committee. It's now been put on hiatus, if you will. Regarding annexing the corporation commission renewal energy standards. Lots of Republicans in the legislature signed on to this thing and then it was pulled back relatively quickly. What are your thoughts regarding this bill?
Jan Brewer: Well, I certainly was very concerned about it because I had been working very hard to make Arizona the solar capital of the world. I have reached out and met with several different renewable energy corporations here in the United States and throughout the world who are interested in coming here to do business. With this bill moving through the legislature, if it were to be enacted, those people would pick up and go. Some of those people we just landed and just announced. . One huge company, SunTech, building out in Goodyear, is huge. It's the largest solar manufacturing company in the world. They chose Arizona and they chose Goodyear. They haven’t put any footings in the ground and they haven't started to build so they could move in a minute. They were threatening to leave, as well as probably 15, 16 other companies that we have that are planning on moving to Arizona and building our economy and bringing jobs. That's what's going to turn us around. So I was very grateful to the sponsor, that she decided she would hold the bill. I thought it was thoughtful that it will not see the light of day again.
Ted Simons: I guess we’ll see about that though. The idea behind the bill was that the corporation commission should not have the authority to impose these kinds of mandates, that this is the legislature's job and not the corporation commission. Again, tell me if I'm wrong here. But is this ideology trumping pragmatism?
Jan Brewer: Well, I don't know. I really don't know. And it comes down to a constitutional kind of vested authority, who is given what authority. We know the legislature sets policy, but the corporation commission by itself is a separate entity, almost like the fourth branch of government, if you will. In that they are vested with setting rates and what a lot of other states do, set that kind of policy. I think it'll be a constitutional issue. If the legislature moves in that direction, it'll probably, in my opinion, and I’m not a lawyer, but in my opinion it’ll end up in the courts.
Ted Simons: The idea that the thing even made the light of day and made more than a few headlines, we're hearing that it makes Arizona look like it’s not the most stable place to do business right now. Is that a concern of yours?
Jan Brewer: It's very concerning to me. I speak with businesses and CEOs and operating officers and they get a little uncomfortable. I try to assure them that I will act accordingly and be a backstop if you will and explain to them that in the legislative process a lot of times a lot of things get thrown out and they are not always well thought out. They move through but once they are explained and vetted out they go away not to ever see the light of day again. I'm hoping they are encouraged by the fact that the people, the sponsors and the members that signed on to it, which was the majority of the legislature, that they realized that was not good for our economy and not good for our pro-growth.
Ted Simons: We talk about pro-growth and economic development a lot on this program. Your ideas of strengthening the Commerce Department. Talk to us again why that makes sense and maybe the idea that you see maybe in a Texas or a Florida or a North Carolina even, these public-private partnerships out there, marketing in the state, encouraging development. What are your thoughts along those lines?
Jan Brewer: First of all, I'm a big proponent of partnering with the private industry, private businesses and stuff; I think that's really important. That's why when I became Governor I redirected and revamped the whole Department of Commerce. We went in and cleaned house. I hired a new director who is very well thought of in the state of Arizona and throughout the United States to be my director. I told him I needed him to set up a plan to how we could build a better Department of Commerce and make it more functional so it would work well. He has done that. I told him my goal was of where I wanted to go and how I wanted to handle it. Then I said what we need is an outside commission. Some of the best CEOs in the state Arizona if they would be so kind and willing to lend their expertise and knowledge to sit on this commission, do the research, use their skills, their backgrounds and experience to tell us what it is that we need to do to encourage commerce in Arizona. It was amazing. I asked Jerry Colangelo to chair that committee. I told him it was going to be something that I was going to listen to and I was going to work with him and they have free rain to bring me a product. We have been meeting with them on a consistent basis. They are diligently working. I want a report given to me that will not end up on a shelf like so many of them in the past. The Governor summons committees to put fourth policy, something that we can put together and get out there and implement. I am very encouraged at the progress they have made. If they can do that what they accomplished, it could be a model for the country.
Ted Simons: Could this be another very well be a standoff with the legislature that says, this is our responsibility; this is what we should be doing. Too much power for the Department of Commerce means less power for us in terms of deciding where the state should go in terms of legislation. It seems like politics always pop up in these sorts of things.
Jan Brewer: We operate in a political arena. We're all politicians. But I think that knowing the makeup of the legislature, certainly those I know personally and the ones I've watched operate down there, they all agree that we need a good business climate. The government has to participate in some manner in the commerce arena, if you will. People coming here want to know they've got a stable government and you're going to be a partner with them. I said we had to make it "work friendly." The first thing I did as governor was put a freeze, a moratorium on all the rules and regulations. I maintained that we've got to make it easier to do business in Arizona. We've got to help them go get through the hoops the green tape and the red tape in order to encourage them. I think the legislature agrees with that.
Ted Simons: On both sides of any issue, you have leaders. You have people willing to take the hit. Taking the hit is a phrase -- we've had Jerry Colangelo on the program. He’s done some things that got some people upset regarding building stadiums and renovating the arena and these sorts of things. He said he was willing to take the hit, which I thought was an interesting comment. Do we have enough people in Arizona right now -- you're taking hits over this whole sales tax thing --
Jan Brewer: I am.
Ted Simons: -- do we have enough people willing to take a hit or are we right now devoid of that kind of leadership generally?
Jan Brewer: You know, I don't know. I'm not much of a good judge on that. I just know that at this time in Arizona with this crisis that we're in, that everybody needs to stand up and have the courage to do what's right. It's not about me anymore, it's not about you anymore, it's about the state of Arizona. That's how serious it is. I couldn't worry about Jan Brewer, her personally or her political career or her future. She had to stand up with good factual information and do what's right. And then go out and tell the people the truth. Have the courage to tell the people the truth. I believe there are other people in Arizona that will do that, you know, and it's like Jerry Colangelo, he did. Today everybody would say he did the right thing.
Ted Simons: Regarding again the tax increase, when you took over as governor there was a thought out there, especially among Republicans, it was hallelujah moment, we're finally going get a Republican governor in there and sail this stuff through. Are you surprised, looking back right now, that your relationship with so many in the Republican Party right now, especially those further to the right, is as strained as it is? Are you surprised by that?
Jan Brewer: I was a bit surprised. I think they will come around. The relationship now is a lot stronger and a lot more congenial, if you will. But I think they expected me to rubber-stamp everything that came up there. As governor you're representing all of the people. You have to balance everything. You're the one that has to make government operate. Until you walk in those moccasins, you sometimes don't realize the difference between a legislative processes where you don't get to do one thing by yourself, you have to have 16 and 31. With the governor, you're one person, got a lot of power and you better use it very, very correctly and judiciously. It's an awesome responsibility I take very, very seriously. I will do as I've always hoped that I've done as an elected official, and that is do what's right. I'm a fiscal conservative, always have been. Never voted for a tax increase in my life. I've cut government more than any governor in the history of the state. I'm up to the challenge. I didn't create this problem but I will resolve it.
Ted Simons: Governor, good to have you here. Thanks for joining us.
Jan Brewer: Thank you.