March 31, 2010
Host: Ted Simons
- The latest from the state capitol with a reporter from the Arizona Capitol Times.
- Jim Small - Arizona Capitol Times
Ted Simons: Good Evening and welcome to Horizon, I’m Ted Simons. State Lawmakers in special section this week, to work on legislation that allows the state to join lawsuits against the federal government over health care reform. Here with the latest on that is Jim Small of the Arizona Capitol Times. Good to see you again, thanks for join us.
Ted Simons: Alright, this is a done deal basically, they’ve already sent it over to the governors office?
Jim Small: They’ve passed the bills both the house and the senate today. Put the bill on the floor, debated them. I think there was one minor amendment on the bills. Democrats’ tried to say the state shouldn’t spend any tax dollars, shouldn’t spend any of its money. That amendment failed, the bills were approved along party lines, Republicans voting yes, Democrats voting no. They are expected to be signed by the governor, most likely that would happen tomorrow.
Ted Simons: That basically gives the governor the authority to sue the feds over health care reform. Democrats saying its basically all political. You have the attorney generals saying it’s a waist of time and effort. And the GOP is doing this to show that the attorney general is not up to it, or whatever the case may be. It’s because he’s a possible gubernatorial candidate, correct?
Jim Small: There's certainly an element of politics. I think you can't look at the situation and say that this is all about pure altruistic reasons, or Republicans aren't doing this for some kind of political gain. Certainly Governor Brewer pushed for the special session, she wanted the legislature to give express authority to make sure that there was no way you could challenge and say the governor didn't have the ability to represent the state in this lawsuit. And obviously the fact Terry Goddard is the likely Democratic gubernatorial candidate and Jan brewer is running for election for a full term as governor, that obviously does play into it. But on the flip side, there is a lot of very philosophical opposition to what happened at Congress with this federal health care reform. And Republicans are very opposed to it. And so while there is an element of politics, there is also an element of ideology and of Republican philosophy.
Ted Simons: Speaker Adams has repeatedly said this is a mandate, maybe not technically a mandate, but de facto mandate from the federal government on a variety of things, not the least of which that you don't play along, you don't get Medicaid money.
Jim Small: Yeah. And he said as much on the house floor today. He said -- he likened it to a situation where a mugger comes up and holds a gun against your head and says "give me your money or give me your life." He said of course you're going to give him your money. That's what you do. He said in this case the federal government is that mugger. They're basically pointing the gun to Arizonans head and say you need to play along, or we're not going to give you any of this money. In a situation like that, that's not really a choice. It may seem like it's a choice on the surface, but at the end of the day it's not, it becomes a mandate, and I think that's obviously going to be one of the main issues, main condenses in the lawsuit.
Ted Simons: Democrats come back and say, all right, we got all of that, but they seem to be saying that Arizona really doesn't have a legal standing in all this. The other states are going to go ahead and sue anyway. Why get involved?
Jim Small: And on the standing issue, what the democrats have been saying is that the state doesn't have standing to sue on one of the components that have been tossed about, which is that the federal law mandate that Arizona citizens, basically every citizen at the United States, get health insurance coverage or face a penalty. And what their argument on that has been is that the state can't sue on behalf of individuals, because you have to have standing in order to sue, so an individual has to be harmed and bring a lawsuit themselves. That's really where their standing argument is confined to that one issue and it's not broad on the entire thing. They did raise the argument other states are suing already, and Arizona can just sit back and wait for the resolution of that case, because that will obviously impact Arizona.
Ted Simons: And speaker Adams says Arizona is uniquely hurt because of our more encompassing eligibility rules and such, and that needs to be heard in this case.
Jim Small: Right. That was what Republicans in both the house and senate argued. Arizona, we have the largest per capita deficit in the country, we have already have our Medicaid populations already at 100%, which is now required of states under -- or will be by 2014. So Arizona has to do that, and doesn't get any extra money to meet that requirement, so we're penalized now, even though the way the bill is structured, wants 2014 hits, we get rewarded in the long term and the federal government pays us a much higher matching rate than other states.
Ted Simons: So governor is likely to sign that probably tomorrow?
Jim Small: I would think so.
Ted Simons: If not later tonight. Before you go, there's a push to ask voters to kind of limit the way governor can line item veto. Talk to us about that, where this is coming from?
Jim Small: Basically what it is, it would be -- change the constitution. Right now the governor has line item veto power but it's only on appropriations bills, and she or he can only strike items of spending. And what happened last year, what we saw last year was Governor Brewer gets the line item veto power, and because the legislature had put in lump sum cuts to agencies, so they'd say spending is $10 million, we're going give a cut of 2 million, she X'd that out, and what lawmakers thought was an $8 million appropriation turned out to be a $10 million. The idea is if you limit the governor's veto -- line item veto authority to only situations where it decreases state spending, you wont have that problem again in the future. It's something that lawmakers in fact sued Janet Napolitano over back in 2003, Supreme Court kicked the case back on a technical reason, said that the Republican leaders didn't have standing to sue because they didn't represent the entire body, but they also gave lawmakers advice for the future, and they said, Charles Jones, who was the Supreme Court chief justice at the time said, you know, basically legislators, you can avoid this situation by not doing lump sum cuts. If you put in specific cuts, then you don't have to worry about this problem, a governor can't raise spending with the swipe of a pen. Obviously they didn't necessarily learn that lesson for last year; they were getting along better with the governor this year, so it didn't matter as much.
Ted Simons: Is this thing going to get out you think?
Jim Small: There are a lot of things that are vying for position on the ballot right now. There are probably more than a dozen different referenda that lawmakers are considering right now. I don't know if leadership is going to let them all will move forward. There is some concern, I know among legislators that if you get the ballot too long, people will look at it, turn it over, see it's two pages and go, well, I'm not going to vote for any of this and start marking no on things that a lot of people feel are important.
Ted Simons: Good to see you. Thanks for joining us.
- Bill Brunson of the Internal Revenue Service talks about changes in the tax code and other information to help you file your tax return. Also, Anthony Forschino of the
Arizona Department of Revenue will review the changes to state tax laws.
- Bill Brunson - Internal Revenue Service
- Anthony Forschino - Arizona Department of Revenue
Ted Simons: The April 15th tax deadline is coming up. Every year, changes are made in tax laws at the state and federal levels. Here to give us a heads up on what we need to know are Bill Brunson of the internal revenue Service, and Anthony Forschino, of the Arizona department of revenue. Good to have you both on "Horizon."
Anthony Forschino: Thanks.
Ted Simons: Changes to the tax code, we need to know. What have you got?
Bill Brunson: I would say the first-time home buyer credit is big, because they've extended that item so that if an individual enters into a binding contract no later than April 30th and closes on the home no later than June 30th, they will have met the new extension time frame. Along with that law change with that first-time home buyer credit with that extension of time, is the long-time -- the first-time home buyer credit, the long-time resident credit, which allows an individual that currently owns a home has lived in the home five consecutive years out of the past eight, would qualify for credit as well. Both credits are refundable, you have to use a particular form, a 5405, and you have to attached that supported documentation to the form, which means this year you have to submit it on a paper return. You can compile electronically, but you're going to have to file that form with paper.
Ted Simons: I want to get back to those two especially. Such a long time, a lot of folks watching the program have been in their homes for more than five years. I want to get back to that in a second but as far as the state is concerned, what's new?
Anthony Forschino: There's not any real big new changes in the actual filing of the tax return. Big thing that is coming up, and it will affect what you end up paying or not, is the change in our withholding. What's going to happen is as you know for years, our withholdings was a percentage of the federal. So if you -- if on your paycheck had you $100 of federal withholding, and you took 20%, as your election, $20 went to the state. But what would happen is the state withholding, whenever the federal would change, so would the state. And so in this past year, the federal lowered their withholding, so did the Arizona go down, but it didn't change the tax for it, so you end up getting a lesser refund or have to pay more. So what we're going to do in the legislature is starting in July 1st, we will no longer be linked to the federal government, it will be our own tables. And we're going to release those hopefully in the next couple weeks.
Ted Simons: Who is working on that?
Anthony Forschino: We're hoping to have something out in the next few weeks. It will be more of a percentage of your gross income or your gross -- we're trying to figure that out, but we'll put those out.
Ted Simons: It's something that we'll be talking about next year.
Anthony Forschino: Exactly.
Ted Simons: OK. Let's get back to these home credits, the credits for the home buyers.
Bill Brunson: If you're in the market for buying a home this, is a good time. Your first-time home buyer credit, is worth $8,000. It's a refundable credit, which means it can cause a refund, increase a refund, or reduce a liability. The long-time resident owner means that you have a credit of $6500 that's refundable. You have to be in that home five years out of the past eight. If you lived in your home 20 years, you lived there five out of the last eight, would you qualify if you're going to buy a new home. But you have to meet those time frames. You have to enter into that binding contract by April 30th, and close no later than June 30th. You can claim it on your 2009 return, your 2010 return, you can file your 2009 firm and amend it. There's a lot of different options. All they have to do is call us or go to IRS.GOV, all that information is there.
Ted Simons: The earned income tax credit, talk to me about that.
Bill Brunson: It's been around since 1975. Congress put it in effect to offset social security wages -- social security taxes that people are paying. This is for people that don't make a lot of money, and it can put money into your pocket. It's a refundable credit, the maximum credit this year for the earned income tax credit is $5,657. That's a whopping piece of change. Average earned income tax credit last year for Arizonans was around $2,000. Now, folks have had some bad times lately, they've been laid off from work, less hours, even lost a job perhaps. Earlier years they may not have qualified for that earned income tax credit, but this year they may. So they don't want to guess, they want to find out. They can contact the IRS and we can tell them yes, you do qualify or no, you don't. But if you do qualify, you want to file and get that, because it's money in your pocket.
Ted Simons: OK. I want to get to electronic filing in a minute, but back to the department of revenue, we have been hearing that the budget cuts have met with staffing problems. I know this doesn't necessarily have to do with our forms. But what’s going on?
Anthony Forschino: One of the things is a year ago, in February, we lost 300 people at the department of revenue. And majority of them were auditors and collectors. But in this last budget that just passed, the department of revenue has been at least allocated back some more collectors and more auditors to get them back on staff and start getting that going again.
Ted Simons: Encouragement there.
Anthony Forschino: Yes.
Ted Simons: OK. You talk about all these credits and all -- I got a form, you can't do this, but you've got to go here, and a lot of folks are filing electronically a lot of folks doing their own taxes. You got to be careful, don't you?
Bill Brunson: Well, there are tax scammers that want some of your money in their pocket. So you're right, the bottom line here is that if it sounds too good to be true it probably is. If somebody says, you know, I can help you get your refund, when the IRS may have already paid that you refund, but they're saying there's more money out there, and you get this unsolicited email in your inbox? Well, you don't want to click on the link, don't open that attachment. You want to stay the heck away of it. Send it to PHISHING@IRS.GOV. But the key is that they're going to want information from you that the internal revenue Service already has. They're going to want your social security number, they're going to want bank account information, so they can do you financial and I.D. theft harm. Don't fall for those items where they say, I've got money for you. If you feel you do have a refund coming, and you're not sure, call the IRS or stop by one of our offices. We'll review your account and go with it, go through the account with you and clarify whatever is out there.
Ted Simons: You mentioned being careful with scams. Electronic filing, I know it's increasing by leaps and bounds, but some folks seem to be still a little wary. Not quite sure it's going where it needs to go. What happens if you use tax software and you E-file, and the software messes something up? What happens?
Bill Brunson: If you're talking about somebody that makes an error based on information that they felt was good and correct, there's not going to be any major issue with that. The actual amount of tax that would have been due the system still has to be remitted, paid, and if there's any interest accruing on that amount, if it's a late payment, that would be required to be paid by law as well. But is there going to be any penalty assessment? No. The thing is, if you make an honest accounting mistake, whether it's a software error or something else where you expense something that you should have capitalized, whatever on the return, those things, those issues we work with all the time. It's when you want -- when you try to willfully defraud the federal government, that's where you have issues with the system.
Ted Simons: So if E-filing, you use tax software and the software was faulty, there are ways to figure that out.
Anthony Forschino: Right. And plus, a lot of times when the returns come through, there's going to be a math and data check anyway. If the software did some type of math and data error, we're going to check that before it gets processed.
Ted Simons: All things consider, still wiser to E-file?
Anthony Forschino: Yes.
Ted Simons: Agree?
Bill Brunson: Oh, yes. Definitely. And everybody here in Arizona can go to IRS.GOV, click on the "free file" icon and file for free at this point in time. And folks still have time to do that. Now, if you don't have all your paperwork together and you need a few more days, like six months, you can request an automatic extension to file. You can do that electronically by going to IRS.GOV.
Anthony Forschino: And currently with our refunds, it's -- it's an average of seven days with electronic filing, and almost four plus weeks if you pay for file -- paper file.
Ted Simons: Sold. Thanks, guys, appreciate it.
Anthony Forschino: Thank you, Ted.
Valley METRO Light Rail
- Learn about proposed changes to light rail service from METRO Light Rail CEO Stephen Banta.
- Stephen Banta - CEO,METRO Light Rail
Ted Simons: The valley's light rail system is funded primarily with sales tax revenue from valley cities. And because that revenue is down, cities are struggling to maintain light rail funding at current levels. In May the metro light rail board of directors is scheduled to adopt a new operating budget. Here with more on that and more, is metro light rail CEO Steve Banta. Welcome to town. You're new on board.
Steve Banta: Yeah, eight weeks on the ground.
Ted Simons: What are you seeing as far as light rail in Phoenix compared -- I know were you in Portland, and other areas. What do you see here?
Steve Banta: I worked for a number of different transit properties. What has to be talked about is the effort that went into this 20-mile light rail system. Through three cities, the major city being Phoenix. A great street running light rail system. It was constructed over roughly an eight-year period, and now we are transitioning into operations. So my vision, my goal, is to transition this organization, metro, from a construction entity to an operator of quality Service.
Ted Simons: How do you do that when so much of city budgets are just getting hammered right now, and that impacts the light rail Service?
Steve Banta: Funding is a big issue. Our member cities make up 75% of our operational funding. We get 25% from the fare box. That's not to be alarming. That's standard throughout the U.S., roughly 20-25% come from the fare box. When tax revenues are down, you've got to make tough decisions you’ve got to tighten your belt in certain ways to manage to a lesser budget, but also keep the customer in mind and impact them the least.
Ted Simons: You talk about fares and such. A quick detour, there are concerns on uncollected fares. People aren't paying, or those who have U-passes, either aren't figuring out how to use them properly, it's -- something is not working. What are we seeing out there?
Steve Banta: I think a lot of it is perception. As we know, perception is 100%. I don't believe we have a big issue with fare evasion here. The U-pass, for example, that was an opportunity for us to partner with ASU, 20% of our ridership comes from ASU. And ASU actually provides a benefit to their students by subsidizing that transit pass. But what they did is they timed the expiration of that transit pass with the school year instead of the semester. They communicated heavily with the students, if you didn't register for the next semester, your pass would be deactivated, so at the end of the day, the passes are deactivated, our fare inspectors have a device that can read the pass to see if it's valid, and if they're using a pass that's not valid, it's just like fare evasion.
Ted Simons: Interesting. As far as proposed changes now to light rail, let's talk about three of them in particular. Reducing peak time frequency from 10 to 12 minutes. What does that mean?
Steve Banta: Right now our trains run every 10 minutes during the peak service. Usually from about 4:30 in the morning, 5:30 in the morning, excuse me, to 9:30 in the morning, and in the evenings, 4:00 in the afternoon to about 6:30. We'll reduce that from 10-minute frequency to 12-minute frequency. And we would be able to take one to three trains out of rotation, which is a cost savings to us, but I think minimally impacts the customer when you wait for a train for 10 minutes versus 12 minutes. So that's what we're trying to look at.
Ted Simons: And combine that maybe perhaps with shortening the peak hours you just mentioned by a couple hours, correct?
Steve Banta: One in the morning and one in the evening, yes.
Ted Simons: And that saves how much do you think?
Steve Banta: That's about $200,000 savings. The three options, the one option for the 10 to 12 minutes is a half million dollar savings.
Ted Simons: Interesting. Running holiday Service for maybe five more days or something along those lines. What are we talking about here and how much do we save?
Steve Banta: It's about $125,000 worth of savings. What we're doing is running a reduced Service on holidays like the day after Thanksgiving. The Christmas Eve. Labor Day. So it reduces the amount of trains we put out. Monday through Friday, we have a large number of trains outs, the weekends it's less Service. So it's less cost to operate.
Ted Simons: As far as ridership is concerned, I thought it read that ridership on the weekends was down a bit. Is that --
Steve Banta: I think a lot of times when the economic conditions are there, discretionary funding is limited. So people go out to recent view -- venues less on the weekends, they don't shop as much, they don't go to the ball game or the events they typically do on a weekend. Ridership all in all, even with the downturn this year on weekends, is up over last year or the original projections. Ridership was projected at about 26,000 a day weekday. And we're up to 34, 35,000 a day. So we're doing very well as it relates to ridership.
Ted Simons: We talked about the options as far as saving money and these sorts of things. The three we mentioned, most likely you think to get through?
Steve Banta: 10 to 12 minutes.
Ted Simons: That's the most likely?
Steve Banta: M-hmm.
Ted Simons: How about the others?
Steve Banta: Well, the one we didn't talk about was late-night weekend Service. We think that's a benefit. To actually the community. It's one thing we instituted last October, last November – September sorry, and it provides opportunities not only for people to have late-night Service options till 3:00 in the morning Friday and Saturday night, it also provides opportunities for workers to get to these establishments. So we think that's going to be --
Ted Simons: That's going to stay?
Steve Banta: I think so.
Ted Simons: What about advertising? Is that going to stay, is there going to be more of it?
Steve Banta: I think so. We're in our infancy in advertising. We documented a policy last year. Early this year we signed a deal with CBS outdoors. We're going to generate 60% of the advertising sales. They will go out with a framework of what can and can't be advertised and we're looking to expand that.
Ted Simons: There's still an aversion though to advertising. Is that -- has that pretty much been thrown out considering the revenues?
Steve Banta: One thing we did here at metro and the board, they didn't want to mess their brand. They've got a nice-looking train, they've branded the system, and what they've done is adopted advertising only on 20% of our fleet. So you'll only see 10 trains out of 50 that have wrapped advertising on them.
Ted Simons: As far as inside, how much could we see?
Steve Banta: Inside could be all the cars. But it's on floors.
Ted Simons: On the floor -- but could you always do the walls like you see in subways and buses?
Steve Banta: It would have to be discussed. Today we've determined just floors.
Ted Simons: What about stations?
Steve Banta: Stations there is advertising. One is central and Washington, as a station advertising for I believe one Lexington, on Osborn street.
Ted Simons: You came from Portland, obviously mass transit there, very different beast. Somewhat different beast than it is here in Phoenix. Are we ready? Is the valley ready for mass transit, or is it still a learning process?
Steve Banta: I think it's a learning process. I think mass transportation in the valley is in its infancy. That was one of the exciting things that drew me to the valley. Is to be able to affect that footprint for generations to come. As we expand, as we provide expansion opportunities, we have to think about transit as a regional asset, and not a city asset.
Ted Simons: Are those expansion ideas on hold, are they going forward considering the economy?
Steve Banta: There's a 20-year transportation plan that was approved by the voters for the prop 400 sales tax, and with that plan, we're actually moving some of the needs to the right, because of the downturn. We're looking for ways to move them to the left, but as this -- at this point in time we're extending them some three to five years.
Ted Simons: So a little delay there.
Steve Banta: Yes.
Ted Simons: It's great to meet you. Thank you so much for joining us.