Ted Simons: Good evening, and welcome to "Horizon," I'm Ted Simons. Joining me tonight are Mary Jo Pitzl of the "The Arizona Republic," Howard Fischer of "Capitol Media Services," and Dennis Welch of the "The Arizona Guardian." Lots to get to tonight as the legislature gets set for another session. Mary Jo, I'm imagining budget issues are all-encompassing. Let's get a preview of what we can expect.
Mary Jo Pitzl: Right. In fact, just this afternoon there was a legislative preview with all the caucus leaders and the governor talking and the big theme was the budget, getting the state back on track, getting the its finances back on track. The state has an $825 million deficit for this fiscal year to be cured, and they have to deal with the $1.4 billion deficit for next year, so that's going to take a lot of time. However, legislative leaders have said they are pretty confident they can get a budget done in 60 days, that’s mid March.
Howard Fischer: Well they’ve got the majority to do it. We've talked about the fact that they've got the two thirds, and even if the governor doesn't want to go along I think the problem becomes the details. I mean, look at the heat they are taking over, just the transplant issues. To the point that you've got John Kavanagh even saying maybe we need to revisit it. I don't think they want to rush anything through. Clearly you can't cut that much this fiscal year. You can't take $825 million out in the middle of a budget year. So we’re going to be looking at some more borrowing, some more accounting gimmicks and you know a little sleight of hand. It's next year's budget that going to get really interesting because if you listen to Russell Pearce he says we can't afford the government we have, and we really need to cut that $1.4 billion.
Dennis Welch: Well that’s the thing every year when the legislature comes. The budget’s always the big issue it’s just the context with changes. And this year, the context is, they’re starting a legislative session with people dying because of perceived budget cuts. We have transplant patients, a second one who supposedly died the other day. This is going to I think muddy things up for them and create some real political P.R. problems for them.
Howard Fischer: What complicates it, it comes at the same time that House Speaker Kirk Adams is leading the drive to lower business taxes. Now, I understand the theory. We do have a business tax structure in the state that even the Democrats admit is counter to manufacturers, counter to the kind of companies we do want to locate here. But it sends a very bad message to say well lets see -- we're knocking people off of ACCCHS, we are going ahead and we have voters paying a penny additional sales tax, but at the same time we’re pushing ahead with business tax cuts under the trickle-down theory.
Mary Jo Pitzl: So what that’ll lead to is you’ll see some jockeying for what issues is going to take presence, what going to get through the chute first. The speaker is pretty intent on getting the jobs bill and tax cuts deferred as a trigger to a later date no more than three years out. He wants that done first, I don't know if he's going get that. Do you try to get the budget aligned first, do you try and send a signal to everybody that they're serious about the balanced budget and then you deal with the rest of the stuff.
Ted Simons: And how much more can be cut though when it comes to education or when it comes to ACCCHS reimbursement? How much is there left?
Dennis Welch: They going to find stuff to cut. And I’ve heard that the place that is going to get cut really hard is probably going to be higher education, if they can't lower the maintenance everyone requires from the federal government. If they don't lower that, I think the Governor is going to address this in her speech on Monday saying, we're coming after higher education.
Howard Fischer: And in fact, look at the ASU College of Law. They’re already trying to wean themselves away from government money because they recognize it's going away. So the university is prepared for that, Michael Crow has been preparing for that for years. And that probably is the big area you can cut. Now the problem is, there's only a billion there, so you need to cut somewhere else, too.
Mary Jo Pitzl: When you ask, how much more is there to cut I think a lot of the answers are, well, how much of a risk and how much pain are lawmakers willing to gamble on? You know, the governor is requesting a waiver for the federal government on the health care requirements saying look, we just cant afford to cover the pool of people that we have in ACCCHS so ease those requirements for time certain and let us out of that. Arizona is not the only state seeking that kind of relief. So who gives? The state? The federal government? If you defy the federal government, the maintenance of effort on lower education money isn't really much of a factor because that expires in June. But if you want to maybe defy -- and they are looking to pick a fight with Washington over health care anyway, so perhaps.
Dennis Welch: And to ask how much pain you are willing to take to get into the ACCCHS and the transplant patients. People are said to be dying and they don't seem to be phased at all. They say, hey, this is going to happen.
Howard Fischer: But here's the problem. We have, and you can say we're the fourth, fifth, sixth most generous program. We are one of the few states that cover everybody below the federal poverty level, that’s about $18, 300 a year for a family of three. Most other states, you’re nowhere near that, you have to have --you know, you’re somewhere in the five, six, seven, $8,000 range to get that same sort of coverage. The Governor's point is yes, it was nice, the voters passed that. The tobacco settlement money hasn't been there. We need the ability to go back to that. Obviously the Democrats are going to be saying you're taking health care away from the people. The curious alliance in this, is the Democrats and the business community. Why the business community? If all of a sudden they have to tart covering their employees they are going say, oh, my God, what do we do now?
Ted Simons: Okay. The idea again, of not enough revenue, of tax cuts perhaps spiking business to bring in more revenues, delay triggered, whatever the case may be -- I know the answer, but I'm going to throw it out anyway. The idea of broadening the tax base, the idea of looking at revenue. We have people coming on this show constantly, experts from all over the country. We had the guy from University of Tennessee with the Morrison Institute, saying the actual structural deficit is $2.1 billion, whatever. The idea is you've got to look at revenue. Anyone going to look at revenue?
Mary Jo Pitzl: Yeah, the Democrats are looking at revenue.
Howard Fischer: We're talking about people who have a vote here in the process.
Mary Jo Pitzl: Therein lies the problem. This idea has been broached countless times at the legislature. Most recently by a lot of the people currently in the democratic leadership. And again it goes nowhere. Partially because to broaden the tax base, you're going to probably put a tax on somebody who's not paying a tax now, I don't know, hairdressers or spa services. And tax increases are not a good thing to do in the Republican caucus' estimation and there’s also powerful lobbies for every loophole. You can call it a loophole or exemption or everything is not tax, or somebody going to fight to defend that.
Dennis Welch: Look at the campaigns these folks ran on this year. Two thirds majority of Republicans they ran on campaigns on cutting and shrinking the size of government. They didn't win their seats by saying, hey we're going to grow government and go down there and tax.
Howard Fischer: But here’s the great unknown, and you guys know this too. We’re at the point where parents bring their kids to a classroom with 40 children. At the point where schools don't have the books, don't have the facilities, when the buildings are starting to crumble again because the State, which was supposed to be doing the new construction isn't, that's where the rubber meets the road.
Ted Simons: And when hospitals start to raise rates because they have so many coming in uninsured.
Dennis Welch: That's why it's the great unknown. I agree with Howie on that. We've got so many new faces down at the Capitol. That’s the one thing we know. What we don't know how they are going to act in the face of diversity. When all of a sudden they start getting the calls and the e-mails from parents going, hey, what’s the deal with my kid he’s got 50 kids in his class. How are they going to deal with that?
Howard Fischer: Well here’s the other interesting thing in terms of the hospitals. Hospital members don't want it, they can't raise their rates. Most of their clientele are insured. Insurance companies, Blue Cross, HealthNet comes in and negotiates a rate. You know who pays full bill charges? The people without insurance, who are the ones who can't pay in the first place
Ted Simons: Any surprise issues you see happening? Anything popping up that we're not quite focused on as yet?
Mary Jo Pitzl: Well one thing I'll be looking for, is a lot of the newbies, as we're calling them, are sort of from the tea party mold, in fact in races where they ran and they won with a Republican seat-mate. The new comer who ran under the Tea Party label out-poll the incumbents. Which is sort of interesting. So it will be interesting to see how those people that ran have been under the Tea banner. How much do they stick to their principles? How much of a force are they, in terms of pushing through perhaps a budget that's balanced more on cuts rather than on new revenues or giving?
Howard Fischer: I'll go a step beyond. Some of the things, some of the targeted tax breaks that the leadership wants, the quote un-quote moderate leadership, but I use the term loosely, whether it's for the film industry or the solar industry, the Tea Party are saying, why are we picking winners and losers? Why are we giving these industries breaks? And that could be the hardest time that somebody like Kirk Adams has holding the caucus together. When people are saying, I don't want to give the film industry a break.
Ted Simons: And I was going to ask about that because we talked about diverting tax cuts into business friendly legislation these sorts of things, but the idea of economic development, there is a lot of incentivization going on. How far does that go with some of Tea Party folks?
Denis Welch: Well I think as far as the sort of incentivizing, I don't know how well that goes. Like I said, there’s a lot of unknown, lot of new faces and we don't know how they are going to be voting. We know how they campaign, but when it comes to casting their vote, the board of truth, as they call it down there, we don’t know how it goes. Now they’re certainly going to support other types of businesses tax cuts and any cuts like that. But far as incentivization, that's a big question mark.
Howard Fischer: If its an across the board cut, if you're taking the corporate rate down from 7%, which is where it is now, down to 4.5%, I don't think there's a problem. If you're talking about lowering individual income tax I don’t think there’s a problem, if you’re talking about reducing the business ratio, see now you're getting into an interesting problem. Because as we’ve discussed around this table, the property taxes are raised mainly at the local level. If businesses are paying less, you squeeze the balloon, homeowners pay more. And the Governor’s already said twice that she doesn’t want anything done about that and the Tea Partiers may have the same problem.
Ted Simons: Let's go to the relationship between the governor and the legislature. What are we seeing here, better? Worse? Hot? Cold? What’s happening? What do we think?
Mary Jo Pitzl: Oh, much, much better. If you compare this to two years ago -- and we will -- it's night and day. I mean this is the Governor who pushed through the sales tax thing, very unpopular with the legislature, and she won and she won big. She convinced a certain number of the lawmakers, you know, to come her way and vote for the referendum. She's also won election in her own right by very big margins. She is indisputably the person in charge, not withstanding, everyone was talking about Governor Pierce but Jan Brewer won the governorship handily in her own right and that gives her a lot more authority. It's going to change some of the dynamics at the legislature. Plus they’re all sort of talking about the same stuff.
Dennis Welch: As quickly as we saw a change that way, we can see it change the other way down there, her relationship with the legislature down there. Yeah, she won by big numbers but she also got a Senate President who really believes she owes him the election. There are some personality issues going on here.
Howard Fischer: And we may even find the immigration issue providing some heartburn. Look, we know where Russell stands. Russell sees immigration as he sees everything, as a budget issue. We're paying to medicate, educate and incarcerate illegal aliens. At a certain point this governor, who has done very well for herself by taking on the federal government may start to say how many more of these fights are we willing to pick? The 14th amendment isn’t simply a we're fighting a Washington mandate, we’re now taking on years of legal battles going up to the U.S. Supreme Court. Does she really want to go down that route?
Ted Simons: With that in mind, let's get back to dynamics here between the House and Senate. How do you see that? Surprising tension there? Or are things going to go relatively kumbaya-ish?
Mary Jo Pitzl: I think there’s already --Pearce tends to crowd the spotlight, it’s our fault I suppose. Everybody sort of crowds to him, and we've had this house speaker who’s going into his second term. He's been around the block a couple of times and has, I think, a fair amount of control of his caucus. He helped to engineer some of those election victories that widened the Republicans' margins in the house. You gotta wonder if there's a little bit of tension, who's going get more attention.
Howard Fischer: And the other piece of it is, we have house speaker who wants to go to Congress.
Mary Jo Pitzl: And the Senate president doesn't?
Howard Fischer: Well I don’t know, the Senate president—-I don’t know, I’ve talked to his wife. She doesn't want him doing even what he's doing now.
Mary Jo Pitzl: Well yeah.
Howard Fischer: And Russell’s reached the age where he can comfortably retire doing what he's doing. Kirk has Potomac fever. He is not going to be overshadowed by Russell. I mean even the speeches today, Russell went up there, gave a nice speech, a little humorous and Kirk gave a very political, partisan speech and so there’ll be some tension there.
Dennis Welch: Yeah, and I was going to say that's going to determine a lot of that relationship there. Everything should be fine as long as Kirk can get his way on the jobs recovery bill he's probably going to be redoing this year. And if Pearce can get his way on some of the immigration stuff and some of his other reforms that he wants to get done it should be fine. But as Mary Jo said Pearce tends to kind of like hog the spotlight, he tends to want to be there.
Howard Fischer: I think the term is it sucks the air out of the room.
Ted Simons: Yes it is, let’s keep it moving here. State of the State: Are we expecting any fireworks here, anything unusual, any surprises?
Mary Jo Pitzl: I’m sure there will be some surprises, I don't know how widely they will resonate. But I wouldn’t be surprised to hear maybe for some more consolidation of government agencies. Even though the Governors got an efficiency commission that’s working on that, she might sort of jump the gun on that. I think the surprise will be, possible surprise, is what she will have to say about education funding because she has held herself up as first and foremost the defender of education funding, witness you know Prop 100, but she has been saying, everything's up for grabs.
Howard Fischer: And the other piece of that is going to be universities in particular. ‘Cause she’s getting a lot of pressure from the business community. But on the other hand, she's trying to make the universities more efficient, in her words. And I think we may see a surprise, in terms of what she supports in terms of perhaps splitting off bare bones universities versus research the universities, maybe even in terms of a push for the four-year community colleges to make education more accessible, more financially accessible at that point.
Dennis Welch: Judging by the Governor's recent history of any post-election, I don't think you're going to see any fireworks in this speech. It's probably going to be relatively short and it’s probably going to be pretty dull. There's not going to be a lot of big things in there. We hardly see this governor, since the election we haven't seen much of.
Mary Jo Pitzl: I don't expect anybody to walk out on her speech. When she addressed the legislature soon after taking office in March of ’09, two lawmakers did walk out on her inauguration speech, that's not going to happen.
Dennis Welch: You're certainly not going to hear anything about the 14th Amendment in her speech, or transplants.
Ted Simons: You mentioned the fact that you don't see much of the governor or you haven't heard much from the governor, at least we haven’t in the past, although she’s appeared on this program and you guys have had a chance to talk to her, as well; will we see more of that, will she start stepping out and start showing a little bit more of herself?
Howard Fischer: First of all, she's won the election. She's the proverbial lame duck for the next four years. There’s two issues in there. She doesn't make herself very accessible to the media. This is, I think, since I’ve been covering the place since ’82 where I've not been able to do a preinaugural, pre-session speech or a sit-down with the governor. That's a piece of it. I think she'll do the safe things, I think she'll go ahead she’ll talk to the East Valley Chamber, she’ll talk to the Tucson Chambers, but I don't -- I don't see her out there pushing anything edgy.
Dennis Welch: What's the up side for her on that? She's a verbal gaff away? She tends to have those come out. Even during the state of her inaugural she made some misstatements.
Ted Simone: Who cares? Verbal gaffs did no harm whatsoever. That's old news. I’m thinking, you’ve got a Governor here who won the election. She now has much more gravitas than she had before. Why not use some of that capital, let it get out there?
Mary Jo Pitzl: She might, I don’t think it’s going to be evidence that will win news conferences as for example, no.
Howard Fischer: And that’s the thing, I’ll give you a perfect example. After the speech today at the chamber, one of the reporters chased her down literally. Obviously it’s sort of a reporter technique: Governor, two people have died, how many more people are going to die on your watch? She hates that sort of confrontation, so you won’t see her out there in places where there’s a lot of press.
Ted Simons: Well let’s talk about, real quickly, the second patient that died. Do we know that the second patient was denied Medicaid coverage? What do we know about this second guy?
Dennis Welch: Well from what the Tuscon medical folks are saying he used to be an ACCCHS patient. The Governor’s always told us that, hey, they still haven't confirmed that and they still don't know. The other part of that is we still don't know what this patient died of. Was it a result of not getting a transplant or something else? There's a lot of questions still surrounding this story.
Ted Simons: Okay this story, though, obviously has caught the attention of the country and of the legislature. How soon before someone starts addressing this?
Howard Welch: Well, there's already a bill been filed by David Shapira to do it. In terms of actually addressing it, I think that what lawmakers want to see is some hard data, as far as -- you know, they didn't stop all transplants. They said certain people with certain medical conditions, the survival rate is such that it makes no sense. The funny thing is, they’re doing what insurance companies have done all along in terms of denying treatment. These people, what they did is changed the rules in the middle. That's part of what drove people crazy. I think that the lawmakers want to see good hard data that shows there's a survival rate there, and that maybe it costs less than simply keeping them on some sort of chemo or treatment for the rest of their lives.
Dennis Welch: I’ll tell you what doesn't make sense, it's $1.2 million. You would think that they could find that money somewhere. The Governor could go out and raise that money privately to fund this thing for a year. The last thing they want to do is go through this session with every couple weeks having another transplant patient who died. It's going to distract from what I think they want to get done.
Ted Simons: What do you think, Mary Jo? Is this thing going to get addressed and seriously soon?
Mary Jo Pitzl: Uh, no. I think there will be a hearing and it'll get massively covered and it’ll be very emotional. A lot of this problem – as he said, part of the problem is that the rules changed in the middle of the game. The fiscal year ends on June 30th. Anybody who’s going on to ACCCHS here on out, or since October 1, knows that at least for certain transplants and probably some more coming down the road, you're not going to have coverage. You should be working on a plan B. Once you get out of these folks that were sort of caught in the middle, you get out of that dilemma, I think the issue subsides. That's just a matter of time and it’s not that much more time.
Ted Simons: Real quickly, a couple more issues here. You now apparently are the expert on the Russell Pearce family since you know what Mrs. Pearce seems to want. Russell Pearce did not go back to Washington for the introduction of this 14 Amendment fight. Are you surprised by that?
Howard fischer: Uh a little bit. Does Russell enjoy the limelight? Sure. Turn on Greta van Susteren, odds are two out of five that Russell will be on... or Jan Brewer. I think that he did have some issues that he did want to address back here. I also think that he wants to let John Kavanagh take the lead a little more on this. In fact, Kavanagh will probably be the one to sponsor the bill. Part of Russells’s problem, and I will go back to the line I used earlier in terms of Russell sucking all the air out of the room. Once he has spoken everybody else chases him because he's got the outrageous comments. I think he’s like to let Kavanagh take the lead on this a little more on this one.
Dennis Welch: On part of that might be a strategy to help apiece his caucus members, who were a little upset with him at the beginning when he was campaigning for this. He told all his members he wasn't going to run any immigration bills and then he's out front on this thing. Maybe its strategic where he takes a backseat and it helps his caucus, keeps that together.
Ted Simons: The birthright bill, obviously, will be introduced here in the Arizona legislature. Does it pass?
Mary Jo Pitzl: It's really hard for me to predict. It'll be vigorously debated if it does pass, and at this point it looks like they probably would have the votes, the question is would it get a veto or be allowed to go into law without the governor's signature.
Dennis Welch: And I agree with that. There’s no evidence at this point that says it's not going to pass out the legislature.
Ted Simons: I wonder about that. Are there Republican lawmakers who are a little squeamish about that?
Howard Fischer: There are many Republican lawmakers who are privately squeamish. That's the problem, they will not -- they see this as a fight for states' rights. They see this as a fight against the Obama administration. Not that Barack was around in the 1860s when they passed this or 1898 when the U.S. supreme court --
Mary Jo Pitzl: Are you sure? We haven’t seen his birth certificate.
Howard Fischer: -- that’s true, you’re right. But they see this as there's no downside for them voting for it. That's the point, among their constituency. There might be a couple of the more moderate Republicans, the two or three that are left, who might go south. But there’s so many votes there, it's not a problem.
Dennis Welch: And they know it's going to go to the supreme court anyway, so why not vote and just let the supreme court sort it out.
Mary Jo Pitzl: Good point.
Ted Simons: Before we go, Bob Usdane had died this week, and how I know you were familiar –apparently he was quite the regular on this program, and majority leader, Senate President back during some tumultuous times. Talk to us about Bob.
>> There were a couple of things about Bob. Bob understood the fact that government is 16, 31, and 1, in terms of getting the majority. He would negotiate with the Democrats. Alfredo Gutierrez was in fact the minority leader through much of the time and he would sit down and say, what do we need to get this bill out. He didn't cave in to the right-wing wack-a-doodles who were in his senate. He said we need to get something out. Bob was very instrumental in getting ACCCHS. We were the last state to join Medicaid. He came up with this pre-paid captivated program. I don't know what he would think about what's going on now. He also helped guide the Senate through the whole make an impeachment, this was the senate that does the actual trial and tried to keep it together so it didn’t become partisan, so they looked at the facts. He was a gentleman and, I think in the best sense of the word, he was a politician, in the extent that he recognized this is government of the majority.
Ted Simons: Could a Bob Usdane be a majority leader, a senate president, a factor in this current legislature?
Howard Fischer: I think it would be very difficult because part of it is term limits. You have people trying to make a name for themselves in the first couple of years ‘cause they know they’re not going to get a –- eight years to become a committee chairmanship or ten years to become the majority leader or the president. Everybody has his or her own ego involved, and I think it’ll be very hard for a Bob Usdanen to get to pull that together.
Ted Simons: We have to stop it right there. Thank you very much.