Ted Simons: Last week we talked about legislative priorities with the senate president and speaker of the house, both Republicans. This week it's the democrats' turn. Earlier today I spoke with senate minority leader David Schapira and house minority leader Chad Campbell. Gentlemen, thank you for joining us. David, start with you. Thoughts on the special session regarding this bill requesting a waiver from the federal government regarding state AHCCCS.
David Schapira: There's two major issues on this bill we passed in the special session. The first is legal and the second is this a good policy decision. On the legal side, we're fairly confident that the folks pushing this, the governor and the Republican leadership, they don't have a leg to stand on. First of all, we don't think the federal government is going to grant the waiver, but let's say they did. The voters passed an initiative, prop 204, which said we have to cover the populations that are covered under our state's Medicaid program. For us to undo that, for us to go against that we'd have to get the voters' permission or they would have to win a lawsuit, which they just can't win. Because the voter protection act says that it's covered. Policy side, it's a bad policy decision, because we kicked 280,000 off health care. They don't stop needing health care. We just stopped giving them preventive care, and now we're going to treat them in hospitals instead, which is a bad fiscal decision.
Ted Simons: Let's go with both of those ideas. First of all, the idea that it is -- that the federal government would not grant this waiver, even though the state would request it. Some lawmakers are confident that the president would grant the waiver because waivers, similar waivers have been granted to private businesses, private insurance firms, and such. You say --
Chad Campbell: I say those are the same lawmakers who thought voters were going to repeal first things first and the land conservation fund last year, and those -- both of those initiatives got shot down overwhelmingly by the voters. I think that we need to be realistic here. This is just another gimmick, and this budget is based on a lot of unrealistic assumptions. I might as well go plant a money tree in my backyard and hope it starts growing tomorrow. And I probably have just as much chance of this budget solving our problems right now.
Ted Simons: Why not go ahead and try and ask the federal government, see our situation, understand what we're dealing with here, give us a break.
David Schapira: They say yes, it still doesn't matter. We had -- when prop 204 passed, the legislative council, which is our lawyers at the legislature, basically came out with an interpretation of the law that said that basically the future legislatures could not cut the enrollment levels or the funding levels for our state's AHCCCS system within the eligibility requirements that we had. So when our own lawyers are saying you can't do this, that basically tells us we're going lose any lawsuit, even if the federal government grants the waiver, we will lose any lawsuit from our own citizens.
Ted Simons: We had John Kavanagh who was confident that the state would win such a lawsuit, because prop 204 was supposed to be covered by tobacco funds if tobacco funds don’t do the job. Any quote unquote available funds should be -- there are no available funds to be used.
David Schapira: John Kavanagh didn't even read the legal opinion I'm talking about, until today.
Chad Campbell: But I want to just counter, there are available funds. We've actually appropriated about $200 million in new spending in this budget. So there is available money. So that is a misstatement I think on the part of John Kavanagh. I also just want to say though that this is just a bad idea policy wise. Putting aside the health care aspect, economically this is a disaster for the state of Arizona. It will destroy our economy.
Ted Simons: We had House of Senate leadership in last week, and they're saying this is the fifth richest Medicaid state Medicaid program in the country. We simply can't afford it.
David Schapira: We have so many people on AHCCCS in our state, because our economy is broken. We have failed to diversify our economy for so long, when they say it's the richest, that means we have so many people below the federal poverty line that qualify. So, yes, we have a lot of poor people in our state because of some of the failed decisions that have been made by the leadership in this state for many years.
Chad Campbell: And by pulling this coverage right now, we're losing over a billion dollars in federal matching funds that taxpayers in this state are paying to D.C. regardless of whether or not this waiver is in place or not. We're still going to be paying that money. We just won't be getting it back.
Ted Simons: Okay, let's go beyond the waiver here and talk about some other things, the $1.2 million for transplants, is that being talked about? What's going on with that?
Chad Campbell: It's being talked about by us. Unfortunately we have seen no movement by the governor, no movement by the majority party, to fund those transplants. We've seen $1.8 million in the new budget going to for-profit charter schools, yet no money to transplant programs.
Ted Simons: Speaker Adams on this program said you pull money from one area for these transplants, you've got to find the money in another area. It's more complicated than just finding the money out of clean air.
David Schapira: We have found it and countless ways. We have found countless ways. Representative Campbell, Representative Tovar, Senator Cinema and myself have identified countless ways of paying for this and have provided those means to the governor. In fact, we've even introduced them in bill form. There are so many ways to pay for this within the AHCCCS system itself. But they just don't want to pay attention or they want to pretend that they’ve never seen it -- I think their shredders are pretty full right now.
Ted Simons: The idea of revenue, I know that broadening the tax base has been a big idea among democrats, but again talked to leadership last week, and they're saying that is nothing more than a tax increase when you're talking about everything from medical bills, to car repair, and all points in between, that's an increase in taxes for those folks.
Chad Campbell: First of all, we're not saying you close all the loopholes all the exemptions there are some things you want to remain untouched. Medical probably being one of those. But there are several billion dollars worth of loopholes we should be taking a look at. And I'll say why -- it's a very simple process of being fair. Why should one business be paying a TPT or sales tax and another one not? Why are we as a government picking winners and losers? Why not make our system more fair more stable and it give us the flexibility to lower some of our business tax rates as well as some of the sales tax rates across the board.
Ted Simons: Does broadening the tax base, and again it sounds like already an exemption here for medical, could obviously maybe see one for tuition who knows, there could be a lot of folks coming in hat in hand -- saying we can't go back to the situation. Even if you got that broadening -- is that enough to handle this deficit?
David Schapira: There are $10 billion of taxing polls out there in the state. We certainly can't deal with all of those. We don't need to. Our budget isn't even $10 billion anymore. We need to look at the ones that aren't working, those that aren't creating jobs, those that aren't benefiting our economy. Let me just give you an example. When I go to the store in Tempe right now to buy baby formula for my daughter, I pay a tax to the city of Tempe on that now. But if I wanted to go get a country club membership in my district, I pay nothing in taxes.
Chad Campbell: But I want to add one thing. I'm not going to sit here and say that if we close the loopholes we're going to solve the entire budget deficit. That's not the case. There has to be some cuts. Let's be realistic. But we have not talked about updating our tax code, modernizing, and making -- making any revenue adjustments whatsoever. In three years in this state. It's high time we do that, and if we don't we're going to continue to fall behind, and we've seen many people, including the Morris institute and others say we need to do this and we need to do it now.
Ted Simons: We had Russell Pearce on this program last week saying the best thing for the legislature to do is to create an environment in which jobs can grow. Their idea is, cutting corporate income tax, private property tax or businesses, these sorts of things, that's what's most important because that gets people back to work.
David Schapira: They want to do across-the-board sledgehammer style tax cuts. For any business, whether they create a job or not. I've talked with some of my colleagues at the capitol, we cannot afford right now to do tax giveaways to somebody that is not going to create a job in the state to something that’s not going to spur the state’s economy. What we can do, and I think we should, is do some targeted tax breaks to folks that are creating jobs. And the governor's commerce authority, it's just too broad based and one of the things they're doing is they’re suggesting basically doing a shift in our property tax base, where were going to push property tax increases on to residential property taxpayers. The governor came out and said, I don't want to do that, that's not really part of this plan. The alternative is, cut even more money from education than what's being cut in this budget we can’t afford it.
Chad Campbell: And I think that’s the point. You can talk about taxes all day long. I think we need to make some adjustments to our tax code. We do need to make some competitive moves in terms of the business property taxes and our corporate income tax rate. It needs to be done in the context of overall tax reform, and not at the expense of education, and health care and infrastructure. There's not a business leader I talk to that says I'm going to come to a state where have you the smallest amount of funding for education, your health care system is falling apart and your public safety system is not doing the best either. We need to think in the greater context of things.
Ted Simons: Real quickly though, businesses do look for stability, and if some of these things they know they're out there in three years, delayed start, implementation, these sorts of things, at least they know they're going to happen.
Chad Campbell: I agree with you, but they also look for stability in other places. And right now with many of the situations we see, regarding so many -- the divisiveness around immigration, around the public safety issue, around many other issues, there is no political stability in the state, none. And I talked to people across the country who tell me that time and time again.
David Schapira: Let me give you an example, an example is the state of Nevada. Where they have one of the most business friendly tax structures in the country, because they've got so many from gaming, it's a great place to move your corporate headquarters. Last week two corporations that were considering moving corporate offices to Nevada, they talked to some of the bureaucrats in the state, they deeply considered moving there, they decided not to. When the bureaucrats asked them why didn’t you bring your businesses to Nevada, their answer was, there are not enough college graduates in your state. And we don't think it's a sustainable business model to move corporate offices with white collar jobs, high paying good paying jobs, to a state where there is not a high number of college graduates. That's the direction our state is headed. We can do all the tax reform in the world and have the most business friendly tax structure, but if we continue to do what we're doing to our higher education system, we are endangering our future economic prospects.
Ted Simons: Very quickly, last question, these voices, your voices were heard by voters all around the state, and yet voters sent a very sizable majority of Republicans and conservatives to the state house and as has been said many times, no one who said, let's cut government, let's cut spending, got voted out of office. What's going on here?
Chad Campbell: Well, first of all, I think there was a national mood that led to the decline of the Democratic Party here in Arizona. And across the country. I think we got swept up in some of the national mood. Some of the anti-federal sentiment. We had Senate Bill 1070 which obviously was a game-changer for many people. And I also think that many of the people running right now, or that got elected and ran last time were still talking about some of the previous decisions made by the Napolitano administration, and I will tell you, there's no more excuses. They have control of the state from top to bottom, democrats have absolutely no position in the executive authority, in the legislative branch. It is the Republican state now, let's see what they do with it, and we're going to be holding them accountable and making sure it's a transparent process.
Ted Simons: Is that the best you can do, hold people accountable?
David Schapira: The voters in the last election may have voted for certain people, but they also voted on certain policies. One of the policies they voted on, which Chad just mentioned, was to essentially raid funds from education money. So although the voters may have made certain decisions on people, on the policy, they're right there where we are. What we're talking about right now, is we can't afford after passing prop 100 last year, where the voters thought we were going to have new money for education, or at least the same money for education, we can't afford to then go back and cut it. The voters are not going to put up with that kind of thing.
Ted Simons: Alright gentlemen, we've got to stop it there. Good to see you, thanks for joining us.