Ted Simons: Good evening and welcome to "Horizon." I'm Ted Simons. Five wide-ranging bills dealing with illegal immigration were defeated in the senate last week. But the senate did manage to approve a budget that proponents say brings honesty and stability to state finances. Here to talk about these and other legislative issues is senate president Russell Pearce and senate minority leader David Schapira. Good to see you both here. Thanks for joining us.
David Schapira: Happy to be here.
Ted Simons: Let's start with the budget and let’s get right into it. As far as education, we’ve got $242 million to K12. 30% to higher education and some $235 million. Ballpark figures here.
Russell Pearce: You take the overall budget and the overall budget, higher ed, 600 million more dollars than -- I mean 600 more million. We cut a small amount compared to that. $235 million and that's not over because there's negotiations between us and the house and the governor which are working well together. We've got agencies, 10%, 15% and sometimes more. In the last budget, about 2% and in this one and about 2.7% overall -- Education is 50% of the budget. You can't leave it untouched.
Ted Simons: I understand what you're saying, when the universities have raised $600 million in revenue, it's designed to go to certain things.
Russell Pearce: Well, protected -- meeting with the university administrators over the past few years, their design has been to get less -- less on the general fund and they've told me that on several occasions, and again, they were untouched last year because of the stimulus and MEO, and so forth. You have a budget, here's the good news, we have a balanced budget for the first time. No gimmicks or games or bonding or borrowing. We’re the only state in the nation that doesn't own our own capitol. We're going to balance the budget and it goes with leadership.
Ted Simons: Respond please.
David Schapira: We need to address the higher ed. $600 million more. First, we have tens of thousands more studentsat out state universities. When you say the funding has increased. Well, the total amount has, but they have more students attending the universities and the other thing, when over time, we cut money from them, funding still goes up, what does that mean? Students are paying higher tuition than they've paid in the history of the state and in-state students will pay more than $10,000 a year per student. What we're doing here is balancing the budget on the backs of college students. It's a back-end tax on people who want a higher education.
Russell Pearce: David and I work well together but we have a difference of opinion on this. The truth is, they told us they intended to raise tuition.They raise tuition when there was no budget cuts at all. They have a design to raise that tuition and again, we're still go the medium of universities in the nation in terms of charges and it's a responsible way to go and we're careful. We've protected education for years. There just comes a point where they have to participate in the process.
Ted Simons: I need to ask you, $235 million from higher ed and $240 million from K12. Does that make Arizona a better place? Does that help the state?
Russell Pearce: Yeah, balancing the budget. How many more tax increases can the public afford?
David Schapira: How many more tax cuts can they afford?That’s what I am concerned about right now.
Russell Pearce: How much can I afford you to keep your own money. You'd be surprised how much government you can do without. The problem is we have an entitlement problem. We're the fifth richest AHCCCS in the nation, 5th richiest. We’ve spent a billion dollares above the national average in Medicade. There's just things you can't afford anymore and there comes a time where somebody has to be responsible. Kind of like mom. Sometimes somebody has to be the mom. Somebody has to say no.
Ted Simons: Enough is enough.
David Schapira: Our system isn't among the richest in the nation, our AHCCCS system isn't among the richest because we offer more healthcare. It's because we're the second poorest state in the nation. Because we've given tax cuts to the corporations and wealthy while we continue to tax the middle class, we continue to tax the poor and cut their services each and every year.
Russell Pearce: I appreciate the perspective. It's not quite true. We have one of the highest in the west of corporate taxes and over-taxed and over-regulated. The last thing we want is to be California. Create a environment conducive to productivity. Let families keep their own money. Those are the things that bring families and jobs here. That's what spurs the economy and you can't grow the economy without jobs.
David Schapira: Corporate income tax only taxes profit. Not every state has a structure like us. Most businesses in this state during this recession have paid zero in corporate income tax. Why? Because businesses aren't profitable right now.
Russell Pearce: They don't pay taxes, the consumer does and they’re called forprofit organizations. If you did --
David Schapira: Paid zero in the last five years on corporate taxes.
Russell Pearce: No, they haven't. You're picking on one or two. We have one of the highest in the nation -- David brings up another issue. Talking about the poorest in the country. We've become the extension of the school district for north Mexico. I mean, we have the -- a huge problem that nobody wants to deal with. Some do. $2.7 billion a year to educate, medicate and incarcerate the illegal alien. Nobody wants to talk about, the impact on healthcare, the impact on education, the impact on health services, the impact on safe neighborhoods, on and on and on --
Ted Simons: Do you agree to the number, A, and B, do you agree that's a problem that needs to be addressed?
David Schapira: Do I agree to which number?
Ted Simons: The 2.7.
David Schapira: I'm not sure what he's referring to. But on the poverty side, the poorest region of Arizona is the northeastern portion where Navajo nation is. It is also among the lowest in the Hispanic population, so to say we’re the second poorest because of Hispanic people, it's not true. One of the poorest legislative districts in the country is Jack Jackson's district which has one of the fewest numbers of Hispanics in the state.
Russell Pearce: It's one of the smallest populated areas in the state. It's not what drives these numbers. Let's be fair about this David. It's almost just not a gnat on your windshield. It's one of 30 districts and it's not the driving, compelling issue. When you get -- you have to take the state as a whole and can't ignore the damage. The good thing about Arizona, we move in the right direction and S.B. 1070, we have three times the rate of violent crimes than any other state. First time ever --
Ted Simons: I want to get to that in a second, but last question regarding the budget. Democrats not happy with what the Republicans have done? What are the Democrats doing? Are there concrete proposals? Give us some specifics here.
David Schapira: First and foremost, Democrats recognize there's a need for cuts. We're in a economic recession. We have a deficit that cannot be resolved without -- with a one-pronged approach. It's just cuts. I think the budget is dishonest. Here's why. We're pushing $300 million debt from this year to next. So we can justify cutting even more. There are folks at the legislature that want to see the programs permanently cut and a lot of things that have been temporary during the recession, they made permanent in this budget proposal. Permanently eliminated financial aid match for the state for college students in our university system and passed a back-door tax cut on taxpayers on school districts that have excess balances, that have done a good job maintaining their budget. We want a budget -- we have taxing policies in the state and I paid taxes on baby formula for my daughter but if you have a liposuction, they pay no taxes.
Ted Simons: Some critics are saying that those loopholes simply aren’t enough –-
David Schapira: $10 billion
Ted Simons: $10 billion?
David Schapira: $10 billion, if you take all the tax loopholes and exemptions in Arizona, the sum total --
Ted Simons: Do you agree with that number?
Russell Pearce: No, no ,no I don’t. It's not true. We don't have a sales tax in this state. You have a transaction privilege tax. Those are exempt services. Services we've never taxed. They want to -- it's just a scheme for how we can get more money from the taxpayer. Simply not true. We grew government under the last administration, some years, 20% growth. While the inflation -- you can't grow at that rate and not have a train wreck coming at you and we all know that. The point is -- that $300 million we're pushing for in the next year is honest. There's no gimmick or rollover, we're admitting you cannot close the budget in the three months we have left in 2011, in '11 and '12 it’s fixed and we’re being honest about it --
Ted Simons: Alright. I want you to be honest about the five immigration bills that were defeated and I want to get your honest oppinion on this. How did you feel about that?
Russell Pearce: I am very offended over it. Again, almost everybody down there -- these are some good people -- but they ran on fixing the borders and fixing the laws. They have a chance to do something about it and they don't do it. These are codifications of what voters passed. Codifications of 1070, closing the loopholes and stopping abuse of taxpayer benefits and no free housing or government housing and no AHCCCS -- I mean, this was great stuff. When you want to fix the budget, stop the hundreds of millions of taxpayer fraud.
Ted Simons: Is this great stuff? Checking kids at school? Checking people going into hospitals? Checking these kins of things. Is that good stuff for Arizona?
David Schapira: ... Let me just say this.First of all, I’ve heard so many people in the last week talk about this issue as a border security issue and I think a few of the republican members of the legislature have responded to this appropriately saying nothing in any of those five bills had a single thing to do with border security. So people are concerned about securring our border? That’s fine and they should addvocate that to our legislature, they should addvocate to our federal government and we should all be working on that. None of these bills had anything –- a single ioda, part of them to do with border security. Let me telll you what they did do. They turned hospital officials and school administrators into immigration agents and here's the other thing. They didn't save a penny. Wouldn't save a penny because the biggest problem is people being admitted on an emergency basis. That would still happen if these bills became a law, but they just wouldn't be allowed to leave.
Ted Simons: If they become law, do they not discourage folks from coming to Arizona? Isn’t that part of the idea behind these bills?
David Schapira: I think it also discourages businesses from coming to Arizona. The business community thinks so. CEO’s, countless businesses – the chamber of commerce, countless businesses --
Russell Pearce: The chambers were the ones who sued us on Prop 200 -- no benefits for illegal residents. The chamber were the ones that sued us on employer sanction, going after illegal employeers. That had a competitive advantage. Everything has an impact on border security. As long as you have free healthcare and free education and free stuff and a job for folks, they're going to come across the borders. Anyone that talks about border security and not the other is dishonest about the fact because everybody talk about border security. Arizona is proven enforcement, we have 100,000, 200,000 illegals that left the state, according to the Pew Center and others. Obviously, it works. The impact -- we've talked about this -- three times the reduction of violent crimes than the national average. We have a declining enrollment and he first time ever in the state of Arizona, we have $500 million we have saved in K-12 from the declining enrollment. Nobody wants to connect the dots.
Ted Simons: Connecting the dots with a failing economy. Will the numbers change back again?
Russell Pearce: Not if we enforce the law and that's the neat thing, is this -- the main thing, is this about enforcement? The recession is nationwide yet our numbers are three times that of the rest of the nation. Clearly, it's not just the economy.It’s got to do with what Arizona is doing. When you talk about business not coming, that's not true and I'll tell you, like S.B. 1070, supported three-to-one across the nation. Border to border. 25 states modeling legislation after 1070. That's an image problem?
Ted Simons: Last word from David. Overall, from what we've talked about today, is Arizona a better place because of this legislation?
David Schapira: Listen, we need to secure -- we need a secure border in this country and we want people going through legal channels. But here's the thing. There are posters all around the state capitol that say jobs are job number one. Well, I don't know exactly what these bills have to do with jobs being job number one. And it's of a real concern to me. You know, the senate president mentioned S.B. 1070 being modeled in 25 different states. They've drafted bills. Doesn't mean they've passed them into law. I’d like to know how many of those states passed model legislation for 1070 to law.
Ted Simons: All right. We --
David Schapira: And 1070 is not doing anything in Arizona. It’s not even being enacted into law because the courts say it's not constitutional.
Russell Pearce: Only a couple of pieces --
David Schapira: The key parts are being enjoined.
Russell Pearce: No, the key parts were passed. They key parts were not enjoined, that's misinformation that's put out there and those will win entirely in the Supreme Court.
Ted Simons: We'll stop it right there. Great discussion. Gentlemen, good to see you.
Russell Pearce: And davis and I are still friends.
Ted Simons: Sounds good to me.