Ted Simons: Good evening and welcome To "Horizon." I'm Ted Simons. Joining me tonight are Mary K. Reinhart of the "Arizona Republic," Mike Sunnucks of "The Business Journal," and Doug Maceachern of the "Arizona Republic."
Ted Simons: Fiesta Bowl this week making news for all of the wrong reasons. Doug, let's get into this now. John Junker, chief executive, fired, two others relatively high up on the chain resign. Why?
Doug MacEachern: All issued forth from a report from a panel, special committee, looking into allegations of spending habits and campaign contributions. A 276 page report which honest to God knocked your socks off. The detail was astonishing about the unaccounted -- the spending that was not accounted for. For example, last 10 years, Mr. Junker's expense account approached $5 million, half of which they couldn't -- they couldn't account for. And the details, of course, which always invariably in situations like this, if you have anything relating to college sports, they end up in the strip club, and low and behold, they couldn't keep out of Bourbon street circus, wherever that is, and there was -- but the most damaging thing, and I think the thing that people will be focused on for quite awhile has to do with the campaign contributions and what appears to be an effort to try and filter campaign contributions from employees and reimburse them for what they spent.
Ted Simons: How did that work? This was -- they were -- not just the reimbursements, fundraisers and other activities going on as well.
Mike Sunnucks: They would have employees from the Fiesta Bowl give money. The money, campaign contributions was small compared to the expenses, $46,000 in terms of contributions because of the limits. Employee would donate to politician X and soon after that they would get some sort of bonus from the Fiesta Bowl. The investigation had cancelled checks from the various Fiesta Bowl entities to these employees and they matched up well with all of these contributions that were in question. So, that -- while the campaign contributions were not a big part of the money, and it doesn't get the headlines like the strip club and pebble beach birthday and the country club memberships that Junker had, if that is where the legal problems start for the group.
Mary K. Reinhart: It has the longer tail. That is what we are continuing to read about and report about, the campaign contributions and junkets to big college bowl games along the country. We have seen a number of state legislators up to the secretary of state's office to amend campaign finance reports to reflect some of these tickets, to begin to repay the Fiesta Bowl for some of those tickets. State law, for whatever reason, doesn’t allow legislators to take tickets. They do -- there is a giant loophole. They can go fly off to all kinds of wonderful hotels and they can have their air fare and lodging paid for. Supposed to declare that as gifts. Some of that going on, too, people pouring over the campaign finance statements to be sure they reflected --
Mike Sunnucks: The Fiesta Bowl folks, the report is -- Junker, they're trying to put it all on him, CEO, long-time executive, worked his way up the ladder, there for a long time. They are putting it all on him. Trying to take some heat off the board who really -- a lot of question about how much oversight, were they asleep at the wheel --
Ted Simons: Wasn't there a quote from someone on the board or close to the board, it was a great party and we all enjoyed it.
Doug MacEachern Yes, one of the board members said that. And it fulfilled what pretty much everyone believed about the Fiesta Bowl committee, these guys very much enjoyed being a part of it, and why not? The whole organization was intended to court college football organizations to make them want to come to Phoenix for the Fiesta Bowl.
Mike Sunnucks: You're not alone. The other big bowls do similar things, maybe not to the excess, maybe not violating campaign contributions, take trips, hand out free tickets, all enjoy themselves.
Ted Simons: One of the BCS -- one of the investigators on this BCS fact-finding commission, this guy took a Caribbean cruise by way of the orange bowl.
Doug MacEachern: You know, that is slowly coming out in the wash here, they're going to have a hard time finding someone to be on the investigative committee who hasn't been touched by some sort of gift like the sorts of things we're talking about because obviously this is what these guys do. They're all going to end up being tagged in some way.
Mary K. Reinhart: It is part of the party, if you will, the fact that the Fiesta Bowl has risen in prominence over the years to the very top, right? And so it is making everybody happy. Making the restaurant owners happy, hotel owners happy, all of the tourism -- folks are flocking here to the games. The money kept piling up and going out the door in some cases in ways that we didn't really understand.
Ted Simons: You mentioned folks coming, I don't know how many, three, four, lawmakers to amend their disclosure statements and such. Is there a -- I mean, you can’t just do something and then come back and oops, I guess I better fix that. The cow has wandered out of the barn, hasn't it?
Mary K. Reinhart: That is a good question. Senator Russell Pearce finally spoke today saying these things get amended all of the time. He's right. There are amendments to the reports done after the fact. How far after the fact? How long after the fact? I don't know what the law says on that. We will follow that part of the story for a long time.
Ted Simons: Senate president Russell Pearce is saying he paid for his tickets.
Doug MacEachern: He is searching, doing an O.J.-style search for the real ticket receipt. Yeah, as I understand it, he is looking through check receipts to see if he actually did pay for it. One person that is paying close attention to whether he will find it or not is Ron Gould, turning into a nemesis of the Senate president, because he said I'm going to conduct ethics investigations, and I don't care if it was a Senate page or Senate president who violated them connected to this Fiesta Bowl mess, we will look into it.
Mike Sunnucks: Tom horn, he inherited this from Terry Goddard. He did not even announce there was a Grand Jury or moving forward with it until after the election. Political mine field mostly republicans, a few democrats. Horn is -- I talked to horn this week and he sounds like he is going to move a little faster and he will look at some of the political side of it, not just the Fiesta Bowl folks.
Ted Simons: As far as the BCS and the image of the Fiesta Bowl obviously hit and hit hard. The chances that the BCS just says, you know what, we’re going to allow the cotton bowl, for example, to take over. Go back and make sure ASU gets into a post season game the way the Fiesta Bowl literally started.
Doug MacEachern: People in Dallas right now -- they're not holding back anything. They are presuming that the Fiesta Bowl is cooked and they are going to take their place. Whether that really comes to pass or not, well, the odds are that the Fiesta Bowl is in trouble, it will be knocked out of the BCS. We already saw BCS officials backing off of their original condemnations and for the reasons citing that everybody is sort of tainted.
Mary K. Reinahrt: Well, too, I wonder, as Mike said, how many other bowl organizations might have some of this in their books. It is hard to say unless somebody takes a look. Some questions I was hearing, let’s look at the rest of them.
Mike Sunnucks: Tuesday, Wednesday, looked really bad. Looked like they were going to lose the nonprofit tax status, lose everything, NCAA going to pull them completely as a bowl. The last couple of days it looks better. The BCS chairman or director backed away from comments about yanking it. All of the other bowls have a lot of money at stake. One thing helping us versus Dallas, how poorly the Super Bowl went, with the weather -- and I think the odds are better that we will keep in the BCS --
Ted Simons:Doug You have been here a long time. Impact, $200 some odd million every year, BCS title game, parades -- the Fiesta Bowl is a big deal. This is a big story.
Doug MacEachern: It is a huge story locally. I'm kind of interested, fascinated at how quickly it has fallen off the radar nationally. Sports illustrated did a big piece on it and ESPN has covered a little bit, but really, it hasn't riveted the nation quite like it has here, I mean, because, for exactly the reasons that you cite. This is -- the estimates were that locally we took in something like $400 million with the three bowls that we had this new year's. For a community that is suffering economically the way this one is, to have that suddenly taken away is nearly catastrophic.
Mike Sunnucks: A couple of other stories, HBO, pay for play scandal at Auburn -- those are overshadowing a little bit which I think helps the Fiesta Bowl's case a bit in terms of public perception.
Ted Simons: Fiesta Bowl, political reputations here. Grant Woods was supposed to do an investigation and the follow-up investigation just makes what he did, his operation, look like, at least from what you read, a sham. Talk to us about that and how much this hurts Grant Woods, who I would assume still has political aspirations.
Mary K. Reinhart: I think in the short term it looks like it hurts him significantly. A question a lot of us were asking earlier this week, what the heck? Here is a guy, moderate republican, voice of reason, his name comes up from just about every open seat or even un-open seat from mayor all of the way up to the U.S. Senate, why jeopardize that with this? And I think a lot of people are questioning that, and, you know, there is this connection with Gary Husk who worked with him at the A.G.'s office, you have to ask yourself is it worth it?
Doug Maceachern: I have gone through the 276 page report in the last couple of days, at least from that report itself, there is no direct evidence that Grant Woods colluded with the Fiesta Bowl or consciously to produce a fake investigation-- there is a lot of circumstantial evidence on the other hand that says that this stunk to high heaven. Everything that they did was with the prefab intention to find the -- to arrive at the conclusion that they did, that there was no -- that there was no wrongdoing.
Mike Sunnucks: One of the problems with it, republic wrote the story about the contribution, and they turned it around really fast, on this Grant Woods thing, it was really quicks, that doesn't help the circumstantial case that the fix wasn't in it. Didn't interview the right people, Junker steered him to folks that they wanted him to talk to and not other folks. It looked fishy from the start.
Ted Simons: It sounded like some were actually coached on questions that he would eventually ask.
Doug MacEachern: There were several people that told the real investigators that, yes, they were coached. One of them had -- was ordered to go and visit with Gary Husk at his home and broke down in tears and said I want this to go away, and according to her at least Husk said this is the only way it can go away if you go along with this.
Mike Sunnucks: Board members, former employees, vendors, sponsors, come out with more information on this, they have set up a whistle blower line the Fiesta Bowl has -- the report -- you will probably see folks come out.
Doug MacEachern: One thing I point out is that one thing that I think we will find very troubling about this will be the financial arrangement made between Grant Woods and Gary Husk. He got paid $55,000 for pretty easy labor over eight days and $20,000 of that was turned over to Husk. That is a very good question as to why a person who was already on the payroll, the person you’re investigating gets $20,000 out of your pay from the investigator.
Ted Simons: Last question very quickly. Yes or no, will we see criminal activities, indictments, anything coming out of this from anywhere in any direction?
Mary K. Reinhart: Hard to say. Yeah, I'm going to be on the fence not having read the whole report.
Mike Sunnucks: I'm going to say no. Civil actions, maybe fines for campaign finance violations. I don't know if you will see criminal charges.
Ted Simons: Criminal action?
Doug MacEachern: I think so.
Ted Simons: You think so.
Doug MacEachern: Yeah.
Ted Simons: We have a budget, I think. What is going on down there? Late into the night, the governor's idea, Senate proposal and the house takes them both and seemed to move toward the Senate as opposed to the governor. Talk to us about this.
Mary K. Reinhart: Yeah, I say if you put it on a scale, it would be closer to the Senate version than the governor's version. Both sides can claim victory or defeat depending on how they want to look at it. Governor, gave up room K-12, gave up room on DES, gave up room on a variety of things, the Senate held firm on its refusal to borrow. Governor's original plan if you recall wanted to do an overnight loan from first things first, $375 million in change. That is not in there. The Senate doesn't have its debt pay-down fund which it was going to hope to somehow sock away money to start to pay down the debt. We are deeply in debt. Question about whether or not this is the time to start paying that off. The budget is on its way to the governor. Vote out of the Senate this afternoon, late this afternoon. The house stayed up all night getting that puppy through, debate, third read, the biggest chunk is -- of the budget balancing is the governor’s Medicaid plan. The Senate and house essentially gave that to her. You hit this mark, we're good.
Ted Simons: Basically, $510 some odd million dollars, do whatever you want. Other than that, university getting cut big, K-12 getting cut big and a lot of pressure now on counties. It seems like a lot of the focus seems to be on the counties paying for stuff that the state used to have to be responsible for.
Mike Sunnucks: Transferring prisoner costs over to them. If you serve under a year, they will transfer that over. The schools and universities were willing to go with the governor's budget even though they had substantial cuts and they get hit more. The counties are taking the brunt on this. We will see if they sue. We probably will see a few lawsuits related to the budget.
Doug MacEachern: A lot of pressure now suddenly on counties, aren't conservatives supposed to be the people that understand the laws of unintended consequences? If judges are faced with the prospect of their county being assessed all of these additional costs for prisoners that serve less than a year, aren't we going to suddenly start to see a lot of prisoners being sentenced to a year and a day.
Mike Sunnucks: We were talking about that. That seems like a logical outcome is for them to react like this, save themselves by adding a week or couple of days to it.
Mary K. reinhart: We're not going to do gimmicks, borrowing, but shift budget problems on to the counties --
Mike Sunnucks: Vote on the budgets with so-called gimmicks, one person's reasonable debt is another person's gimmick.
Ted Simons: The governor campaigned for the one cent sales tax increase with the idea it would help save big cuts to education. This looks like a lot of big cuts to education.
Doug MacEachern I dread what's going to happen two years from now, too, when yet -- when the sales tax goes away and we're faced with yet another $1 billion cut which will likely to go education. That was -- I think if there -- besides the Medicaid issues, if there was one thing that people were trying desperately to try and avoid was big cuts to K-12 and that is what we are seeing.
Mike Sunnucks: The process, they moved this fast at the end and didn't give folks time to mobilize, education lobby, parents, etc., didn't see that. It is done.
Ted Simons; It is structurally balanced -- some $300 odd million shortfall pushed off to the next year -- did that – take care of its self?
Mary K Reinhart: All of the budgets are people's best guesses at revenues, expenditures, and the detail that I saw is balancing the 2012 budget. We are going to wink and nod at the current year deficit that we have and just hope that we make that up over the course of revenue enhancements, or revenue increases over the next year. It is being billed as a structurally balanced deficit, a lot of backslapping going on at the capital, for the first time in the history of however many years in the legislator, we finally passed a structurally balanced budget --
Ted Simons: ok you referred to the governors Medicaid proposal, Here is the number you have to hit -- what is the governor's proposal and does it include coverage for transplant patients?
Mary K reinhart: Yes and -- yes. Much of it has to be approved by federal health care officials. It was sent off on Thursday, the biggest chunk of our waiver request, asking primarily where the savings come from is freezing three programs for folks. One catastrophic health care program that has been in one shape or another for about 40 years in the state of Arizona, safety net for all safety nets for people. Another a childless adult population that voters approved in 2004 -- Another is some parents, these programs are not -- no one is getting kicked off. That is the difference between her original proposal and what the Senate passed. They are being frozen. People -- thousands of people come on and off those programs every month. We will see roughly 100,000, 150,000 or so come off this in the first year.
Ted Simons: What about the idea of violating prop 204. That has been out there from the get-go. You can't mess with this initiative that passed.
Mike Sunnucks: We will see probably a lawsuit on this and how the courts rule on this. This will impact things down the road. On the transplants, she sat there and didn't move on this, but it looks like they're coming back. And that is one of the big stories floating out there nationally is there coming back and can she come back--
Mary K reinhart: Some of those transplant people, they have to make sure to keep themselves enrolled in access. The language in the budget going to the governor's office today says it is their intent to fund transplants. There is a lot of convoluted language, two separate parts of two different bills and it talks about intent and it talks about available funds, the democrats are saying that is shenanigans there -- the governor said it is exactly what we intend to do and as soon as she signed it the people taken off the waiting lists will go back on.
Ted Simons: We had Craig Barrett former Intel CEO addressing the Commerce Authority Board, and basically saying, Doug, Arizona's education system stinks, according to Craig Barrett and this was before all of the funding cuts.
Doug MacEachern He took it to great lengths. He said if this had been the education system in place when we were deciding to bring $10 million worth of Intel in the state we wouldn't have done it, not even in the top 10. He leveled on the system as it exists, and, yes, he was talking before all of the cuts became really public. So, it's good. I mean, this is exactly the sort of -- I'm sorry it came so late in the game really. This is heavy gun business leader type influence that I think the debate really needed and didn't have for quite awhile.
Mike Sunnucks: The quandary for business folks, they call for these investments, and more spending on education, universities, and they push for all of these tax cuts. They want more tax cuts put in this session. Intel as been one of the company that has gotten some of the tax cuts. You can make a good argument, it is going to bring jobs, everyone understands that. But when you fault the state for not spending but then you want your own tax breaks and tax cuts it causes contradictions;
Mary K reinhart: My question, too, they have weighed in for the first time this year on Medicaid, too, on access, and don't do what you have just done essentially. It doesn't appear that the legislators were listening.
Ted Simons: In the old days in Phoenix, it seemed like a couple of folks and a couple of tall buildings that had a lot of power. Some folks didn't like that. It seemed to have been the case, Doug you have been around the block a couple -- where are these folks? It sounds like the business community seems to want a lot of stuff that lawmakers don't care all that much about.
Doug MacEachern Yeah, it's -- and you know, we have been wondering about that on more issues than simply education. I don't have an answer for it.
Mike Sunnucks: I think that they like republicans in control down there generally, business people like that, less regulation, low taxes, all of that. They're worried down there who is the stop gap down there now? So conservative, tea party folks, term limits, clean elections, they don't feel they have those allies in mass.
Doug MacEachern In Craig Barrett's case, at least, he and his wife do have a business school named after them. So --
Ted Simons: Obviously, the attention and attraction to education is there, but you have to wonder, mine, are they paying attention -- does business have a footprint down there anymore?
Mary K reinhart: I would say given the results today, not so much.
Ted Simons: Yeah.
Mike Sunnucks: If you look at the tax cuts they got before, they were all pleased as punch with that, the jobs bill.
Ted Simons: Good stuff. Thank you for joining us. We appreciate it.