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May 2, 2012

Host: Ted Simons

Legislative Update

  |   Video
  • An Arizona Capitol Times reporter provides a mid-week update on news from the Arizona state legislature.
Category: Legislature   |   Keywords: legislative, update, ,

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Ted Simons: Busy times at the state capitol. Legislature approved a state budget and lawmakers are now considering the governor's plan to reform the state personnel system. Here with our weekly legislative update is Jim Small of the "Arizona Capitol Times." Good to have you. Very busy times for you at the capitol. Give us an overview of the budget. Modest increase in revenue but projections for the future not so optimistic?

Jim Small: Well, not optimistic. They predict growth but not as optimistic as what the governor had pushed for months this. Really a little more on the conservative side for lack of a better term considering the makeup of the legislature. The idea was, “Let's predict revenues.” When you start predicting out two, three years it becomes more difficult. Small errors make for big errors in revenue. So they decided, “Let's play it safe and then if we get any extra money we'll be pleasantly surprised by we'll be in a good situation” as opposite where you budget for 8% growth and it comes in at 5% and we go, “Oh wow we have to take care of this problem.”

Ted Simons: So we had a modest increase in revenue in the sense of more money for education, more money for prisons, more money for public safety. These were all the governor's proposals.

Jim Small: I think all tolled up it's a couple hundred million. In terms of new spending. Far less than what the governor had initially pushed for, in education especially. There's like $90 million in new funding for various programs. The governor had been asking for a number far higher, closer to $300 million, $250 million. They met in the middle but tended to meet closer to where the legislature started than where the governor started.

Ted Simons: The legislature also did go with the governor on some of the spending -- these were things the legislature wanted zero line items there. So why do you think, was it basic compromise? Basics negotiation?

Jim Small: I think some of it was basic negotiation and compromise. A good example where the legislature didn't want any part of it but gave the governor something was money for K-through-Third Grade Reading Intervention Program. Last year the legislature passed a law that said students who can't read at a self level at third grade can't go on to fourth grade. We get them reading early. They didn't put any money in the program to help make sure kids can read by third grade, so that's what this is. Legislators, a lot of Republicans didn't want to fund it. They ended up capitulating and giving in, saying, “Okay, the governor can have $42 million but we're going to put in some safeguards and accountability.” But I think on the whole you -- this is a budget where if you're going to pick winners and losers the Republican legislature is seen as the winner more than the governor.

Ted Simons: Why did the governor go ahead and if not capitulate, if not cave, certainly agree to things that initially she wasn't that ready to agree to?

Jim Small: We don't know. We don't have a good answer to that. Certainly none of the sides that are involved are really talking about it, but most people tend to think it was out of political expediency. Republicans and Democrats were $40 million apart in finding a budget deal. They talked about this yesterday $40 million apart. They still would have had to massage where the money was going, but out of an $8.5 billion to be $40 million apart for two parties so philosophically -- there's a gulf between them. That's impressive. There were people with the governor's office who saw that going on, said, “We don't really want to be on the receiving end of this veto override. This looks really bad, looks like the governor can't manage and she can't govern the state. So I think they stepped into action and said “Let's find area where we can claim victory. We won't get everything we want. We have to give more than we otherwise would have but it's better than the alternative, getting nothing.”

Ted Simons: The legislature is looking at personnel reform.

Jim Small: She will be, that bill got to the Senate today. This is an idea we had heard for a long time was for the tied to the budget. Senate leaders said, “No, we're just waiting for the right time.” Lo and behold, the budget got out yesterday and here we are discussing personnel reform today. The bill will be voted on in the House, get sent to the governor. This is a cornerstone of her agenda. This is what she talked about at length about so she will certainly sign it.

Ted Simons: What's the business of reimbursing Russell Pearce, who lost the recall election, reimbursing him for recall election costs?

Jim Small: Constitutional provision that says the legislature is to enact laws to allow recall elections to happen and also to enact the law to provide for the reimbursement of reasonable campaign expenses for recalled officials, Russell Pearce in this case, recalled official. That law was struck off the books in the '70’s, though. You have people who supporters say we need to find a way to make him whole constitutionally. We have to do our duty. So today there was a conference committee that met. They added an amendment to another bill that had to do with recall elections and it says that -- establishes a framework for how to repay recalled officials in the future. It doesn't have a dollar amount. It doesn't say we're going to give Russell Pearce a check, but it allows him to apply for reimbursement.

Ted Simons: Basically if he wins this next election he can be in the legislature and basically apply for reimbursement?

Jim Small: Assuming this thing gets through the House, the Senate and signed by the governor, he could probably do it right away.

Ted Simons: Basically you're talking about no money for Kidscare, no state money for KidsCare. There's money through outside sources, soft capital, school books, computers, we're seeing fund sweeps in unemployment benefits, but they can find money to reimburse Russell Pearce?

Jim Small: Well, there's certainly been a lot of discussion about that. I know Democrats and other people who are critics say, “Really, this is what we're going to do? Spend money on this?” It's the same conversation we had in the House and Senate when they made a motion to authorize a lawsuit against the IRC, well, we can't find money for KidsCare or adult education, for K-12, but find money to sue to make our elections easier?

Ted Simons: Sine die tomorrow?

Jim Small: All signs point to tomorrow. They have called off work for the day, so tomorrow it is.

Ted Simons: Good stuff, Jim. Thanks.

Mortgage Relief Fund Sweep

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  • Arizona Housing Alliance Executive Director Valerie Iverson explains why her organization is considering legal action after state lawmakers pass a budget that sweeps $50 million from a mortgage settlement fund.
  • Valerie Iverson - Executive Director, Arizona Housing Alliance
Category: Business/Economy   |   Keywords: valley, economy, housing, mortgage, relief, fund, ,

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Ted Simons: Included in the $8.6 billion budget state lawmakers passed yesterday is a $50 million fund sweep from Arizona's share of the National Mortgage Settlement fund. The governor's office and Republican lawmakers say the state is well within its rights to use the money. Critics say the move is likely illegal and certainly unethical. Joining me to talk about this is Valerie Iverson, Executive Director of the Arizona Housing Alliance, a coalition of leaders in the housing industry. Thanks for joining me.

Valerie Iverson: Thanks for having me.

Ted Simons: What exactly is the Mortgage Settlement Fund?

Valerie Iverson: About two months ago, 49 states, the federal government and five of the largest mortgage services reached a settlement in regards to some claims for fraudulent practices in the foreclosure industry. So they agreed to settle. It was a $25 billion settlement, and Arizona's share is $1.6 billion of that. The majority of the settlement money is going to be the banks working with specific borrowers and doing mortgage write-downs of those loans, but it's only the five largest banks. There's many lenders that -- borrowers that are not covered by that settlement. There's one part of the settlement that is about $100 million. A little under $100 million, those are payment to the state of Arizona. Every state is receiving a payment as a result of this foreclosure mortgage settlement. That money is supposed to be used for foreclosure prevention and mitigation. That is the fund that's being raided by the legislature to put into the general fund.

Ted Simons: Supposed to be used for foreclosure prevention and mitigation. Are the settlement terms that it must be used for those purposes?

Valerie Iverson: Well, the settlement terms say it shall be used for foreclosure prevention and amelioration of foreclosures and its effect on the market. So I think it was the suits were brought up by the consumer divisions of all the attorney general's offices across the nation. The suits were about things that happened to individual borrowers who had the robo signing and other fraudulent practices, so I believe it should go to the consumers.

Ted Simons: This money that we’re talking about actually came to the attorney general's office, then deposited with the state treasurer's office?

Valerie Iverson: It has not been transferred to the states yet, but we expect it to occur any day now.

Ted Simons: That would be the pipeline?

Valerie Iverson: That's how the pipeline occurs.

Ted Simons: The state says if that indeed is the pipeline, we were hit public funds, we lost a ton of public funds because of the mortgage crisis, the housing crisis, the whole nine yards, we lost that money, this is supposed to reimburse states. Why can't we use it?

Valerie Iverson: Well, it's interesting because they did change their language in the budget. There was a Kavanagh amendment that said it was to reimburse them for costs to the state for the effects of the foreclosure crisis. But I haven't really seen any analysis of what those costs actually are. The only analysis I have seen out of the legislature is a study that showed that they actually collected more individual income taxes because so many people have lost their homes from foreclosures, they are not eligible to take the mortgage interest deduction. So 2011 income tax collections from individuals actually went up 18.5%.

Ted Simons: So when the legislature and some lawmakers say that this basically repays the state for tax revenue lost during the housing downturn, you say tax revenue wasn't lost?

Valerie Iverson: Well, that's the study that came from out of the legislature. So that's the only study that I have seen that shows any kind of connection between the foreclosure industry and a specific cost, or revenue.

Ted Simons: The lawmakers are also saying that the language, the governor's office also made this point as well, the language is somewhat vague. When it's that vague the states can -- they are not taking all the money, just #50 million. What do you make of that?

Valerie Iverson: Well, that's sort of a legal question, and we're actually going to take a legal avenue and file a legal suit against this and then I'll leave that up to the lawyers to decide the legal part of it. I'm not a lawyer. All I can say is my interpretation is this is the people have been hurt are those that have been on the street, the people who are losing their homes, the communities that have been hardest hit by foreclosures, and they are the ones that should have this money. This money is really interesting because it's the only flexible source of funding that can be used for things like homeownership counselors, legal aid, outreach, and there's no other sorts of funds that can help. A lot of people have heard stories about what it's like to go through foreclosure and the giant bureaucracy and the maze that you have to go to to be able to get the funds that they deserve. Without these home ownership counselors and legal aid to help them through that maze, they won't be able to access even the funds that are available in their settlement. Another part I want to bring up too, this settlement is only with the five largest mortgage servicers. There's many people who have loans through other banks that aren't covered by this large mortgage settlement. This $100 million could be available to them to help with principal write-down. Again, it's this flexible source. The one last point also is this any loans that are insured by Freddy Mac and Fannie Mae, my understanding is they are not covered by this settlement. I've heard that's as much as 80% of the loans in Maricopa County. So there's a big chunk of people who are in trouble, they are troubled homeowners about to lose their homes. They are not even covered by this big settlement. This $100 million can help them and help those who can get into the settlement make their way through the bureaucracy better.

Ted Simons: You will be filing suit?

Valerie Iverson: We are filing suit against this. We will be doing it as soon as we can because the money is coming into the state soon.

Ted Simons: We have to stop you there. Thanks for joining us.

Valerie Iverson: Thanks for having me.

Technology & Innovation: iProject

  |   Video
  • Chell Roberts, the Executive Dean of ASU’s College of Innovation and Technology, explains how students are working with industry and the military on innovative projects designed to address real-world issues.
  • Chell Roberts - Executive Dean, ASU College of Innovation and Technology
Category: Technology   |   Keywords: AZ, Technology, Innovation, iProject, ASU, ,

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Ted Simons: Tonight's edition of technology and innovation looks at how ASU students are working with private industry and the military on a variety of different projects designed to address real word issues. Here to talk about the program is Chell Roberts, Executive Dean of ASU's College of Innovation and Technology.

Chell Roberts: Very good to be here.

Ted Simons: I-projects, innovation showcase. What are we talking about?

Chell Roberts: We understand the College of Technology and Innovation that many students learn best when they are able to apply their knowledge in an authentic contest. What that means is they take the lectures and they take what they read in books and they do something real. You don't just read about it, you actual go do it. You actually design the new product, new innovation.

Ted Simons: This is students teaming with industry to innovate on things that really do matter.

Chell Roberts: We have created partnerships with a variety of industries, government, agencies to take that authentic environment and to bring students and partner to solve their problems, to design new things for them, to create new enterprises.

Ted Simons: Who decides on the students, who decides on the partners?

Chell Roberts: Well, I do a lot of that work, but there are many of us that work on finding new partners to work with us, many of them coming to us now. We have done this the past five years. We started very small and are getting very, very large with lots of industry and partners coming to us.

Ted Simons: These sound fascinating, especially the one working with the Air Force on something called the Spiderman Project.

Chell Roberts: Spiderman is a great project. Imagine things Spiderman can do. Spiderman can climb walls. What the Air Force came to us and said is we would like a student team to work on climbing walls while our soldiers have backpacks on them some of the our students created a mechanism for someone to go up a ten-story skyscraper, right on the side, kind of a suction device so they can walk up the side of a building.

Ted Simons: Like little geckos?

Chell Roberts: Like geckos. Yes and it works.

Ted Simons: With 100 pound backpacks?

Chell Roberts: Makes me scared to see students climbing the sides of walls, but yes, they do it.

Ted Simons: They do okay. This is viable. This is something that the Air Force I guess, the military, can use.

Chell Roberts: They can. So often what the companies and Air Force do they have us do a first prototype. We're creating the new idea and how it’s going to work and then they take it to the next generation.

Ted Simons: Honeywell working with Honeywell on a fully automated touch screen panel.

Chell Roberts: Very interesting. So Honeywell wants to test displays. They are looking at new cockpit displays. You think about testing those displays someone may have to touch a display, oh, 10,000 times to know how that works. We don't want to hire a student or an employee to touch 10,000 times a screen, so we created a machine that will do that testing, a robotic device that tests the screen by touching with different pressures, different angles, different drags, thousands of times.

Ted Simons: This is something Honeywell said we would like to see developed?

Chell Roberts: Oh, yes. Now they are going to use it and now they’re testing the devices. You bet.

Ted Simons: General Dynamics. This one I find fascinating as well. A self-sufficient shelter system.

Chell Roberts: Exactly. So one of the problems the military has is they will get soldiers at a remote location and then they have to supply with water and energy those soldiers. A lot of injuries happen because of those convoys that have gone out. What they want developed was more energy, more self-sustaining environment so soldiers can go out, put up their tents, put up an environment, get the energy and be able to stay there without those convoys coming. Our students created one of these environments that will likely go into the next generation of their solution for these soldiers.

Ted Simons: A soldier can go to an isolated region, water, energy can be there for sustained period of time instead of always having to go out and come back?

Chell Roberts: Exactly.

Ted Simons: Wow. And it's working?

Chell Roberts: It's working. Isn't that exciting?

Ted Simons: Yes, it is. Also exciting in a different way is what's going on in Gilbert and dog poop.

Chell Roberts: Dog poop. Exactly right. At the Cosmos Dog Park there are 300 piles of dog poop left a day in the park. This is after citizens cleaning some of it up themselves. They came and said, “What can we do about this dog poop?” We had an idea. We put a student team together with a faculty member and with the city. We created a way to digest the dog pop and create energy, gas, which now will light the lamps in the dog park. That's going underground this week where they are going to use that.

Ted Simons: More than one lamp?

Chell Roberts: Right now we have one lamp. We'll add multiple lamps as we go. Now we have been contacted by New York, Central Park, interested in doing the same thing inside their parks.

Ted Simons: So basically you take the dog out there, he does his business, the business is converted into energy and lights the park so the dog has a better view of himself doing his business.

Chell Roberts: I guess that's it.

Ted Simons: Last one, a solar aided hot water system that SRP is developing but you guys are teaming with them on this how?

Chell Roberts: SRP gives rebates for solar devices that people buy. One of their questions is, how well do they work? When we give a rebate do we know we're getting an improvement in energy efficiency and how much? We teamed to put in a number of solar devices and to spend a year testing those in different climates, different times of day so we could characterize for them how much efficiency is gained by the solar devices.

Ted Simons: and again, viable, working?

Chell Roberts: Viable. Working.

Ted Simons: These are real industry -- these are not academic exercises here. Give us an overview of i-projects and what students are getting from all these developments.

Chell Roberts: You bet. So as I told you earlier, we care about students learning in a different way. When students hear things, many students, when they hear things they learn in one way. When they do things they learn it much more deeply. We created a whole environment with all these industry partners that come in. Industry partners benefit in many ways. They benefit because you have students now that you get to try out for a year, see how well they do. They benefit because they get intellectual property. Our students benefit in a different way. Imagine the resume when they actually have done something, created a new device. They have something viable versus I have a degree and a grade.

Ted Simons: And they have connections with some of the people they are working with.

Chell Roberts: Often an entire team or 50% to an entire team will be hired by the company.

Ted Simons: It sounds like a great deal. Congratulations and continued success on this. This is very encouraging and sounds like it's working.

Chell Roberts: I forgot to mention just won a President's Innovation Award. So, yes it’s working! And it’s going to get bigger and better.

Ted Simons: Great to have you here.

Chell Roberts: Thanks so much.