Ted Simons: Good evening. Welcome to "Arizona Horizon" journalists roundtable. I'm Ted Simons. Joining me tonight are Mary Jo Pitzl of the Arizona Republic, Howie Fischer of the Capitol Media services and Luige Del Puerto of the Arizona Capitol Times. This has been rumored for such a long time, it happened, now we move on.
Mary Jo Pitzl: no great surprise that this has finally happened. It's taken off. What that will leave Arizona with is about according to the governor's office another about 9,000 jobs here in Arizona, in Tempe, still using Sky Harbor as a hub, the glass is half full. This could bring even more flights because it will be a bigger airline. Which doesn't really account for some of the duplication of routes that might be dropped because of the merger.
Howie Fischer: What else are they going to do? They have to put a happy face on. It they said, isn't this great? We're just so happy. Couple hundred jobs are going to disappear. You have duplication not just in terms of the routes but you have certain services that you don't need two people doing. I figure couple hundred jobs. In terms of the economy --
Ted Simons: Is it a couple hundred? I thought the headquarters had 2,000 here.
Howie Fischer: I think that it's going to probably come down to a couple hundred. Some people they will need to keep as part of a hub. Long term as they integrate the airlines we may lose a few more. That's all remains to be seen. The losers in this are air travelers. The fact is less competition creating the nation's largest airline, fewer to compete, even southwest is raising its fares figuring if this is the new future let's do T.
Ted Simons: We know for sure air priceless increase or does that just seem logical?
Luige Del Puerto: The idea of having more players to bring the prices down. We only have I think four airlines and if one raises their prices now there's just three that would have to decide whether they would follow suit or not. Traditionally when one raises its prices and one does not follow, they retract. So with only a few players having to decide whether or not to follow suit on a price increase, it's potential -- there could be huge potential for price increase, but that's not certain.
Ted Simons: The impact of losing a fortune 500 company based in Tempe, obviously still here, headquarters will not be here. Big deal?
Howie Fischer: It's bragging rights. Look, there are a lot of cities that don't have big, corporate headquarters. It's not like New York or New Orleans or San Francisco known for specific things. There are a few technical details to be worked out in temples of name of a certain downtown sports facility. Does American Airlines want another one? It's nice. What corporate headquarters usually mean are contributions to the arts. That's where it really matters in terms of the Herberger and the opera company. That's where I think the loss will show up.
Mary Jo Pitzl: I think it's more than just bragging rights. You lose that executive level commitment to the community. It does play out in things like charitable contributions for everything from the arts to social service programs. Those entities are bracing for a downturn.
Ted Simons: it's a bit of a drag for those who are intend here a while. This was America west, our little airline that could. It did.
Howie Fischer: It could but you remember there was a little bankruptcy bump in there.
Ted Simons: They all have bankruptcy bumps.
Howie Fischer: that's why consolidation makes sense. That's why the Department of Justice will approve it. They may make American shed a couple routes where there's duplication, but it's the wave of the future. With fuel prices being what they are, this is what we're going to see. It could end up you'll have United which combined with continental, Delta which was originally going to be the merger partner, you have American and then southwest. There's maybe hopefully holding down prices.
Ted Simons: Adios, America west, US Airways, welcome to the brave new world. Welcome as well to the governor and her idea of sales tax reform, streamlining the process.
Mary Jo Pitzl: yes. This goes to the process not to the rate. I think a lot of people are thinking oh they are going to mess with the sales tax, we're going to cut it or raise it. This does not deal with that. It's a way to make it easier for business to pay state sales tax. In this state you have different levels collect sales tax. Both cities do their own collection. Others do it through the state. But it creates a confusing mix of where do I pay my tax? If I'm in this city what's the rate? If I'm here what's the rate? The idea is to make this all simpler for business.
Howie Fischer: what business really wants is a single audit. You have a situation now that you think you have taxed things properly and the state does their thing then the city of Phoenix does their thing. If you have an outlet in Glendale maybe they do their thing. That's where they want the simplification. They also will limit to a certain extent the ability of cities to do outlier taxes. The real key is the contractors. If you're building a $100,000 building they presume that 65% of that is parts. Stuff that should be taxable. You pay the tax to the city where you're doing the construction. This makes sense on one level to say when you buy the lumber you go to home depot, the lumberyard, pay the sales tax there. That's fine except if you're building something in Paradise Valley, which doesn't happen to have a home depot, you're paying the tax to the city of Phoenix. That's a real problem.
Ted Simons: cities and towns, that's the issue. Cities and towns seem upset with that.
Luige Del Puerto: They are very upset. Very upset. When the task force was producing this recommendation, presented them, they said we like some but we don't like some. They were serious about things they don't like. They are very upset I think four mayors have already written to Governor Brewer saying this particular piece is really going to hurt us. How we explain if you're buying stuff from one city and constructing in another city, now all the sales tax will go to one place where you bought your materials, then how is that going to even out?
Mary Jo Pitzl: There's a concern that if the tax shifts to where you buy your materials, which I think on a lot of levels makes -- it's common sense, a lot of that could be paid out of state. The state has a way of recouping that through the use tax, more paperwork, more obscure formula for the public to grasp but that's another concern.
Howie Fischer: what the argument has been, Debbi Leske says, we're going to do two things that will make a difference. First by taxing it when you buy it we end leakage. Companies going to stores and saying, here's my sales tax exemption, it never gets taxed. The state now gives shares with cities 20% of the contractor taxes. They will boost that to 40. The idea there will be enough there. You talk to John Kavanagh, that's nice. Will they guarantee it? No, we're not ready to do that. This is going to have to get changed to get through the legislature. Every one of the lawmakers has multiple mayors that they report to. If the mayors are not happy this ain't gonna happen.
Mary Jo Pitzl: you have had no less than the peek Speaker of the House saying this portion of the proposal which relates to prime contracting, there's going to be a change, something has to be done to make sure the city and local governments are held harmless. You create a shared pool, find a way to distribute money from that, but nobody has the details yet.
Luige Del Puerto: Simply disagrees fundamentally with some of the assumption by the governor's office that for example if you did it this way, collected the sales tax at the point of sale that there would be less leakage, I think less co-said at one point there's 30% not being collected. The league says we don't see that. We disagree with that. If they can't even agree on those assumptions, then it's going to be tough getting there without changing some of the provisions.
Ted Simons: Mary Jo mentioned out of state purchases. How does internet purchasing play into this and the idea that eventually Congress would have to approve first the idea of taxing internet purchases.
Howie Fischer: Two of the three bills pending in Congress now to allow internet sales say we'll allow states to tax it if they have simplified, a uniform tax base. You can't have companies figuring out it's 9.1 here, 8.7 somewhere else. This is designed to pave the way. It's coming eventually. Despite the kicking and screaming of the E-bay merchants and everything else, this will clear that. This comes back to the point that you can do that without the other half that Mary Jo talks about in terms of the contractors. It may end up this ends up getting bifurcated to deal with the sales tax simplification.
Ted Simons: do we see simplification? Is this going to happen in some way?
Luige Del Puerto: Yes. The governor has said I think I'm a woman on a mission. She's very intent on having this done. We'll see this happen.
Ted Simons: all right. Let's see if the house Democrats who release add budget plan -- you know, we have talked about Democrats releasing budgets before. How everyone says that's nice and nothing happens. This one mirrors a lot of what the governor wants.
Howie Fischer: Well, they decided to -- to use Bob Robb's term to play small ball on this, which isn't a bad way of looking at it. Sometimes Democrats come out with broad things, we're going to have everybody at age 4 starting full day kindergarten, they concluded, look, let's be realistic. Obviously they are also looking at the fact that governor wants to spend money and the legislature is basically coming out with a no growth budget. Which side would we do better on? It's real clear. There are some other things they could have done. Might they have decided we should use the money in the rainy day fund? They decided to stick with what they got. My loophole is your tax break. I think they are trying to be realistic as they think maybe they will be a part of it as opposed to finding it when it's released in march.
Ted Simons: are they going to be a part of it?
Luige Del Puerto: That's a good question. The Republicans still have very good control of both houses. I think indicateses by the leaders is -- it's going to be Republicans going to negotiate and produce this budget with the governor. The big question, the big elephant in the room is Medicaid, how the governor plans to get that through. How does that impact the whole discussion about the state's spending plan? My sense is that Howie is right, there trying to play small ball if you will. What struck me about the press conference was how much PARADES they were giving the governor. Saying our budget is quite similar to the governor's and we really like the fact that she's doing this and that for kids. A lot of praise by the Democrats for the governor's budget proposal. I was speaking with one democratic Senator, what can we complain about? We like this governor's budget.
Mary Jo Pitzl: I think they were -- their budget from last year was more feelingful and had more impact on the process. Last year you had the Republican majority was not enamored of Brewer's budget. Some of the democratic proposals played into the Republican legislators' hands that allowed the Republican majority to say, hey, we have a few more comrades in arms on this. They don't need anyone else to help bolster the governor's plans for spending increases. The governor's spending increases are modest in the big scheme of things. We're not going going back to 2007. That's nice if Jan's budget goes through as approved. The Democrats could say, me too.
Ted Simons: Last question on this. You're down there every day. Is this the kind of thing where Democrats say, A, governor says A, but in order to get it passed a Republican lawmaker has to say A? That's how it's going to -- no matter what the Democrats say, a Republican has to Shepherd it through.
Luige Del Puerto: Yes. They will have a say in this budget. They will negotiate with the governor. At the end of the day a Republican has to say yes.
Howie Fischer: We saw this a lot back in the '80s. You have 17 Senators. Two of them decide for whatever reason we're going to take a walk, then they have to talk with the Democrats, negotiate. They used to do this -- if they can hold the caucus together, if nobody goes south, shouldn't be a problem.
Ted Simons: Okay. Let's move on here. A judge strikes down an abortion -- this is the one that targeted Planned Parenthood.
Howie Fischer: yes. This actually is not a surprise. Judge Neil wake had previously issued a restraining order saying you can't do to Planned Parenthood what you're trying. In essence Arizona's Medicaid program includes family planning. Federal law says if you're a Medicaid beneficiary you can go to any qualified provider. Well, Justin Olson said I'm going to be cute with this. I'm going to decide you're not a qualified provider if you also provide abortion services. You cannot use state money or federal money. His argument is they are getting Medicaid money for this which frees up other money for Medicaid. The judge said the fact is that they are providing the services. So what he did this past week is made permanent his injunction. We know this is going to the 9th circuit. The preliminary injunction is already up on appeal and the Attorney General's office some of the anti-abortion groups intend to argue it's a states rights issue and we get to decide.
Ted Simons: Arizonans forced to continue to subsidize the abortion industry. Sounds like cap, which is very influential down there, they are looking at stuff like this. They are trying to double down on what they got.
Luige Del Puerto: right. The center for Arizona policy has been very successful, especially since Brewer became governor. They got pretty much everything that they have been advocating for. They are saying we have done a lot of things, we succeeded in getting legislation through. We want to make sure we win in court. We want to make sure what we have are already in statute are getting implemented. They are changing their strategy a little bit, which is somewhat of a surprise.
Mary Jo Pitzl: At least for now.
Luige Del Puerto: at least for now. Yes.
Mary Jo Pitzl: they have to see what happens with these cases as they go up to the federal court system. There's one that will be going to the Supreme Court on the 20 week abortion ban.
Howie Fischer: That's really the key. You're up against the wall. If in fact the prior rulings stand, if in fact you can't define abortion, ban abortions prior to viability, if in fact you can't decide not to fund Planned Parenthood for things unrelated to abortion, where else do you go? They have some little bills dealing with reports on folks that do in vitro fertilization. But you're right, the issue is defending what you've got. There's a bill to allow civil unions. It's for the going anywhere but let's say cap is using it to raise a lot of money.
Ted Simons: last question on this. How influential is cap? How do they get there?
Luige Del Puerto: Very influential. The center for Arizona policies, I would like to call them the evangelical Christian lobby, many of their members are churches or people who espouse a religious viewpoint. Many of their arguments are secular. They raise social studies and what have you to advocate for their agenda but they are very dogged in the way they go about advocating for their legislation. They do it each year. They do it incrementally. The last two years or last year specifically was the year that I have seen they have taken a leap of some sort, pushed as much as they could against abortion. In previous years they chipped away at Roe versus Wade incrementally. That's a strategy that's very successful because as you know, legislation, it's tough to get legislation through but if you're down there and you work on it year after year you'll get there.
Mary Jo Pitzl: Plus many of the lawmakers tend to agree with the position that the cap puts out and are very good in addition to pushing legislation they put out scorecards, voter guides. Here are the folks that are in our corner. You don't want to get -- if you're running in a Republican primary you don't want to get a bad Mark from them.
Ted Simons: Interesting. Union dues, this bill regarding the idea of automatic paycheck deductions to unions, it sounds like first of all we have heard this before and we're seeing it again but sounds like it's being slow footed here.
Howie Fischer: there are several bills. There's the one, this one is slightly watered down version. If the cities are going to allow paycheck deductions they have to take a public vote. Political pressure. There's also a bill Steve Montenegro has which says negotiations have to be negotiated public. You know what gets accomplished there. Nice to talk about. Andy Tobin, the house speaker, said, look, these bills have been up before. Here's the political problem we have. The police and firefighters hate these bills. Our members like police and firefighters. They go and they talk to folks. First responders. They are good Republican issues. Do we really want to force our members into a position where they have to go ahead and either vote no on the bill and seem to be pro union or go up against the police and firefighters? He's going to put a kaibosh on it. At this point as far as he's concerned a couple of bills have cleared committee, he's not bringing them to the floor.
Ted Simons: sounds like a concern over primary opponents plays a big part here.
Luige Del Puerto: he's getting pressure from some of his members that don't want to see this bill on the floor. They are having to choose between being tagged pro union or fighting the guys that they just in the primary and general elections -- they had courted their endorsement, got their support. Those guys had spent money. Look, the firefighters spent more money than the state Republican party did in electing Republicans. Who are the bad guys exactly.
Howie Fischer: There's some question whether some of this will pass. One of the bills died in committee because two of the Republicans are former council members. Why are we messing with this? They agreed to let it come out because some procedural stuff but they made it very clear this gets the floor, don't count on their votes.
Mary Jo Pitzl: you're right. They like first responders so much there's a bill that would extends benefits to spouses and family members of first responders who might be injured or killed in the line of duty.
Ted Simons: okay, last topic here is Fred Duval. Who is Fred Duval and why does he want to be governor?
Howie Fischer: Fred Duval goes back to the Babbitt administration, very nice guy, on the board of regents. He's at the age saying what could I do next? There's a quasi vacuum in the Democratic Party. There's no HEIR-apparent. We have no statewide elected officer, nobody waiting in the wings. He's saying, you know, I think I have the contacts, I probably could get some on the board of regents. If I jump in now I could start raising the money. He figures Richard Carmona is making noise. Ted Campbell is one of those people we keep talking about. Chad blasted off every time we talked about it.
Mary Jo Pitzl: No, he says he is looking at it seriously. I wouldn't count him out.
Howie Fischer: no. You're right. The question becomes is Arizona prepared to elect a short, bald man as governor.
Ted Simons: well, they can get into that another time. Back to Fred Duval, a lot of connections with education in Arizona. Obviously you're talking a White House staffer with the Clinton Administration, staff with governor Babbitt, with interior secretary Babbitt, former chair of the University of regents. This is the kind of candidate that can do well in a statewide election in Arizona or does this need to be more fire and brimstone?
Luige Del Puerto: Talking to a Republican lobbyist the other day. The Republican lobbyist said he's something we would be concerned with. He's something with an impressive resume, someone who has some name I.D. Very likable. So yeah. I think the Republican party would have a reason for concern if Fred Duval is the democratic nominee.
Howie Fischer: a lot of what's going to happen depends if there's a bloody primary. If the Democrats start tearing each other apart, that's a whole different can of worms.
Mary Jo Pitzl: you start early you, uh try to build name I.D. You look at the potential field of candidates for governor, none of these guys, all still males at this point, don't have strong name I.D. Doug dousey is very interested but who knows he's the state treasurer.
Howie Fischer: Don't forget the third term for Jan Brewer.
Ted Simons: with that we thank you all for joining us on journalists roundtable. Monday a debate on President Obama's call for a $9 an hour minimum wage. Find out about a group that works to place minorities on boards of businesses and charities of government agencies. That's Monday evening 5:30 and 10:00 on the next "Arizona Horizon." Tuesday our weekly legislative update with the Arizona Capitol Times. Wednesday the 30th anniversary of channel 8's groundbreaking heart surgery broadcast. Thursday an ASU engineering fair and Friday we're back with another edition of the journalists' rounds table. That is it for now. I'm Ted Simons. Thank you so much for joining us.