Ted Simons: Good evening, and welcome to "Arizona Horizon." I'm Ted Simons. Negotiations over the state budget made for a roller coaster ride this legislative session, but the ride finally ended earlier this week. Here to talk about that and more senate president Andy Biggs. Good to see you again. Thanks for joining us.
Andy Biggs: Thank you.
Ted Simons: 9.23 billion dollar budget, your thoughts on the agreement.
Andy Biggs: I don't think we could have gotten a better agreement with the current constituency of the senate house and the executive, I think everybody worked very hard, and gave some people moved a bit more than they would have liked, but I think everybody gave in here and there to get a budget that's probably right for the state.
Ted Simons: There seemed to be a perception the governor and the house were on one side, if you will, and you and the senate were on another. Is that an accurate description?
Andy Biggs: I don't believe I would characterize that. I mean, the way it worked is, the senate produced a budget that we felt we could get 16 on, we then contacted the house and the executive and we were very transparent with them, told them this is what we have, what do you think we need, and we had great negotiations. And I never felt that there was an adversarial relationship between any of the bodies, because we continued to come back and forth, and had some very candid discussions. And in fact, the way we did this this year was a little unusual, because we laid it all out there for the world to see and then just had a series of committee hearings back and forth, and you actually got to see how that worked.
Ted Simons: Democrats would say that they saw the same old thing, and we already heard from them, they said they were never consulted about when was important to them. First, is that valid, and secondly, with so little input on that particular side, is that good for Arizona?
Andy Biggs: Well, first of all, in the senate we've had kind of some -- I don't want to say fracture, but the Democratic caucus, they haven't been as cohesive as we've seen in the past, but they were working together within their groups, and I met with both groups, they each presented me with a list of items they would like to see in the budget, and we took some of those and actually I think that you saw some of those incorporated a little bit anyway. And you know, to the second part of the question, here's what has to happen. You have to get 16 or 31 and the executive signature. If you bring in the democrat idea that -- Like we had someone say, why don't we spend another $25 million in this area? Well, if that happens, you shove off a mess of Republicans and you can't get your or your 16 or 31 again. Maybe the governor is not OK with that. So you have to be aware of what you -- What's necessary to get a budget out.
Ted Simons: With that in mind, the -- Is that good for Arizona? Does good policy necessarily come from that kind of horse trading if you will?
Andy Biggs: Well, yeah, I think it does. We covered in this budget virtually every area that we've heard needs to be addressed. And we've covered those in I think very responsible fashion, we've increased spending in this budget by, let's see, roughly $420 million over 2014. We still have facing, you know, future budget deficits that we have to be cognizant of as well. So you have to take the full picture into account. So if one side is saying, we just didn't spend enough money here, how would you like to address how you get that money to spend that money? So I think it was a good policy. I think this budget in particular has a lot to merit support from people all across the aisle.
Ted Simons: One of the sticking points in the budget was this post-CPS agency. I don't think we have a technical name for it yet. How much of a sticking point was that?
Andy Biggs: You know, I think that was overblown, to be frank with you. This is part of the thing I find interesting. I did talk to many democrats about, this is where we're going, this is where we're headed. And I think everybody is basically on board with the common theme, something has to be done, we're creating this new agency, do we write the blank check right now or not? As it is, this is important, we took a $670 million agency and now we're about a $725-730 million agency after this budget. We increased everything from adoption subsidies, to children’s services, to preventive services. All of those increased dramatically in spending. So we've brought in 500 and some-odd new workers over the last 15,16 months in CPS, these are things that I think it's easy to say, well, I thought that should have 20 million more. Well, maybe that program already had $170 million in it already. Let's put these things in context.
Ted Simons: You mentioned preventive services. I want to get back to the post-CPS experience in a second, but preventive services is something a lot of folks at the capitol are saying not enough is spent on that. The increases are not enough to match the cuts in previous years and it makes sense to emphasize preventive services so whatever this post-CPS agency is has fewer folks in the system.
Andy Biggs: I would say that we have really tried to come back. Last year we brought back $5 million in family services. This year we basically doubled that. We gave some very specific programs that we felt were good that they got a million dollars, we brought in additional funding to take that almost I think it's just right at $10 million for intensive family services, which is a preventive program. Some of what needs to be remembered is some of those other services, when we talk about the children's services line, that was $155 million. We added another $5 million to it. Part of what that does is deal with services for children. Both in the home setting and then if there is a removal setting. So there is money in there as well going for that. There's other areas where we are funding $130 million already goes into child care subsidies. The first things first program, 81 million dollars, 14,000 scholarships for zero to five, age 0-5. So there's a lot of money going to these preventive services.
Ted Simons: A lot of money going to these services, and from a distance it sounds like a lot of money. But folks in the trenches are saying they're overwhelmed, they need more help. How far should the legislature go to help them?
Andy Biggs: Well, one of the things we've done is we've given over 500 new workers in the last 15 months, January of 2013, January of 2014, and in this budget here. That's a lot of new workers. They haven't even been able to fill all those positions. Do we still have a backlog? Yes. I would suggest that as we go forward and we see this new agency established and we're trying to get rid of that backlog, when that is eliminated, you're going to see the case load be much more manageable.
Ted Simons: The district charter school system, the program, if you will, that seemed to be a sticking point as well. 24.5 million for one more year, and after that, kaput, it's ball game. Why change the rules on this program? It seems like the legislature wanted districts to do this, districts did this, now the legislature is saying, stop doing this.
Andy Biggs: I'll give you the brief history of this. When the charter school movement and the statutes were passed, they allowed a district to charter, but the rationale for that was that we don't know who is going to charter. You want to incentivize. So districts came in and you had districts that would chart all over the state. They would create charter schools. Now that we have the charter movement full on, fully grown, and still growing, actually, in about 15% of all students are in charter, you don't need a district charter anymore. But what we saw happen, and last year when we did the budget we put a moratorium in saying, you can't do this anymore, no new schools because we have heard people are going to be going, districts wanted to convert. But their conversion was not necessarily because they love school choice, it was because they felt that they could get -- Some people called it a double dip, I don't call it that, but what you had is if you were a district charter you get access to basically all the basic state aid, you get access to the local tax base, plus you get the additional assistance given to charters, which was supposed to be because the charters have no access to the other fees.
Ted Simons: What I've heard you say now is that the districts will create the charter schools because of perhaps X, and the money that is used, which is Y, is not being used correctly. Regardless of what happens to that money, if it means, and if school choice is a good thing and districts are starting up these charters, X, Y, or Z, does it really matter? Because the charters are coming in, the kids and parents are having more choice. That seems to be what most lawmakers --
Andy Biggs: Yeah, but here's the deal you have to face. Number one, we can't afford it. The projection for this is a $470 million expense over three years. So you can't afford it. You simply can't afford it. Number two, we have districts that are basically saying, don't worry, parents, even though we're calling your kids school a charter school now, we're not changing anything about it. The third thing is, we have statute currently that proscribes how you use that money. So it must be used for the campus you're calling a charter. And most of the hate email I received over this issue, they didn't understand that, but they would admit we're going to bring back the music program in our district with this funding. Well, guess what? That would be an illegal use of the funding. And that would also mitigate against the argument that we're doing this for school choice. And so you had -- This is a complex problem.
Ted Simons: Without going too deeply, some folks would say, go ahead, misuse to it a certain degree, it does mean a charter school is in existence. Real quickly, is it OK, some are saying you're not honoring the deal. That was the deal and now I think you want to go retroactive to last year, didn't you, originally?
Andy Biggs: But you have another issue, Ted. And that is, I call it the career ladders issue. You remember when we had career ladders, some schools were able to get in, others were not. When the others couldn't get in, we have a big lawsuit. Since you can't afford this program, unless you eliminate some of the other programs nobody wanted to eliminate those other programs. What we did is said, how about this? You really want to be a charter school? We'll fund you just like a charter school. Your governance has to be just like a charter school. How do you feel about that? Guess what they said? We don't want anything to do with being just like a charter school. We want the extra money, we want the local tax base, and we want to keep the governor's model we have. You gotta be one or the other.
Ted Simons: And they'll be one or the other another year and the program goes away. One of your quotes is, we're not out of the woods yet. Regarding the budget in general. What constitutes the woods and what constitutes getting out of them?
Andy Biggs: Here's what you have. We have even with this budget, have you a structural deficit of about $400 million. The reason we're able to do this budget is because as we budget over the last three years, we saved money anticipating this that we would still be in trouble, which we are. So we have a cash balance, but we have structural balances, that means we spend more money than we bring in in revenue. The finance advisory committee met today, they reduced the growth projection for 2015 from 5.3%, which is what the budget was based on, to 5%. That's not overall a great number, it's about $20 million, $60 million over three years. And 16,17 , a little bit. But we also have -- So structurally we'll be 200 some-odd million in the hole. We're going in the right direction. We're not there yet. But you also have a cash imbalance, because all through those years we keep spending more than we bring in. So at some point you have a cash balance. We can handle that as well. Though it's not constitutional. But what we do is we have a lawsuit that's pending where the settlement offer to us is a billion dollars. And if -- And the liability's already been discerned, we're going to be held liable, the question is how much. We're hoping it's 280, but if it's $320 million a year and they come now in'16 our structural deficit is $1.5 billion in 2017. That's not out of the woods yet.
Ted Simons: Of course some would say there are ways to raise revenue to get out of the woods but we don't have time to get into that debate. Before you go, another quote. Government is not compassionate or merciful, government is raw power. It does not show empathy or mercy. Do you believe that?
Andy Biggs: Yeah. Let me tell you why. George Washington actually -- My quote is a derivative of one of he's quotes, which said people need to be careful with government because it is raw power. Let's say I want to express charity to you, Ted, you needed something. I was able to give you $50. I gave you $50 for charitable purposes. That is out of my heart, my capacity, I understand what I can and can't do and I've given it to you. When government extends something that people talk about as charity, it does not do so and say, would you like to volunteer? We actually ran a bill, somebody ran a bill to say, would you like to pay more taxes? Nobody wanted to pay more taxes. But here's what happens. When government attempts to show charity, which it can't because it's an institution, it must coercively take from someone to provide the funding for charity, either the funding apparatus, or the actual funding itself.
Ted Simons: Is that not part of the social contract? What keeps you and me, gives us the ability to use things we may not have personally paid for, may not have personally lobbied for, may not personally like for that matter, but it's out there for the well-being of everyone?
Andy Biggs: No. That isn't the social contract. There's a social contract that's -- That we come together, we live in the community. When I'm talking about government, government has raw power. If it comes to me and says, Ted's in need over here, we want to give Ted this charity, Andy you're going to have to do it, I say, I can't afford it, or I don't want to, for whatever reason, Ted is a skunk or whatever, if I don't give it I'm subject to have my property confiscated, I may lose my liberty. That's not charity. That's not empathy. That is raw power being used to coerce someone to provide property to go be redistributed to somebody else.
Ted Simons: As far as the agreement of the whole to help even when you may not want to help, but knowing that it helps society in general, you say --
Andy Biggs: That's a riparian contract that was expressly rejected by the founders and by this country until probably the 1930s.
Ted Simons: Signy die, any ideas?
Andy Biggs: Hopefully soon, hopefully next week.
Ted Simons: Until then, more raw power?
Andy Biggs: I hope not.
Ted Simons: It's good to have you here. Thanks for being here.