Ted Simons: Hello, and welcome to "Horizon." I'm Ted Simons. Joining me, Mary Jo Pitzl with the "The Arizona Republic," Mark Brodie of KJZZ radio, and Dennis Welch with the "The Arizona Guardian." State budget, lots of things happening this week, and still, Mary Jo, a long way to go. Give us a timeline, if you would, on what seems to be an awfully long week.
Mary Jo Pitzl: Well, the week started with the governor coming out with details of the -- her budget approach which she's been talking about in broad outlines since early March. So the governor says, here's what we're going to do. I want a one-cent sales tax increase, here's my budget preferences, here’s the spreadsheet, let's get to work and the legislature did get to work. They scrambled, and on Wednesday we had a marathon session in the senate in which they approved a budget, that was not a Brewer type of budget and sent it to the house. The next day, on Thursday, the house basically rubber-stamped that and this is where it gets interesting. Usually when bills are passed and go to the governor – and the legislative leader said stop. We're just going to hold these and talk with the governor and work out a compromise.
Dennis Welch: Basically they went through this entire exercise, these grueling kind of marathon sessions for a big bargaining chip, is what this sounds like at this point. They think they can use this to get some leverage with the governor so they can get a better deal.
Mark Brodie: Senate President Bob Burns was talking on Thursday -- the days kind of all go together at this point-- but President Burns was talking on Thursday about using this as a way to sit down with the governor, it was his preference and he and speaker Adams apparently worked out an agreement where they wouldn't transmit the bills to the governor until they had a chance to sit down with her and talk about it. He was hoping that they would be able to come to an agreement rather quickly.
Mary Jo Pitzl: But here's what is interesting - they've been talking with the governor. I mean this has been going on for some time now and apparently, now with the budget and legislative leaders say they weren't trying to dodge the big old veto from the governor but it was widely anticipated that the governor was ready to issue her first veto on the budget. It says, ok, they've already rounded the negotiating table so I don't know, are you going to change the shape of the table, change the meeting place?
Dennis Welch: I'm still unclear as to what they think they can get out of this and how they think this gives her any more leverage. I think if they eventually do send this budget to her and she vetos it, I think it looks pretty good for her and makes them look pretty bad.
Mark Brodie: And you think about the negotiations, they start at the beginning. The legislature's budget solves the deficit of around $3 billion, the governor's of around $4 billion, and her people are saying the legislature is not fully recognizing the problem. They’re not doing anything about increased caseloads and social services and things like that. So not only have they not agreed on ways to fix the budget, it seems they haven't agreed on how big the deficit actually is.
Ted Simons: I want to get to that in a second, but let's get back to the process of getting these things through both house and senate. How much, Mary Jo, pushing, shoving, fighting, biting, yelling and screaming? What was it like down there?
Mary Jo Pitzl: Well especially on the senate side it was very interesting because they did the all-nighter and it seems we've got to have at least one or two all-nighters now per legislative session. I would say the press corps examined Senator John Nelson very closely for bite marks and signs of torture, and we're being somewhat flippant about that but senator Nelson turned out to be the 16th needed vote to put this thing over the top and he was closeted with an array of legislative leaders and staffers trying to convince him to vote in favor of the budget. That went on for a couple of hours Wednesday night.
Dennis Welch: It went on for a lot of hours. I like to refer to it as political waterboarding. This went on into the early morning hours. We didn't get back on to the floor for a vote until 2:00 in the morning. I mean, that's how long it took to get Nelson to agree to vote on this budget. And, in fact, he tried to leave during the night and slip out the back door. But the eagle-eyed Republican lawmakers down there spotted him and corralled him back in and took him into the president's office.
Mark Brodie: And senator Verschoor, who is scheduled to leave on Thursday to go on a vacation, had left and left rather angrily, basically saying if we're not going to start the Republican caucus – where they all get together to discuss everything – he basically said start it or I'm gone and they had to call him to come back.
Dennis Welch: And he left on his scooter for Gilbert. He drives that scooter into work. This is the interesting part. This is the part I don't remember in my School House Rocks when they told me how a bill becomes a law. That people's vacation bills drive the agenda. Because a lot of this was done because Thaier had to leave and they wanted to get this done by the end of the week.
Ted Simons: Talk about the presence of the former speaker, Jim Weiers and his dynamic in all of this.
Mark Brodie: Well this is interesting, Weiers, who was until this year the speaker of the house and is now a rank and file member, emerged trying to put together a coalition that would vote against the budget. He changed his mind because he said the reason he wanted a no vote, he felt it would set up an unnecessary confrontation between the Republican legislature and the Republican governor. Come on, we're all on the same team and I think Weiers, because of his years tussling with former governor Napolitano, knows that when you get into a budget fight with the governor, guess who wins? At least in the court of public opinion, it's almost always, always the governor. I don't think Weiers ever really was on a winning side so I think he was trying to save face for everybody. At the last minute, we're told as they walked on the floor of the house yesterday, he was a no vote, but he had assurances from the speaker Kirk Adams that they would not transmit the bill to the governor and buy time to negotiate. And on the strength of that, and Weiers was the first to stand up and explain his vote, he swung a couple of votes along with him.
Dennis Welch: I was going to say, this whole process, even the fact of them transmitting the bill up to the governor's office now and holding off on that has created quite a bit of questions down there. Whether they can hold on to this bill, how long they can hold on to this bill, because the body did agree on a budget, and the constitution is very clear. Once you finally pass a bill, it must be transmitted to the governor.
Ted Simons: Does anyone really know that particular process? I mean, how long can they wait to present something that has passed to the governor?
Mark Brodie: Senate President Burns didn't know when we talked to him on Thursday. He said he had to talk to his legal team to find out what the deal is. My understanding, it's not uncommon for it to go maybe a couple of days or maybe even a week. As Dennis said, at some point, the leaders don't have the ability to just sort of put it in their pockets and by de facto veto it like that. The body did vote for it so at some point, theoretically, they do have to transmit it.
Mary Jo Pitzl: And so what we do know is that they have to transmit it but we don't know when. So one option is, you know, they can't hold on to it forever. But once the legislature adjourns sine die, that ends the session so something has got to happen with that, and it’s not just one bill it’s ten of them, something has got to happen to the set of those bills before the end of the month.
Ted Simons: So could that be a point -- I'm still not quite sure the leverage argument the legislature get by doing this, which some are calling a practice budget. I don’t quite understand that, that's fine, I don't understand a lot of things --
Dennis Welch: I don’t think they understand.
Ted Simons: However, could that though be the leverage -- you better do something or else come June 30th, or whenever sine die is, this is it, that's ball game?
Mary Jo Pitzl: Yes, and you know and then it becomes a real game of chicken. You know they either dare the governor veto it or let it go into law without her signature but it is a way to make the point to Brewer, and legislative leaders have said they haven't gotten anywhere in talks with her and it has been very hard to discuss with her. Now they can show her a document and say look, here's a roadmap, here's how you can balance the budget without a tax hike.
Dennis Welch: Yeah but I don't know how you are going to bully her into signing this budget that she has clearly said she is willing to veto and contains a lot of stuff in there that she has said she just doesn't like.
Ted Simons: Talk more about the reaction from the governor. What do we see this week? Just basically dismissing the whole thing?
Mark Brodie: She released her plan, also she released a letter that was addressed to citizens, the residents of Arizona, basically outlining her plan and it seemed like it had some pretty harsh language in there about how this it is the only sensible plan and she's not going to sign something that has excessive cuts and that the call for expediency dims the state's future. It was pretty clear that she wasn't ok with some of this and her budget director, Eileen Kline, talked in the middle of the week about how clearly this is not a plan she's on board with.
Dennis Welch: And this is a governor who says she welcomes a campaign being led by the business groups to go directly to voters and around the legislature and on her behalf and to pass her budget. This is a governor who clearly doesn't like what the legislature is throwing out there.
Mary Jo Pitzl: So what We are just very interesting dynamics. There are three weeks and two days left in the state's fiscal year, if you start counting on Sunday. And something's got to give. And it will be up to Burns and Adams to see what kind of deal they can drive with the governor and what they can sell to their members.
Ted Simons: The concept of a special session as well seems to be thrown out there. Why would a special session be necessary? Do we know?
Mary Jo Pitzl: I think mostly for focus. You could issue a call for a special session to deal with the budget and you couldn’t be dragging in other bills although, it is always interesting how all these things that are in other bills are always showing up in the budget. But that is what I understand would be the purpose, is just for a singular focus to get the budget done.
Mark Brodie: When talking about this timing issue, again that the legislature finished the budget Thursday night and both speaker Adams and president Burns talked about wanting to sit down with the governor. As of about 4:00 Friday afternoon they had not communicated with her yet. And the plan was to communicate with her office sometime on Monday or early in the week next week and then try to coordinate a meeting. If they really wanted to talk to her, presumably they would have tried to get in touch with her office and try to set something up sooner after the budget bill had actually passed both chambers.
Ted Simons: We should talk real quickly about some of the particulars that what came out of the legislature and some of the cuts. No hint of raising taxes at all. Obviously, that's the benchmark. No hint of keeping the state equalization rate. However, the governor's idea was interesting in that it was a gradually phasing out, correct?
Mary Jo Pitzl: Yes, this is the tax that lawmakers suspended for three years three years ago, and if they take no action, it will start to be assessed on property tax bills this fall. So the governor said why don't we just let it -- it will come back on but not at full strength and we'll start to ease it out over a three-year period. It is a way to take some of the sting out of it.
Dennis Welch: I think she also had the securitization of the lottery revenues out there to get $400, $450 million out of there. I think there was some question about that, on whether you can securitize encumbered money because I know a lot of that money that proceeds from the lottery is already spent, it goes out to other areas.
Ted Simons: I also noticed in the governors plan there was something along the lines of a taxpayers' Bill of Rights, which seemed as though it was recognizing that she did she did need to do something to show taxpayers she was on their side even though pushing for the one cent sales tax. Was that basically what was going on here? Or is this something she's going to get behind maybe by way of another referendum somewhere?
Mark Brodie: One of the points her five-point plan was structural tax reform, and the legislative leaders understand as well that it is a sort of long term kind of thing, it doesn't necessarily help close the current deficit but it is more of something to look at to get down the road a little bit.
Ted Simons: Those kind of ideas were thrown out there to see what happens in the future as opposed to stopping right now. Mary Jo, we’re talking about all of this, and the revenues coming into the state are just sinking every month. April was just terrible.
Mary Jo Pitzl: April was really, really, really bad. The state income tax collections were the lowest in 13 years. They sent out more in refunds than they anticipated and brought in less in income tax revenue which is really messing up the whole budget projection for the current year budget which has got what, all of what three weeks and two days left, and they're going to have to do something about that. Sales tax collections remain down. The national conference of legislatures did a poll of states and 38 responded and of the 38, Arizona was the worst, it had the biggest decline in income tax revenue of the 38 states.
Dennis Welch: It has also kind of thrown the governor's sales tax into uncertainty. Because with revenues and spending going so far down, there's a question whether a one-cent sales tax can even generate that one billion dollars that they are counting on to balance her budget.
Ted Simons: Well I thought it was interesting when speaker Adams talked about the idea of taking the sales tax to the voters. In a sense he said you're basically wagering on the voters, you’re betting on the voters saying yes to something after we need the something done. Is that something that would -- gets traction with the voters, gets traction with the public, and so financial that most folks are saying tax -- yes, no?
Mark Brodie: Well I think that if you talk to a lot of Republican lawmakers, they say look at California. Whether or not voters like it or don't like it, you look at a state just to the west that has a tremendous budget problem and voters rejected a tax increase. So I think a lot of lawmakers are really concerned about balancing a budget on the hope that voters will approve that.
Mary Jo Pitzl: But I think you can also spin this as the reverse of California, where one of the possible outcomes of this whole budget dilemma is pass a 2010 budget somewhere along the lines of what the legislature has passed and use that as a campaign tool to say, see this is what is going to happen. This is what is coming at you folks, and then refer a sales tax to the ballot, unless you raise taxes and it's your call, voters. What kind of future do you want for Arizona? Which is a little bit of a reverse than California because you can say this is what you are going to face if you don’t do this. California said give us the money and they didn't get it and now they're seeing the reality of it.
Ted Simons: Back to the legislature real quick and the fussing and fighting and biting and those things. [Laughter] We've heard reports that in the senate there was some scuffling going on along the leadership? Correct?
Dennis Welch: Definitely in the senate there was some infighting going on. This budget process, I mean, this is --
Mary Jo Pitzl: Transparent?
Dennis Welch: [Laughter] That's one word for it. That's one word you can say, transparent. But it is definitely a lot of emotions going on. There was a blowup in the senate leadership between the speaker -- the president, the -- and his leadership staff because the president had went independently and brokered a deal with the speaker and it didn't contain some of the elements or -- that they wanted in it. So there was a big blowup and by the end of the day -- I think this was on Tuesday or Wednesday -- Senator Chuck Gray was walking around trying to pull people off President Burns' budget proposal. The next day, when they went to the floor, they apologized on the floor and said we're behind you, Mr. President, and sorry for any inconvenience.
Ted Simons: Interesting. I would imagine the president will make even more friends by lifting, Mary Jo, the moratorium on considering -- how many bills are piled up waiting for takeoff?
Mary Jo Pitzl: I think 469 bills were introduced in the senate and he intends to assign them all. Whether they get heard is up to the committee chair people but yesterday they read 250 into the record to start the process and they're going to start hitting it hard on Monday afternoon and he'll make friends because lawmakers are there because they want bills passed. I don't know how the staff is going to feel because these people aren't going to go home.
Ted Simons: I was going to say, this has got to be an accelerated process mach II.
Mark Brodie: President Burns talked about having all day sessions, maybe a day where one committee just goes all day. He talked about Fridays being on the agenda and that sort of thing.
Dennis Welch: Once again, it's vacation plans. We know that the senate President Bob Burns is going to Europe in July. We got to get this thing done before that plane takes off.
Ted Simons: Before he takes off in July, how many other vacations, how many other excuses, what is out there right now.
Mary Jo Pitzl: Oh there's a lot. I mean, actually, we've talked about Senator Verschoor and then Thursday Senator Russell Pearce left for San Diego as well. The senate’s work was done for the week so he didn't miss anything, at least anything official. There's some members of the house that are going to be gone beginning in mid-June because of business obligations and I'm starting to run around trying to get a list of who is going to be where.
Dennis Welch: I’m just wondering if these people just intentionally want to cause problems. Everybody knows it's not a 100-day legislature anymore. Everybody knows this thing goes into June and they insist on taking vacations in June year after year after year and it causes problems.
Ted Simons: And it's usually 115 in June too. Maybe hold the sessions in Mission Beach or something. Ok, what’s next? We have about a minute left. Meetings next week maybe?
Mark Brodie: Well at some point the Republican legislative leadership and governor presumably will sit down and talk and try to work out an agreement. It looks like a regular legislative session. They're going to do bills.
Mary Jo Pitzl: I don't know how they can do these budget talks with churning through all these committee hearings. I mean, talk about multitasking. I mean this is asu you said, mach II.
Dennis Welch: Talk about what's next? Guns and bar bills.
Ted Simons: Controversial bills that are just sitting there waiting to rear their heads.
Dennis Welch: Oh yeah I mean that’s one of them. You are going to have photo radar bills and all of that stuff popping back up as they are trying to deal with getting this budget plan. It's going to be tough.
Ted Simons: And maybe more late nights for you folks, huh? [Laughter]
Dennis Welch: I can only hope so.
Ted Simons: Thank you so much for joining us tonight on "Horizon." Coming up on Monday, I'll talk with democratic leaders from the house and senate. Find out who they think the winners and losers are in the latest attempt to erase the state's $3 billion budget shortfall -- or according to the governor's office, $4 billion budget shortfall. That’s Monday at seven, on “Horizon.” Tuesday, Senate President Bob Burns and House Speaker Kirk Adams with their take on the budget and negotiations with Governor Brewer. Wednesday, an author from A.S.U. shares stories from her book about the remarkable women who helped shape Arizona's political landscape. Thursday, find out how the latest budget plan affects hospitals and healthcare. And on Friday, we'll be back with another edition of the Journalists' Roundtable. That's it for now. I'm Ted Simons, thank you so much for joining us. You have a great weekend.