Ted Simons: Coming up next on "Arizona Horizon," Governor Jan Brewer talks about her budget plans and policy priorities for the 2012 legislative session. And we'll hear from NAU President John Haeger about what his university is doing to meet the challenges facing higher education. Next on "Arizona Horizon." Good evening, and welcome to "Arizona Horizon," I'm Ted Simons. The Independent Redistricting Commission today gave final approval to maps of Arizona's newly redrawn legislative and congressional district boundaries. The vote was 3-2 with the independent chairwoman and in commissions to two Democrats voting yes and two Republicans voting no. The maps now go to the US Department of Justice which will determine whether the new boundaries comply with the federal voting rights act. A competitive democratic primary is shaping up in Arizona’s new congressional district 9 and State Senator David Schapira today announced his candidacy for the Senate seat. The Tempe democrat and current senate minority joins former state senator Kyrsten Sinema who recently resigned to run for the new congressional district. And the US Supreme Court will not hear an appeal from former Congressman Rick Renzi asking the high court to block his corruption trial from moving forward. The Arizona republican is accused of trying to facilitate a federal land swap for personal gain. He argues that evidence was not properly presented to a Grand Jury. Lower courts have held against him and now the high court has refused to weigh in on the decision. Last week Governor Jan Brewer kicked off the second regular session of the 50th Arizona Legislature with her state of the state address. On Friday Governor Jan Brewer followed up by releasing her nearly $9 billion state budget for next fiscal year. It's a budget based on positive revenue growth that the state’s experienced in recent months but also grounded in the reality that Arizona's budget concerns are far from over. Here now to talk about budget and policy priorities for the new year, Arizona Governor Jan Brewer. Always good to see you, thanks for joining us.
Governor Jan Brewer: Thank you, Ted, great to be with you.
Ted Simons: Are you expecting smoother sailing? 29 vetoes last session, what was going on?
Jan Brewer: Well we had a lot of bad legislation so I had to use the old veto. But the bottom line is I think that Arizona’s turned the corner and I think we’re on to a bright future. I feel very, very positive moving into the session, and I think the speaker and president feel likewise. I'm feeling really, really good. That's what I tried to explain or project in my State of the State address. You know, it's a wonderful time for Arizona, moving into the centennial year and the celebrations, and that we could reflect back to where we’ve come from. We have a bright future.
Ted Simons: Some see part of that bright future the fact that there is actually a budget surplus that can be used and looked at. How much of a surplus are we talking about and where does the money go?
Governor Jan Brewer: We probably have about $400,000 out of this fiscal year. With the budget I project, we'll have around $600 million so it is a bright future. Just let me comment, if I can, because I'm proud, everyone involved in the process should be proud that we have had difficult times but this is the first time in years that we've had a balanced budget, and that we have a budget surplus. That's good news.
Ted Simons: Some question the balanced budget aspect, saying there's too much debt out there, there’s still some things in their minds that don’t always equal a truly balanced beget. How do you respond to that?
Governor Jan Brewer: I think we've addressed the structural budget deficit. The important thing is that indeed we had to go into debt in order to get things straightened around. But basically the structural deficit has been corrected. That we are very, very grateful for. To have that carry forward to get us through the lean years, because of course we're coming sometime in the near future, may 31st, 2013, the temporary sales tax will disappear. It's $900 million out of the budget. But we have been very successful in making government smaller and leaner, and much more -- much better in delivering services.
Ted Simons: Are there contingencies for when that one-cent sales tax goes away? Some suggest now is the time to look at it before the proverbial cliff, before the cliff approaches.
Governor Jan Brewer: I think when that one-cent sales tax goes away we have enough in the carry-forward budget to get us through. And I by that time, the economy of course, with everybody going and working hard to do what's right for the State of Arizona, we believe we will have the revenue year that we will need. The big problem, Ted, is the federal government in regards to health care. If they come in and continue with the Obama health care plan, that would be a killer for Arizona. But I feel very confident in the fact that we have a very good lawsuit, along with many other states, in the Supreme Court. We should hear from them hopefully by April, so that we'll know.
Ted Simons: Until then, I know hospital associations and some others out there, a bed tax, some sort of assessment to try to get some of these matching federal dollars in here that have been lost because of budged cuts. What do you think of that idea?
Governor Jan Brewer: Well I think it’s something that they’ve discussed with me. They brought it to me last year, as well as the legislature, and it wasn't very well received by the legislature or myself, because I wasn't into new taxes. So I think probably they will come up with a plan either to take it to the ballot and let the voters decide how they want to address it, or they will lobby the legislature to see if they want to do it. I believe the mode is we're not looking for new taxes.
Ted Simons: Let's talk about education here. K-12 funding, higher education, will you push for more funding?
Governor Jan Brewer: I think it's really important. Education is a number one priority of mine. As I think the public and everyone understands, and that I don't necessarily always think it takes more money. I know that we had to make some difficult cuts. Of course some of those would have been a lot worse without the temporary one-cent sales tax. That was the bridge that got us through. The bottom line is I think that we're on the right plan now. As far as education, I'd like to see dollars go into some areas. But my Arizona Ready committee headed by Craig Barrett is sitting down with a very well-advised and impressive committee, if you will, of people that really know education and trying to get things implemented online. I'm anxious to see where they go and what they do.
Ted Simons: The impact of education cuts on attracting and keeping so much about jobs in the legislature. And you're concerned with jobs, as well. But the cuts to education, how much does that impact getting and attracting businesses and keeping business here?
Governor Jan Brewer: I think the important thing is that we have to keep in mind when you say cut, we had to go in and cut some things but not necessarily those things that are really impacting education. In the budget I just presented I'm putting in $330 million more into education. The bottom line is that we know in order to get our economy turned around we have to have a well-versed workforce, a well skilled workforce. That's our number one goal and why we're putting money into community colleges for job training. Other than that, too, one-time costs that have been neglected year after year, like school facilities and technology, those kinds of things, that's where we want to put some of those new dollars that we have currently.
Ted Simons: Quickly, tuition tax credit, expanding that particular program: Is that a wise idea? Critics say it just takes money out of the public system. Others are concerned those credits are going to kids and parents who would otherwise go to private school anyway. Does that need to be revamped, look at some how?
Governor Jan Brewer: I don't know if that's necessarily true. But I certainly know it's on the agenda in the legislature and it's going to be discussed. That would be a good time for your listeners and anybody that's interested in that. But it's been producing certainly a lot of benefits for the children. They have been doing much better being placed within those schools getting tax credits, than they were doing in our regular public schools.
Ted Simons: Okay. Tax code changes just in general: The capital gains tax, the carry-forward policy, business property taxes, all these sorts of things, it sounds like you want to see some changes there.
Governor Jan Brewer: I do.
Ted Simons: Do you want to see reductions, eliminations, just general change?
Governor Jan Brewer: Last year when we did my comprehensive package and tax reform we made some really major changes. Now I'm trying to chew around the edges to look at the things you've just mentioned. And I think it is important that we do address those things because it does make us more competitive and it's a little bit unfair, in looking at what we do and what other states have done. So we have not put pen to pencil yet, but I would assume in the next couple of weeks our bill will be moving forward hopefully through the legislature, and collectively between the legislature and myself. But the bottom line is that I will not do anything that will derail my plan in regards to tax cuts. I think we need to make reasonable, concise tax changes, not drastic ones that will eat into our carry-forward.
Ted Simons: And still, I know last year you were saying don't give me anything as long as the one-cent sales tax is still in operation. Does that still hold true?
Governor Jan Brewer: Oh, absolutely. Any of these things don't go into effect until May 31,2013.
Ted Simons: Personal reform, you’ve emphasized this a lot and it seems like it’s something that’s special to you. Why are you pushing it so hard?
Governor Jan Brewer: I think it's something that many of us have been concerned about for years in Arizona. I think it's a shame that we are in a position here that we are not able to reward our good employees, not able to promote them based on performance. We're held back by at-will -- I mean, at-merit employees. I think that we ought not to do that. When you reward people for doing a good job, they perform better and advance. They feel better, they do a better job. By holding everybody back it makes it very, very difficult you have supervisors that can really discipline employees, it just doesn't work. It's just not good, I think we can give them an option. Do they want to be at-will or do they want to be merit? You know, and let them make those choices. But I know a lot of them are in the merit system because they are just in the merit system, period. Because they don't have the option of being exempt. I'm hoping we come up with a great plan that allows them to make a good choice so they benefit, and we can reward those people.
Ted Simons: Some would say though that removing the merit system would politicize things, getting rid of the agency heads being fired or let go at will or whatever, would lead to some sort of cronyism as far as that particular avenue is concerned. Is that a valid concern?
Governor Jan Brewer: Most of your agency heads are at-will and they are appointed by me and serve at my pleasure. So I can’t dismiss them. So I don’t think that’s an issue. I think it's more of the rank and file employees that have been working for the state and they get caught and never can progress unless somebody comes in and says everybody gets a raise at one swoop. If you're doing an excellent job and picking up the slack, you ought to be rewarded. Your supervisor would want to reward you. Why wouldn't they? I think that's the incentive. I think it's really important and it'll be an interesting discussion. I'm solidly behind it as I believe the majority of the legislature.
Ted Simons: Are you expecting a big fight from the unions?
Governor Jan Brewer: I would think unions might be against it. I hate to say a big fight, but I’m sure there would be a lot of debate and discussion and I'm open to that debate. There's different ways of doing it. I will have both ears open and hopefully we will come out with a good product that serves the people that are serving the people of Arizona, the public servants.
Ted Simons: Transportation issues real quickly, the highway user funds, the diversion of those funds for dvs and mvd, and the fact that local governments are being hurt because they’re not getting their expected share of these funds. That diversion, why is it happening and how long is it going to continue?
Governor Jan Brewer: Well I hope that it doesn’t continue. You know, if there was ever a governor that stood up for local government in the cities and counties, it's been me. They are very well aware I’ve been very supportive of that. You know, I don't believe in sweeps. But during difficult times, and you know it not only happened under my watch but in previous years, also. It's not right. Those dollars ought to be going where they should government we have a court opinion saying that those can be used in that manner, because it is part of the street operations, so they say. But there have been other sweeps that have taken place that in my opinion weren't entirely fair, and some of them we lost in court. We kind of knew going in that we probably would lose, but it was the will of the elected officials to move forward with it, and we did. No, I don't believe sweeping funds is a good practice.
Ted Simons: The capital buy-back, you specifically mentioned in this your State of the State address. It's $106 million. Some would say why bother with this, when the interest doesn’t have to start being paid back until 2019, we've got some time to work on this. We’ve got $106 million let’s put it to something else.
Governor Jan Brewer: I think it's really, really important. If you were a homeowner and you were mortgaged up to the debt, that you'd want to start paying it down to continue on the road to prosperity. One way is to start buying back our debt. The first items on that list would be the capitol, if you will. If we do it through the plan that we have determined would be the best way, we would save 47 million in interest. So in the long run it's going to save the taxpayer’s dollars. Eventually we will start to pay down all those one-time gets because we don’t want to be in debt. Arizona doesn't need to be in debt. If we continue down the road of prosperity and doing things we have done, if we continue that path, we will get it done.
Ted Simons: Last question: You mentioned this during your state of the state address you actually mentioned it in our conversation early on that Arizona is in a good place and you feel good. You mentioned that Arizona had been "saved” which brought a lot of attention from folks. Critics are saying those who have been cut or frozen from AHCCCHS, kids care, other services, they don't feel saved. How do you reconcile that, the idea that the budget may look pretty good, but so much has been cut, so many people are affected by this. What's the dynamic there?
Governor Jan Brewer: Well the bottom line is we can now see the light. The government was in debt over its head, drowning, it was sinking. The legislature and myself I believe, and the people of Arizona that stepped up, saved the state from total bankruptcy. And today, you know, we are successful. It's a bright future ahead of us. It's something that tough decisions have to be made and that's what leaders do. They make those tough decisions to move forward and we will continue down that path and not -- to think that we're going to get ourselves on this line where we have some additional revenue, and then continue the same bad practices that got us here in the first place, we’re not going to do that anymore.
Ted Simons: Governor, it’s good to see you again, thanks for joining us.
Governor Jan Brewer: Thank you.