Horizon, Host: Ted Simons

November 24, 2008


Host: Ted Simons

Maricopa County Budget


  • Maricopa County Manager David Smith addresses the county's need to cut $58 million from the current year budget.
Guests:
  • David Smith - Maricopa County Manager
Category: Business/Economy

View Transcript
Ted Simons
>> Maricopa County is home to more than half of Arizona's population. The county provides a variety of public services including parks and libraries, animal control, air quality, law enforcement and transportation. But sales tax revenue is way down, forcing the county to consider cutting services and jobs to the tune of $58 million this fiscal year and 99 million next year. Here to talk about the latest plans is County Manager David Smith. David, good to have you here. Thanks for joining us.

David Smith
>> Thank you.

Ted Simons
>> Have you seen anything like this sort of shortfall and this sort of projected deficit?

David Smith
>> Well, Ted, I’ve worked on three different financial turn arounds in my career, in one city and two different counties including Maricopa County back in the early 90s. And so you understand that there is expected things that happen in economic downturns and recession, okay? This is my fifth recession in my 36-year career. But I have never seen -- and in no one's memory in Arizona has anyone seen -- the sales tax go this negative, this deeply, this sharply, without even finding a bottom yet.

Ted Simons
>> And we are still waiting for somewhat -- still waiting for October and November or mostly November?

David Smith
>> Well, we're waiting for all of those numbers. But we are anticipating even worse numbers for October that we'll find out in December.

Ted Simons
>> Right. Was this a falling off the cliff kind of a thing as far as sales tax?

David Smith
>> Really, it was extremely alarming and unpredictable. I mean, we used the best economists. We used extremely conservative projections. It was the first time ever that we had done a budget estimate in the minus numbers for vehicle license tax and sales tax, and even we were over by about 5 or 6 percent. It it's really running minus 8 and we had budgeted minus 2.

Ted Simons
>> Does it suggest too much of a dependency on sales tax revenue coming into the state by way of home sales, auto sales, these sorts of things, to the county, I mean?

David Smith
>> Well, there's the usual discussion about the balance between, you know, say a property tax and an income tax and a sales tax. We don't have incomes -- income tax, we don't even have a share of it the way the cities do. So our main sources of revenue that support say the criminal justice system and the general fund are the vehicle license tax and the sales tax. So yes, there is a dependency, but it seemed to be a reasonable one since even in the downturn in the 90s, sales tax did not go flat or did not go negative. It only went down to like a plus 1 or 2%. So this is so unusual they don't think anybody in the public sector in Arizona was ready for it.

Ted Simons
>> So hiring freezes are in play, I would take. It what kind of jobs are we talking about, and how many of those jobs at risk?

David Smith
>> Well, Ted, just to do the budget that in, we eliminated 437 jobs. And sadly, we have laid off about 90 people, which is kind of -- certainly the most difficult part of this work. And so we'll do another round of cuts in this fiscal year that will deal with that on an anticipated shortfall. And we've asked our departments to go back and do lists of priorities trying to preserve critical services as our number one priority, but then finding any and all ways that we can eliminate administrative overhead, consolidate functions, change business process, go to more applied technologies, et cetera, and get up to an additional 20% cuts on average.

Ted Simons
>> I know that 20% is the target there. And I know the sheriff has come out and said that just can't be done as far as his department is concerned. How do you broach that dynamic?

David Smith
>> Well, what our chairman of the board, Mr. Kanacek has done is brought in all the electeds, we had face-to-faces with them. We ask for good suggestions, creative thoughts in a variety of different ways including ideas from the sheriff, the county attorney, the recorder, all of our elected and so, yes, they have brought forth some ideas that we will implement. And so we certainly understand the public position that in a $330 million budget, you know, that would be 60 some million dollars. On the other hand, as part of this intelligent dialogue, it's going to be a combination of cuts done intelligently that do not effect say response times or safety in the jails, but on the other hand, can eliminate overtime, can eliminate expenses on the administrative side, maybe some of the take-home cars, some of the variety of things. So there are savings that everyone can contribute to in pursuing a structural balance.

Ted Simons
>> What about postponing or getting rid of capital outlay projects, and specifically the criminal court tower? What's the deal with that? Because I know that's going ahead. And yet I wonder if other projects are being stopped.

David Smith
>> Well, the board has looked at our capital situation where we basically save dollars and create a fund where the board can pay cash for its capital infrastructure needs. And so we had no bonded indebtedness at Maricopa County which is unusual anyway. So there is no secondary tax rate that people pay on their county tax bill. What we have done is eliminate all the other fairly large projects to concentrate all of those resources on one major project that is critically needed in terms of the long-term needs of the criminal justice system for it to run efficiently. And that is building a courthouse in downtown Phoenix, the last one being built in 1975 when there was 1.7 million people in the county and now we're serving 4 million with 40,000 felony cases a year.

Ted Simons
>> All right. We'll stop it right there. Good luck to you, sir. You've got your work cut out for you. Thank you so much.

David Smith
>> Thank you for having me, Ted.

St. Johns Murder


  • Former Arizona Attorney General Grant Woods talks about the case of an 8-year-old boy accused of murder in St. Johns.
Guests:
  • Grant Woods - Former, Arizona Attorney General
Category: Law

View Transcript
Ted Simons
>> Hello. Welcome to Horizon. I’m Ted Simons. Earlier this month, two men were shot to death in the usually quiet northeastern Arizona town of St. Johns. The suspect, an 8-year-old boy, the son of one of the victims. Police conducted an interview with the boy that was captured on video and later made public. It's generated a lot of media attention and some serious questions about our criminal justice system. Here to talk about the case is former Arizona Attorney General Grant Woods.

Ted Simons
>> Welcome. Your views on the case.

Grant Woods
>> There are a couple of red flags at least to me. The questioning of the 8-year-old is very suspect. Releasing the tape, the video to the press. I don't like that, either. That's always a tension that you have between what the press wants and what they should get and your investigation. I’ve wrestled with that over the years myself. The kid going home for Thanksgiving. Not big on that. As a rule if you're charged with a double murder you don't get to go home for Thanksgiving. I think you could probably go down to the jail and see quite a few people in that predicament. So I’m not crazy about it. It's a very weird case, though, very strange. I still -- it happened sometime ago. I still don't think we know what happened.

Ted Simons
>> Yeah. And that's another question that seems to be popping up more and more is some of these other things kind of go underneath the surface. Let's start with police and how they questioned the boy and why there was not an adult in the room with him.


>> Well, I guess their excuse is that they are saying, I gather, that they were just interviewing him and it turned into a confession. And I don't think anyone's going to buy that. It didn't look that way. You need to have a parent or guardian there or an attorney. In this case, the parents weren't available, one was out of state, one was the victim. Certainly you could have had an attorney appointed and had the attorney there. So even if you don't have that, in my view, I don't believe an 8-year-old can give a knowing and voluntary confession. I just don't think by definition -- what are you going to do? Read him his rights and he's going to understand what that's all about? I don't think so. So I think that confession is going to be thrown out. I think it was inappropriate for sure. So if they wanted to just use it for informational purposes, then I guess that's one thing. I don't like that, either. But then you don't release it to the public because now he's definitely been smeared, I think, across the world, really.
Ted Simons
>> Let's talk about the actions by the prosecutors there. First in releasing it. But also can you charge an 8-year-old with first degree murder?

Grant Woods
>> Theoretically you can. You know, first degree murder is premeditated murder. So you don't need much for premeditation. You just have to have thought about it. You have to have formed in your mind the intent to kill somebody and then killed them. Could a 8-year-old theoretically do that? That's a close call. I think that's a tough one. But I would say yes, that's possible. Of course, now they've dismissed the first degree murder charge against the father and left it against the roommate. That's rather odd as well. We have to figure that out.

Ted Simons
>> What's that all about?

Grant Woods
>> You know, we just have to guess right now like we're guessing about a lot of things. I think a couple things come to mind for me. One is as you're preparing the case, you certainly fair to revise your charges as you get new evidence, as you examine the evidence. So they could recharge him now or charge him with something less than first degree. Charge him with second degree murder, with negligent homicide, with manslaughter. Those basically revolve around reckless conduct. You knew or should have known that this sort of conduct with this weapon could result in the death of somebody. So they could charge him that way. Or they could just flat out say it was an accident based upon what they've discovered, which we don't know as far as the evidence. The first one was an accident, but then he stood there and waited, reloaded and waited for the second guy to come in. That's possible. It's also possible -- and people need to keep in mind that it's very possible -- that this kid didn't do it. Now, for him not to have done it you have to think that somebody else put four bullets into two men in St. Johns. That's pretty far-fetched but having said that, everything's far-fetched. I don't think that's more far fetched than a little kid taking a rifle that's as big as him and killing two adults and reloading seven times. That's a crazy scenario. So whatever happened here is really way out of the ordinary.

Ted Simons
>> We've talked about the police and we've talked about the prosecutors. What about the judge in this case? Specifically the gag order, which apparently a lot of folks had some trouble with. Your thoughts on that.

Grant Woods
>> I don't know. You know, he's doing his best up there with the situation that they've never seen before. And frankly, who has? Who has ever seen a 8-year-old charged with a crime like this? I never have. I’ve never even heard of it. So he did his best. I think he thought that this would protect everybody's rights and everybody's interests. And it seemed to have the opposite effect. I don't know. I don't have a big beef with that. I think it's not a bad thing that this judge up there in this small community is elected. He's going to have to figure out, what do we do here with this kid? Let's say he did it. Then what do we do with him? And who better than someone from the community there to figure out the community standards and assess the appropriate penalty. The next step really is going to be, unless there's more charges or more evidence that we haven't heard, is going to be the determination of whether he's going to be tried as an adult or a juvenile. The county attorney is to going to make a recommendation there. If they ask for him to be tried as a juvenile that will be it. If they say they want him tried as an adult they'll have to have a hearing on that and the judge will decide. I hope they don't try to try him as an adult. I think that's preposterous in my mind. And I am someone who back when I was A.G. I fought for, for example, 14, 15, 16, 17-year-olds who commit violent crimes I think they should automatically go to adult court. So I don't have any problem punishing young people who commit violent crimes as adults and punish them harshly. Not an 8-year-old. So I don't see that. Hopefully that won't happen. If it stays in juvenile court then the judge is going to have to decide whether he did it or not. And if he did, what do we do with him?

Ted Simons
>> And that is a good question. How do you -- is this a kind of -- it's a boy, it's an 8-year-old boy. Does society need to be protected from this boy? Especially when this boy becomes a young man?

Grant Woods
>> Right.

Ted Simons
>> An older man? I mean, at what point does society say, okay, it's okay not to have him under constant surveillance?

Grant Woods
>> Well, this is why I do think our justice system works best when as a rule we deal with cases individually. I think it's okay. I’ve thought a lot about it over the years. I think it's okay to say some things apply to everybody. If you use a weapon you are going to go to prison regardless of the reasons. But generally we should look at the individual case and the individual defendant. So in this case, if -- I will say if this kid did this, if he reloaded seven times and killed two adults and then spoke about it very calmly, even if it was an improper interview he spoke about it calmly, he needs to be locked up, I would think, for awhile, for quite awhile, until we figure out what in the world is wrong with this kid. And I think you individualize your attention, the psychological attention to this kid, until you get to the point where you figure he's not a threat to himself or others. And you do that up until he's 18. When he's 18 you'll have to let him go. So hopefully between now and the time he's 18, if he's found to have committed this, we can figure out what went wrong here and help this kid and get him on the right track.

Ted Simons
>> So between now and if this does go to trial, do you think justice can be served in a case like this?

Grant Woods
>> I think it can. And if it stays in jury court there the judge is going to make the decisions here. It's not going to be a jury. And the judge is perfectly capable of saying I’m not considering that interview at all. I won't consider this or that but I will consider this. He does that all the time. He'll make a good decision here.

Ted Simons
>> A fascinating case, isn't it?

Grant Woods
>> It's a fascinating case on all fronts, not the least of which is we still don't know what happened. Usually you can figure it out pretty quickly. And much less knowing why it happened, we don't know how it happened.
Ted Simons
>> Grant always a pleasure. Thank you so much for joining us.

Grant Woods
>> Thanks.

The President-elect's Economic Advisers


  • President-elect Obama has announced his team of economic advisers. Hear what ASU finance professor Herb Kaufman has to say about the choices.
Guests:
  • Herb Kaufman - Professor of finance, W.P. Carey School of Business, Arizona State University
Category: Business/Economy

View Transcript
Ted Simons
>> Today President-elect Barack Obama formally introduced his team of economic advisors. Federal Reserve Bank President Timothy Geithner will serve as Treasury Secretary and will be Obama's economic spokesman. Lawrence Summers will head the National Economic Council. He served as Treasury Secretary for President Clinton. And Christina Romer, an economics professor at the University of California, was chosen to chair the Council of Economic Advisors. Earlier this evening I spoke about the choices with Herb Kaufman, professor of finance at Arizona State University's W.P. Carey School of Business.

Ted Simons
>> Thank you for joining us on Horizon.

Herb Kaufman
>> Thank you.

Ted Simons
>> Let's start with the particulars. Tim Geithner to head Treasury. Who is it?

Herb Kaufman
>> The President of the Federal Reserve Bank of New York. Maybe your viewers don't know that President of the Federal Reserve Bank of New York has the unique function in the policy making group that fed call the Federal Market Committee. The president is a permanent member of that committee because all activity through the financial markets run through New York. Geithner also has an incredibly important resume'. Great background. Treasury, international monetary fund. He then went to the federal reserve bank of New York and has been intimately involved in everything that has happened in the last six months. Seems like it has to be over five years. But in the last six months with all the rescues packages and bailouts and so forth that have taken place.

Ted Simons
>> Good choice as you see it?

Herb Kaufman
>> I think he's excellent. I think he has two things going for him, among others. First of all -- maybe three. First of all, he's a very smart guy. The second thing is he's highly experienced and he was a player at every stage of this so he's quite familiar with what is happening and what is going on. He's going to inter-- to interact well. He has been a part of the interaction with the folks coming in the Obama group as well. I think he'll turn out to be an excellent appointment. When it was announced on Friday the market soared and I think the street -- which is the third thing I was going to mention -- the street knows him. You can't be the Federal Reserve President in New York and not have great interaction with Wall Street and the financial community in general. And he's had that.

Ted Simons
>> National Economic Council Lawrence Summers to head that, Lawrence Summers. Talk to us about him.

Herb Kaufman
>> Lawrence Summers was the last Treasury Secretary under Bill Clinton. He was a protege' of Robert Reuben who was sort of legendary as Treasury Secretary. Not so legendary these days as a lead director at Citibank but we can get back to that. But he did do a yeoman's job at treasury and Lawrence Summers he groomed clearly to take his place at treasury. He did -- Lawrence Summers did under the last few years of the Clinton administration went on to be President of Harvard, had a mixed reception there because of perhaps some ill-advised comments that he made. But he's no question one of the leading economists of the world of his generation.

Ted Simons
>> Do these choices signal to the markets, to the economy in general, that the Obama administration is somewhat on top of things here?

Herb Kaufman
>> I think it signals it very much. Again I point out that when Geithner's announcement was confirmed, appointment was confirmed, the markets did soar. They continued to go up today at a substantial pace. I think at least in the short-term the market is giving this an incredible vote of confidence. Of course what happens tomorrow is a whole new thing. And unfortunately, Obama cannot Milwaukee an appointment a day of the stature of Geithner and Summers. So we'll have to see. And it is going to take some time for all the stuff that he's talking about for --

Ted Simons
>> There does seem to be talk, lots of talk regarding a stimulus package somewhere around 700 billion, maybe even more, over two years. Is this time kind of thing A, that you are hearing and B, if it comes to fruition a good thing?

Herb Kaufman
>> Well, it is what I’m hearing. And do I think at this point in time we have no choice. The economy is in a severe recession. It's going to get worse before it gets better. We are certainly going to have the worst recession in the post-war years. We have no other player that can take us out more quickly than the government, I fear. I say that as a free market economist who would like not to see a government intervention, that word, too often. But I think across the political spectrum among economists on both sides of the conservative, liberal divide, there's pretty good consensus that we need this now we need it as soon as possible.

Ted Simons
>> Speak of that, we have Citi now getting a rescue effort. Talk to us about this.

Herb Kaufman
>> This seems to be the most -- of all the stopgap rescue bailouts ad hoc whatever you want to call them, packages, this seems to be the most considered one. It gives the government a major stake if city bank comes back. They're going to get -- they have preferred shares, the government does, preferred shares, they have warrants for common shares. Clearly they're going to own about 8% of Citi under any circumstances. And they are causing Citi to take a deductible, as an auto insurance policy, going to guarantee about $306 billion in Citi bank assets, questionable, no question, but they have to take the first 29 billion of losses on that and 10% going forward. It's more complicated than that but we can stop there.

Ted Simons
>> Real quickly, are we going to see some loan modification out of this as well?

Herb Kaufman
>> I’m not sure if city bank is required under this deal to do that. It seems loan modifications are spreading. We know Bank of America and -- are doing this. I think Citibank will be in the same condition. You have to understand the actual assets being guaranteed by the government are packages of these things, not individual loans.

Ted Simons
>> Last question: critics are saying these things, like Citi, they have to fail in order to send a message that you can't take these kinds of risks in the future. The market has to punish and penalize itself.

Herb Kaufman
>> I may have been on this program after we let Lehman Brothers fail. And I may have said to you that I thought that was a good signal because of exactly the reason you said. And I was wrong, okay? When Lehman failed, it totally -- destroyed confidence in the financial markets. I like that model. It is the right model. We're going to have another test of that model to the degree with the auto industry. I like the model in general. But I think the financial system is the bloodstream of the economy. A bank like Citibank that is so integrated not only in the U.S. but across the world is simply -- and I hate this phrase -- too big to fail.

Ted Simons
>> All right. Well, thank you again for joining us. We certainly appreciate it.

Herb Kaufman
>> My pleasure, Ted.

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