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December 16, 2003

Host: Michael Grant
Topics:
· Howard Dean campaign;
· Citizens Finance Review Commission
In-Studio Guests:
· Phoenix economist Alan Maguire;
· Leezie Kim, Executive Director, Citizens Finance Review Commission;
· Dennis Hoffman, Arizona State University economist

 

>> MICHAEL GRANT:
TONIGHT, HOWARD DEAN VISITS THE STATE WITH ARIZONA'S MOST RECOGNIZED DEMOCRAT PLUS TAX REFORM. WE'LL HAVE A REVIEW OF THE PROGRESS OF THE GOVERNOR'S BLUE RIBBON PANEL AND LOOKING TO OVERHAUL ARIZONA'S TAX SYSTEMS. GOOD EVENING, I'M MICHAEL GRANT, WELCOME TO "HORIZON." THE LEADING DEMOCRATIC CANDIDATE FOR PRESIDENT SPENT THE DAY CAMPAIGNING IN OUR STATE. HOWARD DEAN RECEIVED THE ENDORSEMENT OF ARIZONA'S MOST RECOGNIZED DEMOCRAT BRUCE BABBITT. A QUARTER OF THE MONEY RAISED BY DEAN'S CAMPAIGN SO FAR HAS COME FROM UNLIKELY SOURCE, PEOPLE UNDER 30. AS LARRY LEMMONS REPORTS, THE VERMONT DOCTOR AND FORMER GOVERNOR HAS STRONG SUPPORT FROM SENIORS AS WELL.

>> REPORTER:
THEY PACKED THE CENTER IN SUN CITY EAGER TO HEAR A WORD FROM HOWARD DEAN.

>> WHAT WE'RE GOING TO DO IS REACH --

>> HOWARD, GIVE 'EM HELL!

>> Howard Dean:
YOU KNOW THEY SAID THAT TO HARRY TRUMAN. THEY SAID, "GIVE 'EM HELL, HARRY." HE SAID, "I DON'T GIVE 'EM HELL, I TELL THE TRUTH AND THE REPUBLICANS THINK IT'S HELL."

>> REPORTER:
THE PARTISAN CROWD RESPONDED WELL IN POLITICAL AND RHETORICAL FLOURISHES.

>> Alfredo Gutierrez:
HE IS THE LEADER OF THE PACK WHERE OTHERS HAVE TO BEGIN TO SHOOT AT HIM OR DESTROY HIM. WE'RE GETTING IT FROM THE RIGHT OF THE REPUBLICANS OR OTHER DEMOCRATS. HE'S ONE DEMOCRATIC CANDIDATE WHO I THINK HE CONTINUES IN THIS FASHION CAN BE LEGITIMATELY CONSIDERED AS GEORGE BUSH'S RUNNINGMATE. ( LAUGHTER )

>> Jim Pedersen:
I THINK BARRY GOLDWATER TODAY WOULD ROLL OVER IN HIS GRAVE TO SEE WHAT HIS REPUBLICAN PARTY IS DOING TO THIS COUNTRY. ( APPLAUSE )

>> REPORTER:
FORMER ARIZONA GOVERNOR BRUCE BABBITT JOINED BY HIS WIFE PATTY IS ENDORSING DEAN AND TRAVELING WITH HIM THROUGH THE STATE.

>> Bruce Babbit:
HE'S GOING TO WIN IT ALL. HE IS GOING TO SWEEP NEW HAMPSHIRE. ( APPLAUSE ) AND THEN IT'S OUR TURN. ( CHEERS AND APPLAUSE ) AND WE GOTTA DELIVER --

>> Reporter:
WHY ARE YOU SUPPORTING GOVERNOR DEAN?

>> Bruce Babbit:
BECAUSE HE IS TALKING SENSE ABOUT AMERICA, ABOUT THE ECONOMY, ABOUT HEALTH CARE AND MOST OF ALL ABOUT OUR MORAL LEADERSHIP IN THIS WORLD. THIS COUNTRY WILL BE STRONGER INCLUDING THE RESIDENTS IN SUN CITY-- THE MILITARY FORCES ALL OVER THE WORLD. THIS GUY IS WITH OUR -- THE WAR AGAINST TERRORISM. WE'RE NOT GAINING MUCH GROUND. WE HAVE TO REGAIN THE HEARTS AND MINDS OF ALL THE ALLIES.

>> REPORTER:
THIS IS HOWARD DEAN'S FIRST VISIT TO ARIZONA SINCE THE CAPTURE OF SADDAM HUSSEIN. DEAN HAS BEEN TAKING FLACK FOR HIS ANTI-WAR STANCE BUT THE CRITICISM HASN'T APPARENTLY MUTED HIS SUPPORTERS WHO RUSHED THE FORMER GOVERNOR FOR AUTOGRAPHS. HE CARRIES A BIT OF STAR POWER OVER HIS DEMOCRATIC RIVALS. HE IS UNAPOLOGETIC ABOUT HIS POSITION ON THE WAR.

>> Howard Dean:
I WANT TO START BY CONGRATULATING THE UNITED STATES TROOPS FOR CAPTURING SADDAM HUSSEIN. THEY DESERVE A LOT OF CONGRATULATIONS. ( CHEERS AND APPLAUSE ) AND WE HOPE THAT HE WILL GIVE US INFORMATION ABOUT WEAPONS OF MASS DESTRUCTION. WE HOPE VERY MUCH THAT THIS WILL BEGIN TO DIMINISH THE ATTACKS ON OUR TROOPS, BUT I DO NOT THINK THAT IT MAKES AMERICA'S HOMELAND SAFER. WE DO NEED TO MAKE SURE THAT WE FOCUS AND CONTINUE TO FOCUS ON STOPPING TERROR, STOPPING AL QAEDA BECAUSE AL QAEDA IS THE REAL FOCUS OF DANGER FOR THE UNITED STATES OF AMERICA.

>> REPORTER:
DEAN REMINDS THE SUN CITY AUDIENCE OF HIS OPPOSITION TO THE MEDICARE PRESCRIPTION DRUG PLAN.

>>Howard Dean:
IT PROHIBITS SENIORS FROM GETTING LESS EXPENSIVE DRUGS FROM CANADA. IT GIVES $85 BILLION OF OUR TAXPAYERS' MONEY TO HMOS AND INSURANCE COMPANIES, MUCH OF IT UP FRONT. DRUG COMPANY PROFITS ESTIMATED TO GO UP 38%. OVER $100 BILLION INTO THE POCKETS FROM OUR TAXPAYERS POCKETS FROM YOUR POCKETS TO THE PHARMACEUTICAL INDUSTRY. HERE IS THE THING THAT AMAZES ME ABOUT A REPUBLICAN ADMINISTRATION, THERE'S A PROVISION IN THE BILL THAT PROHIBITS THE FEDERAL GOVERNMENT FROM USING ITS PRICING POWER TO DRIVE DOWN PHARMACEUTICAL COSTS. THIS IS A BILL THAT WAS DESIGNED FOR THE BENEFIT OF AND BY THE INSURANCE INDUSTRY AND THE PHARMACEUTICAL INDUSTRIES AND SENIORS HAVE BEEN LEFT BEHIND AGAIN IN THIS COUNTRY.

>> REPORTER:
HE POINTS TO HIS OWN STATE OF VERMONT AS A MODEL.

>> Howard Dean:
IN MY STATE EVERYBODY UNDER 18 HAS HEALTH INSURANCE. ALL OUR WORKING POOR PEOPLE, EVERYBODY UNDER 150% OF POVERTY HAS HEALTH INSURANCE. IN MY STATE NEARLY A THIRD OF SENIORS HAVE PRESCRIPTION BENEFITS BECAUSE WE GOT TIRED OF WAITING FOR WASHINGTON SO WE DID IT OURSELVES. NOW, IF WE CAN DO THAT IN A SMALL RURAL STATE WHICH BALANCES ITS BUDGETS EVERY SINGLE YEAR, SURELY THE MOST POWERFUL AND WEALTHY SOCIETY IN THE WORLD CAN JOIN THE BRITISH, THE FRENCH, THE GERMANS THE JAPANESE, THE IRISH, THE ITALIANS THE NORWEGIANS, THE BELGIANS, EVEN IN COSTA RICA THEY HAVE A HEALTH INSURANCE PROGRAM FOR ALL THEIR CITIZENS AND SO SHOULD WE! ( CHEERS AND APPLAUSE )

>> REPORTER:
THE LATEST NAU POLL OF DEMOCRATIC VOTERS IN ARIZONA PUTS DEAN A FULL 10 POINTS AHEAD OF HIS NEAREST COMPETITOR GENERAL WESLEY CLARK. AS THE PRIMARY SEASON LOOMS IT'S CLEAR DEAN AND HIS SUPPORTERS BELIEVE THE NEXT TWO MONTHS WILL BRING VICTORIES FOR THE GOVERNOR.

>> Howard Dean:
THANK YOU. THANK YOU VERY MUCH.

>> Michael Grant:
BESIDES THE STOP IN SUN CITY DEAN CAMPAIGNED IN YUMA AND SIERRA VISTA. A PRELIMINARY STUDY THAT COMPARES HOW VARIOUS STATE AND LOCAL TAX RATES AFFECT SPECIFIC INDIVIDUALS IN BUSINESSES IS RAISING A FEW EYEBROWS. PHOENIX ECONOMIST ALAN MAGUIRE APPEARED BEFORE THE REVIEW LAST NIGHT. HE TESTIFIED ABOUT ECONOMIC DEVELOPMENT BLOOPS. HE AND THE ACCOUNTING FIRM KPMG LOOKED AT TAXES AND LOOKED AT INDIVIDUALS AND BUSINESSES TO SEE HOW COMPETENTIVE ARIZONA IS. THE CONCLUSION, JOINING ME NOW IS ALAN MAGUIRE TO TALK ABOUT THE FINDINGS OF THE STUDY. GOOD TO SEE YOU AGAIN.

>> Alan Maguire:
GOOD TO SEE YOU.

>> MICHAEL GRANT:
SEEMS TO ME THAT THE MYTH THAT IS POKED A HOLE IN IS THAT THE BUSINESS PERSONAL PROPERTY TAX PUTS US BEHIND THE 8-BALL IN ARIZONA.

>> ALAN MAGUIRE:
WE LOOKED AT SIX SPECIFIC INDUSTRIES AND THEY ARE THE INDUSTRIES THAT WE LOOKED TO THE FUTURE OF ARIZONA AS OUR AREAS OF GROWTH. OUR REAL FOCUS WAS ON ECONOMIC DEVELOPMENT AND THEN IN TURN EMPLOYEES FOR THOSE KEY BUSINESSES THAT WILL BE THE FUTURE OF ARIZONA. THESE BUSINESSES HAVE A CERTAIN COMMONALITY TO THEM IN THE SENSE THAT THEY ARE HIGH TECH BUSINESSES, USING LOTS OF TECHNOLOGY, HIGHLY PRODUCTIVE AND THEREFORE HAVE A LOT OF EQUIPMENT AND MACHINERY FOR BUSINESS PROPERTY. PERSONAL PROPERTY AS OPPOSED TO REAL PROPERTY LIKE BUILDINGS. ARIZONANS HAVE AN AGGRESSIVE SCHEDULE FOR DEPRECIATING THAT PROPERTY AND WE HAVE A LOW RESIDUAL VALUE RULE FOR IN A PROPERTY. THE RESULT THAT EVEN THOUGH ARIZONA TENDS TO HAVE RELATIVELY HIGH OVERALL BUSINESS PROPERTY TAXES OR PERSONAL PROPERTY FOR EQUIPMENT AND MACHINERY WE'RE ATTRACTIVE COMPARED TO THE REGIONS WE EXAMINED.

>> MICHAEL GRANT:
LET ME TAKE IT AWAY FROM THE GLAMOUR SEGMENTS AND GET TO SMALL BUSINESS, AUTO REPAIR SHOPS, YOU KNOW WHATEVER IT MIGHT BE, BECAUSE THERE'S A FAIR AMOUNT INVESTED IN TOOLS AND BUSINESS, PERSONAL PROPERTY, THAT KIND OF THING, WOULD THE SAME CONCLUSION DERIVE?

>> ALAN MAGUIRE:
NOT AT ALL. ONE OF THINGS WE DID LOOK AT -- AND I SHOULD POINT OUT ALL OUR FINDINGS ARE PRELIMINARY -- WE'RE DOING OUR FULL REPORT WHICH WILL BE OUT IN A COUPLE OF MONTHS. ONE OF THE THINGS WE LOOKED AT SPECIFICALLY IS TO COMPARE REAL PROPERTY TAXES. TAXES ON LAND AND BUILDINGS TO TAXES ON PERSONAL PROPERTY FOR BUSINESSES. AND IF YOU TOOK UP A SORT OF TRADITIONAL BUSINESS, WHICH IS PRIMARILY BUILDINGS AND LAND THEY WOULD HAVE A MUCH HIGHER BURDEN THAN THE PARTICULAR INDUSTRIES AND BUSINESSES WE EXAMINED. IT WOULD LOOK MORE LIKE THE PERCEPTION OUT THERE THAT ARIZONA HAS HIGH BUSINESS PROPERTY TAXES.

>> MICHAEL GRANT:
I UNDERSTAND THAT. I WAS TAKEN WITH THE PERSONAL PROPERTY ASPECT OF IT AND WONDERING IF IN THE SAME CONCLUSION THAT -- WONDERING IF IT'S NOT AS BAD AS WE THOUGHT IT WAS WOULD APPLY TO SMALL BUSINESS?

>> ALAN MAGUIRE:
IT WOULD IF THEY HAD A LOT OF PERSONAL PROPERTY BECAUSE THEY ARE --

>> MICHAEL GRANT:
BECAUSE THEY HAVE THE SAME ACCELERATED DEPRECIATION?

>> ALAN MAGUIRE:
EXACTLY. IF THEY HAD A LOT OF EQUIPMENT, THEY WOULD HAVE DEPRECIATION AND THAT WOULD OFFSET A SUBSTANTIAL PORTION OF THE TAX BURDEN.

>> MICHAEL GRANT:
LET ME CYCLE BACK TO THE SECOND POINT YOU MADE THERE. BUT, THE OVERALL, NOW LET'S SHIFT TO PROPERTY TAX, BUILDINGS AND LAND, THAT KIND OF THING, THOSE TAX BURDENS FOR BUSINESS ARE DISPROPORTIONATELY HIGH VIS-A-VIS THE CITIES THAT WERE INVOLVED?

>> ALAN MAGUIRE:
THE KEY THERE IS WHEN YOU LOOK AT ARIZONA, WE HAVE A SIGNIFICANT DIFFERENTIAL WHEN WE TAX HOUSEHOLDS OR RESIDENCES. THERE IS NO TAX BREAK, IF YOU WILL, FOR REAL PROPERTY. IF YOU HAVE A BUSINESS THAT HAS LOTS OF BUILDINGS AND LOTS OF LAND, YOU WON'T GET THE KIND OF TAX BREAKS AND YOUR BURDEN WOULD BE SIGNIFICANTLY HIGHER THAN THE INDUSTRIES WE USE. ARIZONA'S BURDEN WOULD BE RELATIVELY HIGH COMPARED TO OTHER REGIONS.

>> MICHAEL MAGUIRE:
YOU ALSO TOOK A LOOK AT VARIOUS PEOPLE THAT MIGHT BE EMPLOYED BY THESE KINDS OF BUSINESSES. WHAT CONCLUSIONS DID YOU DRAW THERE? WE LOOKED AT FOUR KEY EMPLOYEES FOR EACH BUSINESS OF DIFFERENT SALARY LEVELS. FOR EACH INDIVIDUAL EMPLOYEE WE TURNED IT INTO A HOUSEHOLD. THEY MAY HAVE BEEN MARRIED WITH CHILDREN, ITEMIZED THEIR INCOME TAX, WE CALCULATED THEIR TOTAL TAX BURDEN FOR SALES INCOME AND PROPERTY TAXES, THE THREE TAXES HOUSEHOLDS PAY. WE FOUND ARIZONA WAS EITHER THE SECOND OR HIGHEST BURDEN IN THE PHOENIX METROPOLITAN REGION COMPARED TO THE OTHER REGIONS WE EXAMINED. HIGHER THAN WE EXPECTED.

>> MICHAEL GRANT:
PARTICULARLY FOR THE LOWER INCOME WORKER, THERE WAS A MORE SIGNIFICANT SPREAD, WAS THERE NOT, IN COMPARISON TO THE OTHER CITIES?

>> ALAN MAGUIRE:
IT VARIED. THERE WERE TWO THINGS THAT IT CAME OUT CLEARLY. ONE OF THE REASONS THAT HOUSEHOLD BURDENS WERE AS HIGH AS THEY WERE IS ARIZONA HAS RELATIVELY HIGH SALES TAXES. YOU CAN THINK ABOUT THAT IN THE TIMES. WE PASSED A COUPLE OF SALE TAX INCREASES IN THE PHOENIX REGION. WE RAISED OUR OVERALL RATES. WE TAX A LOT OF THINGS SOME OF THE STATES DO NOT TAX. IN ADDITION TO THAT, FIVE OF THE JURISDICTIONS WE LOOKED AT, FIVE OF RAPIDLY GROWING REGIONS HAVE NO INCOME TAX AND WE HAVE AN INCOME TAX IN ARIZONA. THE COMBINATION OF RELATIVELY SALES TAX BURDENS AND NO INCOME TAX IN FIVE OF THE REGIONS PUSHED INTO THE TOP OF SCALE SIGNIFICANTLY.

>> MICHAEL GRANT:
I REALIZE IT WAS A COMPARATIVE STUDY, BUT TO A CERTAIN EXTENT IS IT NOT DEMONSTRATING THE REGRESSIVITY OF SALES TAX?

>> ALAN MAGUIRE:
IT REINFORCES THAT CONCEPT. PEOPLE TEND TO SPEND LESS ON CONSUMPTION ITEMS AS A PERCENT OF THEIR TOTAL INCOMES THAT WOULD SHOW THERE. THIS IS A INCOME TAX THAT WOULD OFF SET THAT.

>> MICHAEL GRANT:
ALAN, I APPRECIATE THE INFO. THINK YOUR TAXES ARE TOO HIGH THAT SOME BUSINESSES OR INDIVIDUALS ARE TARGETED UNFAIRLY? THE CITIZENS FINANCE REVIEW COMMISSION HAS SPENT THE YEAR EXAMINING THE TAX SYSTEMS. IN A MOMENT I'LL TALK TO THE DIRECTOR AND AN ECONOMIST ADVISING THE COMMISSION ABOUT ITS PROPOSED RECOMMENDATIONS, HOW THEY MAY AFFECT YOU, BUT FIRST PAUL ATKINSON REPORTS ON THE PANEL'S MISSION.

>> REPORTER:
THE 19 MEMBERS AT THE CONFERENCE TABLE WERE HANDPICKED, THE PROPOSED WAYS TO FIX A TAX SYSTEM THAT MANY ESPECIALLY THE GOVERNOR ACKNOWLEDGE.

>>LET THE GOVERNOR'S SIDE OF OUR BUDGET I HAVE FORMED A CITIZEN'S FINANCE REVIEW COMMISSION.

>> GOVERNOR NAPOLITANOARIZONANS NEED A TAX CODE THAT IS SIMPLE AND FAIR ACROSS THE BOARD.

>> REPORTER:
THAT IS SOMETHING EASIER SAID THAN DONE.

>> BARRY ARONS:
ANY TIME ANYBODY, WHETHER IT'S THE LEGISLATURE, WHETHER IT'S THE CITIZEN'S COMMISSION, THE CFRT TACKLES THE ENTIRE STRUCTURE OF OUR REVENUE SYSTEM IN THIS STATE IT'S A HUGE UNDERTAKING. IT DEFIES ANY KIND OF SIMPLE SOLUTION.

>> REPORTER:
THE CITIZENS FINANCE REVIEW COMMISSION HAS DONE EXTENSIVE ANALYSIS OF CURRENT TAXES. IT'S PROPOSALS WOULD TAKE A TAX SYSTEM BASED ON A MANUFACTURING ECONOMY OF YEARS PAST AND ADAPT IT TO THE SERVICE ORIENTED ECONOMY OF TODAY. RATHER THAN PRESENT A PACKAGE OF REFORMS, THE COMMISSION WILL RECOMMEND ALL AS INDIVIDUAL OPTIONS.

>> DANA NAIMARK:
IT'S DISAPPOINTING TO SEE THAT THEY ARE DEALING WITH RECOMMENDATIONS SEPARATELY AS AN OPTION. MANY OF THE COMMISSIONERS HAVE POINTED OUT HOW DIFFICULT THAT IS BECAUSE THEY KNOW THAT THE DIFFERENT TAX POLICIES INTERACT AND CREATE A DIFFERENT IMPACT IN COMBINATION THAN THEY DO SEPARATELY. I THINK THAT'S BEEN A DISAPPOINTING PART OF THE PROCESS AND HAS MADE IT DIFFICULT FOR CITIZENS TO GIVE INPUT AND HAS MADE IT DIFFICULT FOR THE COMMISSIONERS TO COME TO CONCLUSIONS IN SOME AREAS.

>> REPORTER:
THE GOVERNOR REITERATED TO REPORTERS TODAY SHE WOULD NOT SUPPORT TAX INCREASES IN 2004 AND SHE SAID THE RECOMMENDATION WOULD BE TOO LATE FOR THE UPCOMING SESSION. THE QUESTION THEN IS WHAT WILL HAPPEN WITH THE WORK DONE BY THE CFRC?

>> DANA NAIMARK:
CERTAINLY ONE OF THINGS ALL THE COMMISSIONERS AGREE ON, ALL THE PRESENTERS AGREE ON, IS THAT OUR TAX SYSTEM IS BROKEN IN MANY WAYS. IT'S OUTDATED. IT'S NOT APPROPRIATE FOR THE 21ST CENTURY. IT'S NOT GIVING ARIZONA THE ECONOMIC GROWTH AND QUALITY OF LIFE WE WANT. AND SO WE HAVE TO KEEP WORKING TO COME TO AGREEMENT ON HOW TO MOVE FORWARD AND ADDRESS THOSE ISSUES SO THAT IN ANOTHER TEN YEARS WE'RE NOT HERE WITH ANOTHER COMMISSION LOOKING AT THE SAME DATA AND COMING TO THE SAME CONCLUSION.

>> MICHAEL GRANT:
HERE NOW TO TALK ABOUT THE WORK OF THE CITIZENS FINANCE REVIEW COMMISSION IS THE EXECUTIVE DIRECTOR WHO IS AN ATTORNEY , LEEZIE KIM AND HERE IS ASU ECONOMIST DENNIS HOFFMAN. HE SERVES AS AN ADVISOR TO THE PANEL. INTERESTING COMMENTS FROM THE GOVERNOR TODAY ABOUT BASICALLY THIS PACKAGE BEING OFF THE TABLE FOR THE NEXT LEGISLATIVE SESSION, ALTHOUGH, IT WOULD BE RATHER DIFFICULT TO -- GIVEN THE FACT THE NEW YEAR IS ONLY A COUPLE WEEKS AWAY, PUT THESE SORTS OF PROPOSALS INTO ANY PACKAGE AT THIS POINT?

>>LEEZIE KIM:
I AGREE WITH YOU, ABSOLUTELY, MICHAEL. I THINK THERE WAS A REAL EXPECTATION THAT THE GOVERNOR WAS GOING TO TAKE THE RECOMMENDATIONS ON TWO, THREE, EVEN FOUR WEEKS NOTICE AND TURN THEM AROUND INTO LEGISLATION THAT QUICKLY. THESE ARE FUNDAMENTAL CHANGES TO AN OVERALL TAX STRUCTURE AND THEY REQUIRE A SIGNIFICANT AMOUNT OF CONSIDERATION.

>> MICHAEL GRANT:
PROFESSOR HOFFMAN, I THINK THE GOAL, ULTIMATELY THOUGH IS TO GET TO THEM AT SOME POINT IN TIME, AT LEAST IS THAT YOUR UNDERSTANDING?

>> DENNIS HOFFMAN:
ABSOLUTELY, ABSOLUTELY. I THINK WHEN THE COMMISSION WAS FORMED, A FISCAL REFORM COMMISSION, BY THE WAY IT COULD BE TAXING, COULD BE SPENDING ISSUES, THE FOCUS OF COMMISSION WAS TAXES BUT WE HAVE LAND ISSUES. I THINK THE LATEST DOWNTURN ILLUSTRATED THAT THAT IS GOING TO REQUIRE FIXES OVER THE LONG RUN.

>> MICHAEL GRANT:
WHERE ARE WE ACTUALLY AT THIS POINT IN TIME?

>> DENNIS HOFFMAN:
IN THE RECOMMENDATION PROCESS BECAUSE WE HAVE BEEN TALKING ABOUT PROPOSALS AND PERHAPS MISLABELING THEM AS RECOMMENDATIONS. WHERE IS THE COMMISSION IN TERMS OF SAYING ALL RIGHT, THIS IS WHAT WE RECOMMEND?

>> LEEZIE KIM:
WELL, IT'S BEEN AS DENNIS MENTIONED IT'S BEEN A LONG PROCESS. WE STARTED IN JANUARY. WE BROUGHT TOGETHER A BRILLIANT GROUP OF PEOPLE. YOU KNOW I CALL THEM ANY JEDI COUNCIL. THEY ARE AN INCREDIBLE AMOUNT OF PEOPLE WHO HAVE DONE AN INCREDIBLE AMOUNT OF WORK. ALL ARE VOLUNTEERS BUT WHERE WE ARE NOW WE HAVE GONE THROUGH AN EDUCATION PERIOD. WE HAVE GONE THROUGH A PUBLIC INPUT PERIOD. WE HAVE RECEIVED LAST NIGHT WHEN I -- WHAT I THINK IS PROBABLY THE FINAL DATA WE WANTED AND THAT WAS A PROPERTY BY ALAN MAGUIRE AND KPMG THAT COMPARATIVE TAX STUDY. WE RECEIVED THAT LAST NIGHT. KNOWING THIS COMMISSION, THESE COMMISSIONERS ARE GOING TO TAKE TIME TO ABSORB THE DATA, TAKE ATE PART, PUT IT BACK TOGETHER AND REALLY ANALYZE IT. WITH THAT IN MIND, I THINK IT MAKES SENSE THAT WE DESERVE TIME TO DO THAT. THEY HAVE THOUGHT ABOUT ALL OF THE RECOMMENDATIONS THIS FINAL INFORMATION. NOW IS THE TIME WHERE THEY'LL START MAKING THEIR DECISIONS ABOUT THE RECOMMENDATIONS.

>> MICHAEL GRANT:
SOUNDS TO ME LIKE THE ACTUAL VOTES ON RECOMMENDATIONS NOT UNTIL AT LEAST NEXT MONTH?

>>LEEZIE KIM:
I DON'T -- I WOULD RATHER DO THIS RIGHT, I THINK THAN TO DO IT ON TIME. WE SELF-IMPOSED A OCTOBER 31 DEADLINE BUT WE MOVED IT BECAUSE WE KNEW THIS INFORMATION WAS COMING. I THINK THAT MADE SENSE. IT WAS WORTH THE WAIT. IT COULD TAKE ANOTHER MONTH. I THINK THERE ACTUALLY IS MAYBE SOME ARROGANCE IN COMPLETING THIS ON THE ANNIVERSARY OF OUR COMMERCEMENT WHICH WOULD BE IN ABOUT A MONTH.

>> MICHAEL GRANT:
THE MAGUIRE KPMG STUDY TALKED TO ALAN ABOUT ARE YOU SURPRISED ABOUT THE PERSONAL PROPERTY TAX?

>> DENNIS HOFFMAN:
NOT SO MUCH WHEN ONE THINKS ABOUT THE EXPLANATION. MUCH OF THE ANALYSIS IN PLACE ON THE BUSINESS AND PERSONAL PROPERTY WAS DATED AND CERTAINLY, I THINK, THE CONCLUSIONS WERE BASED UPON CONDITIONS 10-15 YEARS AGO BUT AS ALAN SAID RECENT CHANGES IN OUR DEPRECIATION SCHEDULES HAVE CHANGED THAT STORY.

>> LEEZIE KIM:
THIS IS A VERY GOOD POINT THAT ONE OF THE REASONS -- ONE OF THE REALLY GREAT QUALITIES OF THIS COMMISSION HAS BEEN THAT THEY HAVE RELIED ON DATA. THERE IS SOMETHING ABOUT THE ETHOS OF THIS COMMISSION. THEY WANT DATA IN A DESPERATE WAIT WAY. THEY ARE WILLING TO WAIT FOR THE DATA. THEY ARE NOT COMFORTABLE ON RELYING ON CONJECTURE OR WHAT PEOPLE THINK IS CURRENTLY AND MAY BE OUTDATED?

>> DENNIS HOFFMAN:
INDEED. I THINK THE BEST PART OF THE ABOUT THE COMMISSION, AND I DON'T THINK WE NEED TO WORRY ABOUT THE TIMETABLE IS THE BYPRODUCTS OF POLICY REPORTS THAT HAVE BEEN GOING. THERE'S A NUMBER OF CONCLUSIONS THAT CAN BE DRAWN. YOUR CONVERSATION WITH ALAN ABOUT PERSONAL TAXES, INDIVIDUAL TAXES, THERE'S A POLICY REPORT ON FEES AND CHARGES THAT REALLY COMES TO A BASIC CONCLUSION ON INDIVIDUAL TAX BURDENS. WE ARE DEAD LAST IN TERMS OF FEES AND CHARGES. TOTAL FEES AND CHARGES ON A STATE AND LOCAL BASIS.

>> MICHAEL GRANT:
WE FOUND OUT THAT THE SO-CALLED 90/10 AGENCIES ARE NOT 90/10 ANYMORE.

>> DENNIS HOFFMAN:
I THINK THAT'S THE CASE. RIGHT. THE SECOND ONE TO ME IS COLORADO VERSUS ARIZONA. COLORADO PURPORTED TO BE SUCH A FISCALLY BETTER STATE, A TAXPAYERS BILL OF RIGHTS STATE. THEY ARE NUMBER NINE IN FEES AND CHARGES WE'RE 50TH.

>> MICHAEL GRANT:
LET ME GET -- I THINK ONE OF THE VOTES TAKEN LAST NIGHT AS CERTAINLY BEEN ONE OF THE MOST CONTROVERSIAL ITEMS AND THAT WAS SHOULD WE IMPOSE A TAX ON REAL ESTATE TRANSFERS? THE COMMISSION VOTED NO, WE SHOULD NOT. IS THAT A POLITICAL DECISION OR A TAX DECISION?

>> LEEZIE KIM:
IT'S HARD TO SAY. I HAVE TO TELL YOU ONE THING ABOUT THIS COMMISSION, THERE ARE 21 VERY INTELLIGENT, HIGHLY INDEPENDENT THINKERS. SO IT'S HARD TO SAY IF THERE WAS ANY ONE REASON. MY GUESS IS THAT POLITICS PROBABLY CAME INTO PLAY IN SOME WAYS. ONE OF OUR COMMISSIONERS MENTIONED THAT THERE WERE MANY FUNDAMENTAL CHANGES THAT THE COMMISSION WAS CONSIDERING PROPOSING. THIS ONE DIDN'T SEEM TO RISE TO THAT LEVEL.

>> DENNIS HOFFMAN:
HARD TO SUPPORT IT WITH ECONOMICS. THE 37 STATES THAT IMPOSE A REAL ESTATE TRANSFER TAX HAD A MORE ROBUST, MORE GROWTH THAN THE REAL ESTATE SECTOR THAN THOSE OF US THAT HAVEN'T IMPOSED IT. THERE ISN'T ANY ECONOMIC BASIS.

>> MICHAEL GRANT:
HARD TO IMAGINE THE STATE HAS A MORE ROBUST REAL ESTATE CLIMATE THAN ARIZONA?

>> DENNIS HOFFMAN:
WE CERTAINLY DO WELL. THERE DOESN'T SEEM TO BE ANY LINK BETWEEN THE ECONOMIC IMPACT ON THE REAL ESTATE SECTOR OF A VERY, VERY SMALL PERCENTAGE REAL ESTATE TRANSFER TAX.

>> MICHAEL GRANT:
I THINK WE SHOULD POINT OUT THAT THE REAL ESTATE INDUSTRY HAS INDICATED IT HAS MARSHALLED A WAR CHEST OF $2 MILLION OR SO TO FIGHT THIS. WAS THAT ACTIVELY BROUGHT TO THE COMMISSION'S ATTENTION IF YOU KNOW?

>> LEEZIE KIM:
I THINK IT WAS MENTIONED ONCE. I MUST TELL YOU OUR INFAMOUS FOUR-HOUR LONG MEETING. I THINK IT WAS MENTIONED ONCE. I DON'T THINK IT WAS THE REASON PEOPLE FELT THAT WAY. THERE WERE A NUMBER OF REASONS. SOME PEOPLE WERE CONCERNED ABOUT THE EFFECT IT WOULD HAVE ON THE REAL ESTATE INDUSTRY GENERALLY. MANY PEOPLE WERE CONCERNED ABOUT THE EFFECT IT WOULD HAVE ON THE OWNER -- HOME OWNERSHIP PARTICULARLY AT THE LOWER INCOME LEVELS. IT WAS A VARIETY OF DIFFERENT REASONS.

>> MICHAEL GRANT:
ONE OF THE OTHER ISSUES TAKEN UP LAST NIGHT AND VOTED ON, DENNIS, WAS LET'S REINSTITUTE A STATE PROPERTY TAX BUT LET'S MOVE RESIDENTIAL AND BUSINESS TAXES CLOSER --

>> DENNIS HOFFMAN:
EQUALIZE THE TAX RATIOS WITH THIS NEW TAX. THAT WAS THE PROPOSAL. I THINK THAT FUNDAMENTALLY INSTITUTING A STATEWIDE PROPERTY TAX PERHAPS AS ITS FUNDING BASIS FOR BONDING WOULD BE DOING THE SENSIBLE THING IN BONDING SCHOOL CONSTRUCTION INSTEAD OF TRYING TO FUND IT OUT OF A CURRENT OPERATION WOULD BE A SENSIBLE MOVE. THE STRUCTURE OF SUCH A TAX IS OPEN TO DEBATE. IF YOU COULD EQUALIZE ASSESSMENT RATIOS BETWEEN BUSINESS AND RESIDENTIAL PROPERTIES IT MIGHT MORE PALLETABLE.

>> MICHAEL GRANT:
IS THAT AT LEAST IN PART OF CONCLUSIONS OF THE MAGUIRE KPMG STUDY BECAUSE THEY SEEM TO BE SAYING DON'T FOCUS SO MUCH ON THE BUSINESS PERSONAL PROPERTY ACT BUT FOCUS ON THE FACT THAT YOU DO HAVE SOME DISPROPORTIONATE IMPACTS ON BUSINESS OWNED BUILDINGS AND LAND, THE REAL ESTATE TAX?

>>LEEZIE KIM:
I DON'T THINK IT ACTUALLY CAME OUT OF ALAN MAGUIRE THE KPMG STUDY, WHEN THEIR STUDY DID FOR THE COMMISSION, IS IT CONFIRMED MANY OF COMMISSIONS BELIEFS. IT ALSO CHALLENGED SOME OF ITS BELIEFS. IT'S A REQUEST THING TO HAVE THIS KIND OF DECISION AND TO HAVE DATA TO RELY ON. THAT BEING SAID, ONE OF THE THINGS IT DID CONFIRM IS THAT PROPERTY TAX OR BUSINESSES IS A GREATER BURDEN ON BUSINESSES. DISPROPORTIONATELY ON BUSINESSES THAN IT IS ON HOMES. BUT THAT'S PRETTY WELL NOTED BECAUSE THERE IS A DIFFERENCE IN THE ASSESSMENT RATIOS BETWEEN RESIDENTIAL AND BUSINESS PROPERTY.

>> MICHAEL GRANT:
REAL QUICKLY, ADD PERSONAL SERVICES TO SALES TAX BUT LOWER THE OVERALL SALES TAX RATE? WHY IS IT A GOOD IDEA?

>> DENNIS HOFFMAN:
I WOULD DO THE FORMER AND CONSIDER THE LATTER, A BROADER BASED SALES TAX OVERALL IS MUCH BETTER FOR FUNDING INFRASTRUCTURE NEEDS TO THE ARIZONA ECONOMY. I WOULD PROVIDE TAXES THAT GROW WITH THE ARIZONA ECONOMY. YOU CAN USE PROCEEDS TO OFFSET LEGAL COSTS OR DROP THE RATE.

>> MICHAEL GRANT:
WE'RE OUT OF TIME. THANKS FOR JOINING US. IF YOU WANT TO LEARN MORE ABOUT THE TAX CHANGES THE CITIZEN FINANCE REVIEW COMMISSION IS LOOKING AT PLEASE VISIT THE CHANNEL 8 WEBSITE. (CLEAR FOR CHYRON) THEN CLICK ON "HORIZON" YOU'LL FIND THE LINK TO THE WEB PAGE. THAT'S WHERE YOU CAN READ ALL THE REPORTS AND RECOMMENDATIONS. HERE IS A LOOK AT WHAT IS ON "HORIZON" TOMORROW:

>> UNITED STATES SENATOR JOHN MCCAIN JOINS MICHAEL GRANT IN THE "HORIZON" STUDIO TO TALK ABOUT ISSUES SUCH AS THE CAPTURE OF SADDAM HUSSEIN, THE MCCAIN FEINGOLD CAMPAIGN FINANCE SUPREME COURT RULING, IMMIGRATION ISSUES AND OTHER TOPICS. THAT'S AT 7:00 WEDNESDAY ON "HORIZON."

>> MICHAEL GRANT:
THURSDAY, ECONOMISTS WILL JOIN ME TO TALK ABOUT WHETHER WE'RE ON THE REBOUND AND AN ASU LAW PROFESSOR WORKING IN THE COUNT AS ATTORNEY'S OFFICE WROTE A SCATHING BOOK WITH THE EXPERIENCE. THANKS FOR JOINING US ON A TUESDAY. I'M MICHAEL GRANT. GOOD NIGHT.

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