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December 19, 2003

Host: Michael Grant
Topics:
· The Journalists Roundtable
In-Studio Guests:
Mark Flatten, "East Valley Tribune;"
Howard Fischer, Capitol Media Services;
Robbie Sherwood, "Arizona Republic."

>> Michael Grant:
It's Friday, December 19, 2003. In the headlines this week, Democratic presidential candidate Howard Dean campaigning in Arizona looking for votes. Nearly two months after it began state lawmakers finished the special session on CPS reform and prison overcrowding. And Governor Napolitano says she will not push for tax reforms in 2004. Candidate Howard Dean campaigning in Arizona looking for votes. Nearly two months after it began, state lawmakers finished their special session on CPS reform and prison overcrowding, and Governor Napolitano says she will not push for tax reforms in 2004. Good evening, I'm Michael Grant. This is the Journalists Roundtable. Joining me to talk about these and other stories are Mark Flatten from the "East Valley Tribune"; Howard Fischer of Capitol Media Services; and Robbie Sherwood of the "Arizona Republic." Former Vermont governor Howard Dean brought his presidential campaign back to Arizona this week. One of his stops was in Sun City where he spoke to a large crowd. Mark, you were there, what did he have to say?

>> Mark Flatten:
He had a lot of things to say about why George Bush is bad and he can beat him. But the thing that's attracted the most attention is that the capture of Saddam Hussein does not make us any safer in the homeland, and the reason this is sort of a controversial statement or important statement for Dean is Dean has really separated himself from the pack by being out front from the very beginning saying this war is wrong, you know, we have no reason to be there. Once Hussein was caught, he kind of had to -- people were expecting him to sort of, how is he going to backtrack, how -- put a happy face on this? He frankly came out and said, hey, it's a great thing that we caught him, but the fact of the matter is it doesn't make us any safer here. The same day that Dean was here, senator Lieberman, who is also running for the democratic nomination did a conference call with a lot of local media and you could tell in his voice that he just couldn't understand how Dean can say something like that and not really be affected in the polls.

>> Michael Grant:
Given at least part of the reason is that the constituency that Dean is playing to right now to see if can he get back to the center by November if he ultimately becomes the nominee, but that message plays to that core?

>> Mark Flatten:
The core of the Dean campaign, not all Dean supporters but the core seems to be the people that truly believe in their hearts that the only reason we went to Iraq was to help Haliburton make some money. So to them, capturing Saddam Hussein is no different than capturing Ken Lay. For that group it's not -- it's a good thing we caught him, he's a bad guy --

>>Robbie Sherwood:
It's primary politics 101, whether you're a Republican or Democrat, on the right or left, you win a primary by appealing to your base voters and those are the people at the extreme of each end, and those people are not going to stand up and rejoice and decide the war was a good idea because Saddam was captured. They might say nice job and I support the troops.

>> Howard Fischer:
That gets into the problem that assuming Howard Dean manages to win Arizona and survive, you know, how far can he move back to the center? Yes, he does appeal to a certain group --

>> Michael Grant:
How fast can he move back to the center, too?

>>Howard Fischer:
Yes. That becomes the issue. There was a poll this week that basically said that somewhere close to 60% of the people said if Howard Dean is the nominee they will not vote for him. This is Republicans and Democrats. That's just not a good sign for the Democratic Party.

>> Mark Flatten:
There's an interesting thing going on in the Democratic Party right now, and I suppose the Republican party goes through it, too, when they're out of power struggling trying to figure out how to get back, but when you talk to candidates like Lieberman they make the point we're sort of fighting for the heart of the Democratic Party. Are we going to let the Howard Deans of the world take us off the cliff, pass out the Kool Aid and everybody drink it, or are we going to stay at the core values of the Democratic Party? What Lieberman said is, look, what I'm running on is what Bill Clinton was successful in doing, building jobs, middle class tax cuts, a strong defense policy and Dean is way out there in left field --

>> Howard Fischer:
Here's the problem. When Fred from Northern Arizona University did a poll on what people who are registered Democrats intend to vote, he also asked how familiar are you with the candidates? Lieberman a lot of people are familiar with him, but in his case to know him is not to love him. They know what he stands for and don't like him. They don't find him as a leader. He's not charismatic any shape of form. That's why he's on the phone saying, how come they won't vote for me?

>> Michael Grant:
Howie I wonder if it's they don't like him or your second point it's that he's not charismatic. It seems Joe Lieberman might have played well as a number two position on the ticket but maybe doesn't make that next step to number one.

>> Howard Fischer:
That's the thing. You need somebody to inspire him. One of the things that Howard Dean has been able to do and he did it with the Internet is rallying the troops, rallying the disaffected. The problem with the Democrats is they sort of got their hearts knocked away and got the wind knocked out of them with this we won the election but we didn't win the election. We need somebody to kind of lead us out of wilderness and Dean is in a lot of ways the old line liberal in terms of something different. He talks about the universal healthcare he provided for all the children in his state. Those are issues that get people fired up.

>> Robbie Sherwood:
And he has a year to make his case. That's the good news for him. The election is not tomorrow. Because this Saddam Hussein thing would have blown him out of the water. The bad news, I think, for him is that the economy is coming up, the news out of Iraq has been increasingly better, it's still not great, but providing things stay on that trend level, he has problems -- he'll have to come one a new issue.

>> Mark Flatten:
There's another thing I think Dean's got going for him and I think that's reflected in the support he's got in Arizona, I think the polls showed him two to one over his next closest competitor in Arizona, which is when you hear Dean, boy, you know there's a big difference between him and George Bush. There's no middle ground there. And for a lot of Democrats, that's what they need to do, is rally around someone that's going to draw a clear distinction to President Bush. When you talk to Lieberman, when Lieberman was on the phone for the conference call, he said I'm strong on defense, I supported the war in Iraq, I'm for middle class tax cuts, and I finally had to stop him and say, Well, aren't the people you're targeting, aren't they going to vote for Bush anyway?

>> Robbie Sherwood:
I think Dean can also make a fiscal responsive argument as well because as governor he actually balanced budgets. That's what he's saying throughout. The bush administration has set new standards for spending --

>> Howard Fischer:
Wait a second, balancing a budget in a state that's built on maple syrup hardly qualifies somebody to run the country.

>>Robbie Sherwood:
It requires a balanced budget.

>> Michael Grant:
Don't underestimate how sticky that can be.

>> Howard Fischer:
Ooh.

>> Michael Grant:
Barnett Lotstein in the county attorney's office has retired but really not.

>> Mark Flatten:
Well, Barnett -- let's put them in perspective and take us back a year or two when Dave Henderschott who was sheriff Arpaio's deputy retired so he could collect his pension and got rehired at the same job. Lotstein was on out there pounding his shoe on the table saying this is wrong, this would never happen at the county attorney's office. He's essentially chief deputy for Rick Romley. Apparently turns out he thinks Henderschott wasn't so stupid because he did exactly the same thing this week. Actually he did it quite some time ago but it was revealed in our paper this week that he had done the same deal, and the entertainment value of this, of just reading him saying, well, I was wrong this, no, no, it's fine --

>> Howard Fischer:
That's the funny part. He specifically said with Henderschott, you shouldn't be coming back to the same job and now his argument is, well, you know, somebody would have to fill this job anyway, so, look, look how much I'm saving the county by coming in with my experience.

>> Michael Grant:
Robbie if I recall correctly, that was precisely Joe Arpaio's and Dave Henderschott's argument as well.

>> Robbie Sherwood:
Right. Once you start drawing that salary from the retirement account and your own budget there is probably a savings there so you can make that argument. Lotstein certainly wasn't making the argument at the time and we know how and he Arpaio --

>> Mark Flatten:
The interesting thing about this is Romley, I would think -- Romley is pretty sharp politically, and he had to see this as not passing the proverbial headline test. I don't know -- I don't know discussions that went on. Romley is smart enough -- Lotstein is in essence his sort of political advisor for the office. I'm just surprised that they didn't handle this --

>> Howard Fischer:
Maybe he thought nobody would -- look, it took Ray Stern, he's a good reporter, it took Ray Stern five months to dig it out and if Ray hadn't, perhaps we wouldn't be sitting here talking about it.

>> Michael Grant:
Certainly hasn't picked up the level of press attention --

>> Mark Flatten:
It's because you don't have the county attorney's office saying this is an outrage.

>> Michael Grant:
Last weekend state lawmakers finally wrapped up their special session which began on October 20th, I think 1999. They were able to reach a compromise on CPS reform and prison overcrowding. Howie, let's start with the CPS bill. What does it do?

>> Howard Fischer:
Well, the big thing is it provides some more money for the agency. One of the issues came down to lawmakers finding out that if you call in with a complaint on abuse and neglect, it doesn't always get investigated by a CPS worker. They farm it out to nonprofit groups like family builders. They said, wait a second, that doesn't make any sense. A family builder person comes to your house and says, we would like to come in, we would like to help and the people basically say, go away, and that's the end of the matter. So the governor concluded you need more CPS workers. This provides more CPS workers. It provides more money for the agency to deal with the cost overruns it's going through. But it provides substantive change for the agency. One of the prime issues is it says the prime directive of the agency is the safety of children. The old law seemed to be worded in a way that said, you're really supposed to keep families together. That often did not work hand in hand with the idea of protecting the children. It also provides for open courts. Not all of them, but every county will have to open at least some of the courts. Open records of what CPS is doing to the extend allowed by federal law. One of the significant changes says if you're a parent and the state is trying to sever your parental rights you are entitled to a jury trial so that the state can't run roughshod over you. There's some other procedural changes. For example, it says you can't hold the parent guilty of abuse solely by refusing to provide psychiatric medications, in other words, your kid has epileptic seizures, you may not want to do.

>> Mark Flatten:
The thing about that was the Ritalin thing, there is a perspective out there that any time a kid opens his mouth you need to pop a Ritalin in it.

>> Robbie Sherwood:
That's at one end, but there was also like the anti-seizure medication, some of the side effects of these have parents trying to do other remedies and they don't want to get in trouble for not doing that. That was one of the prime motivations of house majority leader Eddie Farnsworth. He had a kid with that condition and decide to do treat them through their diet and didn't want an issue with CPS in that situation.

>> Howard Fischer:
One other quick point on this, this isn't the end of the spending. When the CPS bill was adopted, the appropriation was adopted, it said if you are running ahead of appropriations, stop spending. This gets rid of the provision that basically says, you can keep spending even though we haven't authorized the money with essentially a promise by the legislature when they come back in January. If they can't find nickels in the couch, they will come up with more money.

>> Robbie Sherwood:
And they won't be hitting them with subpoenas like they did last time and having this issue of hinting there was something illegal going on. |

>> Mark Flatten:
Beyond the money issue, the reforms are, I think, very sort of huge in terms of really getting a handle on this agency, because without some openness, this agency has always hidden by confidentiality and that was one of the frustrations at the legislature. You would have legislators asking questions, what about this, with a about that? They would get --

>>Howard Fischer:
Part of the problem with the confidentiality and there has been a pendulum here and Mark has seen this, is you have situations where CPS goes to a home, everyone says everything is okay and the child turns up in a cage or dead, and then you have other situations where CPS in fact would take a child based on some report of proxy my -- Munchausen by proxy and things like that, and it turns out it wasn't really necessary to take the child. This provides more oversight.

>> Mark Flatten:
That's the concept of the jury trials. The old argument had been, well, we're not really taking anything from a parent if that you run a red light -- or get a DUI you can get a jury trial, you can get a misdemeanor. Yet someone can come into your home and take your children away and you really don't have much recourse. Yeah, you had to go in front of a judge under the old system. But the way the system operates is a lot like any bureaucracy, is it just because sort of almost a rubber stamp agency.

>> Michael Grant:
Robbie, once they cleared that one, they then moved onto corrections and what happened on the prison side of the special session?

>> Robbie Sherwood:
Much to my surprise they came to a meeting of the mind on this thing and approved some money -- in about the $70 million range all told for like 2100 -- 2,000 new beds and it's a mixture of public and private beds and that was the compromise the house leaders had to give some public beds to get their privates and the governor wouldn't move off that. There was a an agreement to move a range of prisoners, it's no longer like 2100 prisoners out of state. It will be up to that amount as needed and a whole variety of funds being mixed in there drawing down some federal dollars to try to make this happen just to avoid general fund hit and debt as well, like about $37 million to build the new public beds.

>> Michael Grant:
Incidentally and this is a question I never asked, but it just occurred to me, since this was a current shortage, does this really take us far in -- like past April?

>> Robbie Sherwood:
I don't believe it takes us too much farther into the next fiscal year. I believe this was called a stopgap sort of a Band-Aid approach. However, there are some new prisons that are about to go up. There's -- part of the deal was a private prison in Kingman had been delayed for various reasons depending on who you believed, and then -- with the time that they bought for themselves with this, hopefully some of these things can start coming online.

>>Howard Fischer:
But you still have the governor waiting in the wing. She has a $440 million construction plan for another 9,000 beds, which would take us 15 years to pay off but only take care of five years of growth and population which is real scary.

>> Michael Grant:
Governor also with the task force on recommendations on how to keep the military bases open?

>> Howard Fischer:
It's interesting. It's no big surprise. We want to give counties and cities in terms of zoning around the bases. There's a fear the next round of base closures, those bases feel there is an urban encroachment will be the first ones to go and obviously Luke having lost Williams, Luke may be next in line.

>> Michael Grant:
And possibly Davis-Monthan. DM already has the city on the north side and that's a whole different situation. One of the interesting things, though, is that what's really lacking in this which is cash. It's one thing to say we're not going to allow development around, but if people own the land, are you going to buy it from them? Are you going to say you have to farm this forever? She wants to put a million dollars there. She says maybe we can make another 3.5 million by diverting a percentage of all military taxes into this fund. That gets us to 4.5. McCain says he has been able to come one 27 million over two years. But look at the price of land. You're not going to buy a lot of land with and that until the legislature is really willing to say we're going to buy the land, rather than just telling people you can't develop it, none of this means anything.

>> Mark Flatten:
If you have perpetual agriculture zoning, it might depress the price. Can't cities take care of this with, for instance, industrial zoning?

>> Howard Fischer:
Well, some of it, but then you come down to neighbor out there saying, I don't want industrial zoning near my home.

>> Robbie Sherwood:
These are the people who bought their homes under an airport.

>> Howard Fischer:
We didn't know that airport was there. Those jets --

>> Mark Flatten:
I would think we would be able to trick those people --

>> Michael Grant:
Speaking of gubernatorial commissions, Governor Janet Napolitano this week announced she will not pass for major tax reform in 2004. Why did she say never mind?

>> Robbie Sherwood:
Because the commission, her citizens finance commission, that she launched to develop these reforms a year ago in January is not finished with their work. Their recommendation are pending and I think we know within the margin of error of 4 or 5 recommendations what they're going to be, but the governor says that it's too late to develop anything for this legislative session.

>> Michael Grant:
That was the official --

>> Robbie Sherwood:
Implicit is she won't develop anything for the 2004 ballot. The November election I think is the elephant in the room. I don't think a democratic governor or any governor wants to be talking taxes in an election year, particularly when the sum total of what that commission is talking about is upwards of $800 million in new taxes, potentially, and a huge shift of business property taxes which are considered punishing in Arizona and bad for business to homeowner, provided you want to keep the revenue the same. Then homeowners would have to go up to make that happen and it's pretty controversial.

>> Mark Flatten:
Doesn't this put her in a huge box? You can't do it in '04. You can't do it in '06, an election year. Basically gives them a one-year window to convince the legislature we need new taxes.

>> Howard Fischer:
She's counting on people like Bill Post to chairs the commission to take this on the road. They're counting on these people to take this back to their communities and say, look, if we expand the sales tax base and we start taxing the pool man and the barber shop and things like that, but we can lower the tax rate from 5.6 down to 3.8 just for argument sake, that may make sense.

>> Michael Grant:
That's a lot of haircuts.

>> Howard Fischer:
A lot of haircuts. You can tell I don't have to go very often, so it's not a problem for me.

>> Mark Flatten:
But they're promising revenue neutrality. You could maybe sell it that way --

>> Robbie Sherwood:
That's an ideal -- in some ways there's no way to do that. And revenue neutrality means something like, well if they decide not to bring up your homeowners taxes by bringing down business taxes, maybe we'll expand the sales tax base and buy down the business property tax or some measure like that. But so many taxes are going up, somewhere when you say revenue neutral --

>> Michael Grant:
I thought -- there were a couple of interesting votes taken by the committee this week, one of which was it looked like they were eyeball to eyeball with the realtors, and they blinked, no real estate transfer tax.

>> Robbie Sherwood:
Absolutely. Perhaps it was the news a couple months ago when we started taking a look at these proposals that the real estate industry had already set aside $2 million to fight this thing if it ever got anywhere near the legislature. They were going to mobilize their forces. The interesting thing is they took votes on that, reaffirmed their proposal for a statewide property tax which is something you'll probably see to fund schools, and to bring down the business property taxes, but those are the only votes we've seen that from commission. They do their business in a funny way. They run things around the table in sort of divine consensus and get written feedback, and when they're close, as they were with these four proposals, then they actually took a show of hands and did a vote. To me that says if you saw their other 46 proposals, they're probably going to be in the package.

>> Howard Fischer:
One of the interesting things that did come out of this package was kind of a surprise. Allen McGuire helped do a study along with KPMG. We've heard year after year Arizona tax on business equipment is what's holding back the state, holding back the development, because the companies that have high salaries are the manufacturers who have a lot of equipment. Well, Allen did a comparison with eight other cities with whom we tend to compete for these kinds of jobs and found out that our business property taxes, at least on equipment, were no hirer than anywhere else.

>> Michael Grant:
Actually the rate was higher, but given the accelerated deparisian associated with them and low salvage values, the impact -- actual dollars --

>> Howard Fischer:
That was the real key, the same thing with corporate income tax. We have a 6.9% corporate income tax rate. But what he found for most companies, biotech being the lone exception, we have very low research and development tax and pollution control equipment, which includes almost everything theses day and a lot of these companies aren't paying corporate income taxes at all. So complaints about how we have to lower the corporate income tax is meaningless for the kinds of business we want here.

>> Robbie Sherwood:
There's a couple Arizona tax credits. One is pollution and the other is pollution control. If your company can make a case they're researching and developing, they can virtually wipe out their tax liability. So now if this study wasn't telling you what you wanted to hear, it was fairly easy to poke holes in it because they were looking at a very narrow family of companies and some hypothetical employee models that may or may not be based on anybody that lives in Arizona. But it also -- the conclusion that I -- the eye opening conclusion was that for the businesses we really want and need for Arizona's economy, if those people are paying tax, I mean, the -- you're a sucker if you're paying taxes in Arizona.

>> Michael Grant:
Particularly on the business personal property tax analysis. That surprise add lot of people at the capital? What was the legislative reaction to that?

>> Robbie Sherwood:
They still want to cut it. There's a separate legislative committee that's looking at the tax code and they still want to do -- they still want to get rid of that. They think it's onerous and they say there's a whole host of businesses that don't qualify for these credits and they still wanted to do the single sales factor, which tax the corporations on their in-state sales and if you're somebody like Raytheon, you probably don't have any. It could be about a $100 million tax break. The notion is that these companies don't pay a lot of income tax anyway. Now it can't be a $100 million tax break and they don't pay any taxes. You can't have it both ways.

>> Howard Fischer:
The fact is, the legislative committee was not a broad cross section -- when you have people like SRP lobbyist Russell Smolden as a citizen, this isn't your typical legislative committee with citizen input. They are headed off in a direction -- Steve Huffman who is a representative of Tucson knew where he wanted to go. Dean Martin knew where he wanted to go with it. There was no question but they were going to come back and recommend these changes. The real key, as Robbie alluded to, is with property taxes, the state doesn't collect property taxes. This is a local issue if that a locality needs to raise $10 million for bonds, and the businesses are playing less, guess who pays more? It's the homeowners. If you're going to have that kind of shift from bond issues and everything else, that's going to be something you can never sell in this legislature.

>> Michael Grant:
Did the committee discuss at all, I take it, is it going to try to finalize its recommendation sometime early next year now --

>> Robbie Sherwood:
Yeah, I think by the second week of January. It's just a matter of writing them up, showing them to the commission one last time, since they didn't take a vote like I said, that they got the recommendations the way they believed they came forth and then you will see it.

>>Mark Flatten:
I think there's a sense in the legislature -- they think the governor wants to taxes and no matter what committee she you a points they're trying to sell a lame horse.

>> Michael Grant:
Panelists we are out of time. Happy holidays. Thank you very much. To share your views or contact us, visit our website at www.kaet.asu.edu, click on the word "Horizon," and that will lead you to transcripts, links and information on up upcoming shows. Let's see what's on "Horizon" on Monday.

>> They bring you the news with a bite. They are newspaper editorial cartoonnists. Join Steve Benson, Brian Farington and Mike Ritter as they draw you in with their cartoons of 2003, covering everything from the capture of Saddam Hussein to the shame of Michael Jackson, Monday at 7:00 on "Horizon."

>> Michael Grant:
Will tell us about their books. Thank you very much for joining us on this Friday edition of "Horizon." I'm Michael Grant. Have a great one. Good night.

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