Razing Arizona

There’s been no shortage of headlines in this year’s race between Gov. Jan Brewer and her Democratic challenger, Attorney General Terry Goddard.

There have been arguments over whether drug dealers have been beheading people in the Arizona desert. There have been fights over whether Brewer should meet Goddard in a debate. There have been stories about Brewer’s big lead in the polls. There have been attacks against the federal government by Brewer. There have been broadsides by Goddard against Brewer for happily dishing out federal stimulus funds at the same time she badmouths the feds.

Last week, after former Phoenix New Times reporter John Dougherty started a rumor on his Facebook page that the governor might be too ill to survive a four-year term, the race hit a new sorry low when one of Brewer’s chief operatives, lobbyist and political consultant Chuck Coughlin, said the governor’s health was just fine—before suggesting that the media look into whether Goddard was gay. (Coughlin later delivered a half-hearted apology, saying he’d only been trying to point out that questions about the governor’s health were as out of bounds as questions about Goddard’s sexuality. Goddard, for the record, is married with a son; in an interview with the morning daily last week, he called Coughlin’s comments “despicable.”)

But amid these sideshows, there’s been remarkably little discussion of how the state is going to survive the fiscal disaster that still looms on the horizon.

As state revenues have crashed from $9.1 billion in 2006 to $6.6 billion in 2009, Brewer and Republican lawmakers have spent two years slashing spending, but the state is still facing a shortfall of at least $356 million in the current fiscal year—and that could easily grow to $825 million if voters reject two propositions on the Nov. 2 ballot that would divert money from early-childhood programs and land-conservation funds.

More bad news lies ahead: The budget for the next fiscal year, which begins in July 2011, has a projected $1.4 billion deficit.

Republican lawmakers have already used pretty much every trick at their disposal to borrow dollars, put off payments to school districts and sweep out the various bank accounts where agencies had set aside any dollars for the future. And they’re firmly opposed to any kind of tax reform that involves increased taxes.

That means lawmakers will be looking to cut even more when they get back to Phoenix.

State Sen. Al Melvin, who represents the Catalina Foothills and Oro Valley, has made no bones about cutting back the size of government, saying state government grew too much while Democrat Janet Napolitano was governor.

Melvin declined to discuss what he favors doing away with next.

“You’ll just have to watch,” he told the Weekly.

Judging from what Melvin and his GOP allies have done so far, the cuts to come are likely to devastate state government—and many Arizonans may not yet realize how much they’re about to lose.

Like many Republican lawmakers, Melvin likes to minimize the cuts to education, saying that the spending reductions to K-12 have been less than 5 percent.

But that figure includes not only spending on classroom programs but also money that’s spent to build schools, which has been sharply reduced because of the downturn in the economy.

The cuts to the schools include state support for all-day kindergarten, programs for gifted students and adult-education programs that help Arizona’s many dropouts get GEDs and a second chance.

Melvin’s Democratic opponent, Cheryl Cage, says those education cuts will hurt efforts to build Arizona’s economy.

“The types of businesses that depend on an educated workforce, that depend on public schools, are not going to want to move here, because we cannot actually provide that right now,” Cage says.

Higher ed is a sure target for cuts when lawmakers go back to work in January. Arizona’s three universities have already lost more than $200 million in state funding since 2008.

For the University of Arizona, that has meant a cut from $440 million to $340 million over the last two years.

The UA has handled that by increasing tuition to bring in an additional $30 million, using $20 million in stimulus funds and cutting about $50 million from the budget, says Steve MacCarthy, the UA’s vice president of external relations. That $50 million in cuts includes eliminating 600 positions, consolidating four colleges into one, closing or merging 42 academic programs, freezing pay and asking employees to take up to three unpaid furlough days.

As the university squeezes its budget, it finds it harder to keep top faculty—and the big grant funding they bring in. As a result, the university’s reputation suffers.

“It takes a long time to build something up,” MacCarthy says. “It doesn’t take very long at all to destroy it.”

More cuts are on the horizon. Last month, state Sen. Russell Pearce, who headed the Senate Appropriations Committee, and Rep. John Kavanagh, who headed the House Appropriations Committee, said that universities had barely been cut at all over the last two years.

“If you look at what Pearce and Kavanagh have been saying, there are people there who clearly don’t see the value of quality universities the way that we do,” says MacCarthy.

But the education cuts are just the start. Lawmakers were limited in what they could cut on the health-care front by the passage of the federal health-care reform bill, which required states to maintain spending on many programs.

But legislators were able to cut $5.3 million in spending on programs that provided dental care, podiatry exams for diabetics and even life-saving transplants. In the process, the state lost an estimated $20 million federal matching funds, according to Rep. Matt Heinz, who works as an emergency-room doctor in Tucson.

The cuts for transplants made news earlier this month after ArizonaGuardian.com reported that Mark Price, a 37-year-old who suffers from leukemia, required a bone-marrow transplant to save his life. His doctor, Jeffrey Schriber, had lined up donors for the procedure, but Price’s AHCCCS coverage for the procedure had expired.

An anonymous donor offered to fund the quarter-million-dollar procedure for Price, but that doesn’t solve the long-term issue of providing health care for the next patient who slips through the widening cracks, says Heinz.

“The Republicans in the Legislature have essentially set up a death panel,” says Heinz, a Democrat who represents central and southern Tucson. “I’m glad Mr. Price has a reprieve, but how many more benevolent donors are going to step up?”

Asked whether funding for transplants should be restored, Melvin told the Weekly last week that he didn’t know enough about the issue to make a decision.

Sen. Frank Antenori, a Republican who represents eastern Tucson, Green Valley and Sierra Vista, says lawmakers may move toward cutting more than 300,000 people from AHCCCS by lowering the eligibility standards to half of the federal poverty level. That would mean a single mom with two kids who earns more than $9,155 a year would no longer be eligible for health-insurance coverage. (The state now provides insurance for anyone who earns up to 100 percent of the federal poverty level—which is $18,310 for a family of three.)

The push to dump hundreds of thousands of Arizonans from the health-care rolls brought opposition from hospital lobbyists and business leaders such as Glenn Hamer of the Arizona Chamber of Commerce, who complained that the result would be higher health-insurance premiums for the private sector because hospitals would have to raise their rates to compensate for treating more uninsured patients.

Republican lawmakers also voted to scrap KidsCare last year, which provides health-care insurance to children in families that earn up to 200 percent of the federal poverty level. The vote, which was later reversed to ensure Arizona continued to receive all of its federal health-care dollars, would have meant a big loss of federal funds, since the federal government offers to pay three-fourths of the cost of insuring the kids.

Antenori says the state may challenge federal regulations that require funding for the programs.

“Maybe we should call their bluff on it,” Antenori says. “We’ll end up in court.”

Antenori’s opponent, Democrat Todd Camenisch, says the programs bring in matching federal dollars that help support the health-care system for all Arizonans.

“They’re throwing away hundreds of millions in matching federal funds,” Camenisch says.

Cuts to state programs have been widespread. Social safety-net programs that helped families on the edge have been sharply curtailed. Job-training dollars have vanished, as did state support for an effort to attract high-tech jobs through the non-profit Science Foundation Arizona. The Department of Water Resources, which has the job of overseeing the state’s water supply, saw its budget cut by $10 million, while the Department of Environmental Quality was cut by $5.7 million and is now expected to get by mostly on fees charged to companies that it oversees.

The Arizona Commission on the Arts, which provides grants to organizations like Arizona Theatre Company, Arizona Opera and museums around the state, has seen state funding cut to less than $2 million this year, putting Arizona at 47th in the country in per-capita arts funding. On top of that, a $20 million endowment that had been built up over 13 years (with the idea of eventually having enough interest generated to reduce annual funding from tax dollars) was completely swept back into the general fund.

Robert Booker, the commission’s executive director, can make any number of persuasive arguments that arts funding helps the state’s educational system and economic-development efforts. Many of the organizations go into schools to teach about the arts or provide discounted or free performances for field trips—exposing kids to the arts in a way they might not otherwise get. Companies look to relocate in communities that offer not only sports teams, but also cultural opportunities. When people go out to see a show, they often will also have dinner or drinks, helping restaurateurs and bringing in tax dollars. And the state dollars invested in the Arizona Commission on the Arts bring in matching federal funds of $1 million annually.

“An arts industry in a state helps build the state in so many different ways,” Booker says. “A healthy arts industry is an economic driver. It brings dollars into the state. It is an adjunct to education.”

But those arguments are lost on lawmakers like Antenori, who dismisses arts funding as a frivolous waste of tax dollars, and Melvin, who says that the state just can’t afford to fund programs like that until the economy recovers.

But Goddard warns that as funding for all these programs fade away, Arizona is in danger of losing both its past and its future.

“I just think it’s very important to the quality of the communities that we live in and, ultimately, to our economic success,” says Goddard. “It ties in, in a very seamless way, especially in Arizona, where the cultural landscapes and the scenic landscapes are so critical to why people come here and why they stay.”

Then there’s the question of whether voters really care if any of these programs go away.

A recent survey of voters suggests they may not. The Pew Center for the States surveyed more than 1,000 adults back in June to measure their feelings about state government.

Overall, 43 percent of those surveyed said that they thought state government was too big and was trying to do too much, while just 31 percent said it was the right size and doing enough and only 19 percent said it was too small and not doing enough.

Arizona citizens are skeptical of the state lawmakers; only 36 percent of those surveyed approved of the job the Arizona Legislature was doing, while 54 percent said they disapproved. Brewer got higher rankings, with 51 percent approving and 38 percent disapproving.

But almost half—48 percent—said that they believed state government wasted “a lot” of money and 63 percent believed the state could spend less and still deliver the same level of services.

Arizonans were most concerned about cuts to K-12 education, with 57 percent saying that was an area they most wanted to protect and 71 percent saying they were willing to pay higher taxes to protect it.

But they were reluctant to support most tax increases to preserve any state programs. Only one in five supported increasing state income taxes; 29 percent supported the idea of making the 1-cent sales tax permanent; and roughly one-third percent liked the idea of expanding sales taxes to services that are now untaxed, an idea that’s been pushed by Goddard and legislative Democrats.

The popular taxes to increase? Two-thirds of those surveyed said they’d support higher taxes on alcohol and cigarettes, while 51 percent said they’d support expanding gambling and 55 percent said they’d support higher corporate taxes. Nearly two of every three Arizonans—63 percent—said the state needed major changes in how it budgets, but 78 percent said they believed voters could do a better job at the ballot box than lawmakers could do at the Capitol.

It’s a mixed bag of opinions, but it reveals that voters have a deep distrust of state lawmakers combined with a desire to find a way to tax someone besides themselves.

But any tax increases appear to be off the table when it comes to solving Arizona’s budget mess. While Brewer has been noncommittal about her support for future tax cuts, Antenori and Melvin are promising to slash taxes and further reduce spending when they get back to the Capitol next year. They argue that the lower taxes will draw businesses to Arizona.

Last year, Antenori and Melvin signed on as sponsors of a tax-cut bill that would have reduced Arizona revenues by $941 million a year once it was fully implemented in fiscal year 2017. Although Antenori argued that the lower taxes would bring more businesses to Arizona, an analysis by the Joint Legislative Budget Committee noted that the state only recovers anywhere from a nickel to 18 cents for every dollar cut in taxes.

Senate President Bob Burns, a conservative Republican who is not seeking reelection this year, told his caucus during the session that the tax cuts in the bill would require revenue growth of up to 24 percent a year to cover the projected shortfall that they would create, according to the Arizona Republic.

In other words: Those kinds of deep tax cuts only worsen the state’s deficit problems.

GOP lawmakers are so convinced of the inability of government to do much of anything right that they’re determined to hand over what they can to the private sector.

For example, they’ve made a major effort to privatize large portions of the state’s prison system in the belief that private prisons can house inmates more cheaply, even when they’re guided by a profit motive.

The inherent dangers of that approach were amply demonstrated earlier this year when three inmates escaped from a private prison near Kingman by simply cutting their way through a fence with the help of an accomplice. While they were later recaptured, it was after two of them allegedly killed a New Mexico couple while on the lam.

Even departments that aren’t a drain on the state’s general fund are being targeted for privatization. One juicy target: the State Parks Department, which has seen nearly all of its operating funds simply eliminated over the last two years.

Until the fiscal crisis hit, the state parks were an example of smart government that paid for itself.

In the 1990s, Gov. Fife Symington III gave the parks new marching orders: He wanted them to wean themselves off the general fund and become self-supporting.

The parks met the challenge. Nearly all of their funding came from user fees supplemented by the Heritage Fund, a stream of lottery dollars set in place by the voters in the ’90s. Some parks made money through gate fees and the like, which then helped support historical sites like Flagstaff’s Riordan Mansion or Homolovi Ruins State Park.

Along the way, the parks built up a considerable reserve of money that helped keep the system stable. But lawmakers, seeing a pot of money they could tap, have swept more than $60 million away from the parks’ bank account.

They also pledged to use future lottery funds that would have supported the parks to help pay back $450 million that they borrowed to get through the fiscal year. To ensure that it would be difficult to ever use lottery funds for the parks in the future, they scrapped the voter-passed law that directed them toward parks in the first place.

The State Parks Board, facing a serious financial crunch, has made seasonal closures at some parks and worked out deals with local communities and non-profit groups to keep the gates open at others.

Having left the parks with barely enough funding to pay the bills from month to month, Gov. Brewer and lawmakers now argue that the parks can’t pay for themselves.

“They were rewarded for doing what they were told to do by having all their money taken away,” says Sandy Bahr, the legislative lobbyist for the Grand Canyon Chapter of the Sierra Club. “And then they were told that, ‘Hey, this isn’t working because you can’t fund yourself.'”

Lawmakers like Melvin want to move toward a privatization model. A committee formed by Brewer earlier this year recently released a report suggesting that the parks were an ideal area for the state to explore leases to private operators. The details remain sketchy, but the proposal suggests “bundling” profit-making parks with other parks that operate at a loss.

The parks’ supporters warn that lawmakers are opening a can of worms by moving toward privatization. What, for example, are the responsibilities of private operators in terms of managing wildlife and the overall environmental health of the parks? And if private operators make improvements, is the state obligated to pay for those if a lease is not continued in the future?

“Having a system doesn’t mean that every park makes money, nor is that the intent of a park system,” Bahr says. “It’s to protect the resources and provide opportunities for the public to enjoy them, hopefully at a reasonable cost.”

Privatization has its share of hurdles. Some of the parklands were acquired through deals with the federal government that require that the land remain in the state’s hands, while other parcels have similar restrictions.

“There are all kinds of complications, besides the fact that it’s just wrong to do it,” says Bahr, who says that she can understand using a few private concessionaires in some places, but fears that going further would damage the long-term health of the parks.

Goddard says the parks are important for rural communities that depend on tourism dollars. When the parks close, businesses in nearby towns suffer.

“It’s not about the turnstile revenue at the parks,” Goddard says. “It’s about how we bring people into our communities. I don’t understand why you’d want to chuck it away the way that Jan Brewer has, saying ‘We don’t care about visitors and we don’t particularly care if they come.'”

For Goddard, it gets back to the ongoing damage to Arizona’s tourism industry, best exemplified by what he considers Brewer’s reckless charges about beheadings in Arizona.

“Going after tourism is not just a war on tourism,” Goddard says. “It’s a war on rural Arizona, because so many of the rural communities depend upon the cultural resources. Visitors put together these trips going from one part of the state to another.”

Speaking to a group of historic preservationists earlier this month at Hotel Congress, Goddard brought up the example of Pinal County’s McFarland State Historic Park, which includes a preserved 19th-century courthouse and an archive of the papers of Ernest McFarland, who served as governor of Arizona, a chief justice of the Arizona Supreme Court and a majority leader of the U.S. Senate. The park, and the McFarland museum, are now closed. By comparison, in Del Rio, Texas, the gravesite of Judge Roy Bean has been transformed into a museum.

“Judge Roy Bean gets his due for hanging people in Texas, but Ernest McFarland evidently isn’t worth it in Arizona,” Goddard said. “This is crazy. Those are the kinds of things that help us both remember our past and celebrate what made Arizona what it is today, and we’re in the process of destroying it.”

Hank Stephenson assisted with the reporting of this story.

This article appears in Oct 21-27, 2010.