The Farley Report from Phoenix #226: 5-6-15

Welcome to the first monthly Farley Report of the off-session. Grab yourself a refreshment, sit back, and read on -- there's plenty to talk about. First, let's talk about what you can do to make sure that there are much better things to talk about after the next election:

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If you appreciate these reports and my representation as your Senator, Please help out my campaign in these ways:

--> 1) If you live in District 9, please sign my online petition. Since I posted it last week, the AZ Secretary of State's office has now fixed the link so it should work for you now. Please CLICK HERE TO SIGN.

--> 2) If you live anywhere in the U.S., please contribute what you can to my re-election campaign. Although I did not vote for these higher limits, you can now contribute up to $5,000 for the 2016 cycle, although I am just as honored by $50 or even $5 donations. Whatever seems right for you is right for me. Thank you for the support. CLICK HERE TO CONTRIBUTE.

--> 3) Please help us elect better legislators in key districts around Arizona by supporting the Arizona Democratic Legislative Campaign Committee (ADLCC).  

Those of us who currently serve in the minority in both the House and Senate know how important it is for the future of our state to increase our numbers. That's why we have founded the ADLCC to work toward a new majority in November 2016.  We are holding our first fundraiser at the home of my seatmate Rep. Randy Friese, on Wednesday, May 20, from 5:30-7:30pm, 1231 E. Condesa Tercera, Tucson, AZ 85718. 

Stop feeling helpless about the Arizona Legislature -- help us take action! Please RSVP to ADLCC Director Dana Walton at danae.walton@gmail.com (tell her I sent you) or just show up and bring your checkbook to create real change.
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GilbertHighForSaleLR2.jpg--> Since the end of session Governor Doug Ducey has been busy traveling around the state frantically trying to spin a horrible budget into a PR juggernaut. Often accompanied by Senate President Biggs and House Speaker Gowan in a big (taxpayer-funded?) RV ironically called the Opportunity Express, he proclaims that he "protected education" and signed "a budget with no tricks, no gimmicks, no rollovers, no borrowing."

Governor, I (and the facts) beg to differ. Your spin does not have the power to change the reality of what you and your colleagues currently in the majority in the legislature have done to undercut our future.  Slashing is not "protection". Your budget slashed education at all levels -- these are just a few examples:

> Universities were cut by another $99 million.

> Community colleges were cut off from all state funds. 

> Voter-approved JTED vocational education programs will lose nearly half of their funding.

> K-12 district additional assistance funds were handed an overall loss of $352.4 million.

> Voter-approved inflation funding for K-12 schools were funded at only $75.4 million, not the $332 million that a judge has already ruled is owed our schools.

And when it comes to gimmicks, tricks, rollovers, and borrowing, your assertions are also at odds with the facts:

> Your budget continues accounting gimmicks called "rollovers." In an attempt to portray the budget as balanced, you have decided to roll payments due to schools and other state institutions from one fiscal year into the next, from that year into the following, and so on. Easy to start, but hard to end. As I pointed out during the budget debate, that rollover amount is currently $1.2 billion (yes, Billion), with $931 million of that taken from our K-12 schools, $200 million from our universities, $21 million from DES, and $11 million from the Department of Child Safety (!). 

> Remember back when Gov. Brewer and the legislative majority sold off our state Capitol and other state buildings along with future lottery proceeds to gain some quick cash? Well, our state debt now amounts to $8.6 billion, $1.4 billion of which is from those mortgages. We are paying $913 million per year to service our debt, and your budget continues this borrowing. 

> Your budget also includes another gimmick -- a cut that will not be allowed to take effect. There is a 5% provider rate cut for already-struggling hospitals and all other AHCCCS/Medicaid providers. This would "save" a total of $127 million over two years which means losing another $532.4 million in federal matching funds from Arizona's economy over that same time. More than a half-billion dollars will leave the Arizona economy and go to some other less ideological state. This requires a Federal waiver. The waiver requires proof that the cut will not reduce the quality or accessibility of care for patients, something that will demonstrably happen as a result of these cuts. When the waiver is denied, the budget will be unbalanced.  

All the while you managed to give away hundreds of millions of dollars more in taxpayer money to out-of-state corporations, with nothing promised in return for our citizens. 

There is nothing fiscally conservative about these conservatives. #RememberInNovember

--> Gov. Ducey issued a press release yesterday crowing about an investor rating company, Moody's, giving Arizona a slight upgrade to our credit rating. He claimed it was a result of his creation of a "structurally balanced" budget. Well, as the facts above make clear, there was nothing structural or balanced about it. And even if you ignore the facts above, the Governor's own numbers do not bring the budget into balance until 2018.

I looked up the press release announcing the "upgrade" on Moody's website, where they make a statement that was not included in the Governor's release -- one that rings much more true: "The Aa2 rating, below the median for US states, incorporates extremely narrow reserves and weaknesses in financial management and governance." Weak governance. Is that what we should stand for in Arizona?

--> One place Gov. Ducey didn't show up on his Opportunity Tour was at yesterday's Board of Regents meeting where his $99 million budget cuts forced more tuition increases for UofA, ASU, and NAU. Who could possibly believe that $11,402 per year complies with the Constitutional provision that higher ed be "as nearly free as possible"?

State funding for UofA, ASU, and NAU has been chopped by almost 60% since 2008. Not one state has cut more from their universities than Arizona. And not one state has raised tuition more than Arizona.  

We've created an interesting experiment. What happens when you put education out of reach while building private prisons and cutting corporate taxes? 

The results are in:

> Our per capita income is now 41st in the country -- down from 32nd in 2007. (Bureau of Business and Economic Research)

> Our economic (GDP) growth rate since 2008 is 50th in the country. (Bloomberg)

> Our percentage of people age 25-34 with a college degree is 41st in the country. (US Census)

> Our unemployment rate is 14th highest in the country. (Congress Joint Economic Committee)

> Our poverty rate is 9th highest in the country. (US Census)

> Our incarceration rate is 6th highest in the country. (US Dept of Justice)

This is why increasing numbers of community leaders of all political backgrounds -- even Republican business leaders -- are standing up and saying, Enough is enough. The Board of Directors of the Ryle Fund (a Catholic social justice organization) in a recent letter calls the adopted budget "economically unsustainable and morally untenable."  It's time for our Governor and legislative majority to listen.

--> You may recall last month I shared with you that a major reason the legislative majority rushed the budget through in three days, earlier than at any point in recent history, was because state revenues are growing much faster than we were told in March. With an artificially larger deficit to fill, the Governor and the legislative majority had an excuse to cut more deeply than necessary -- especially to education and social services that they do not support.  Those cuts will be absorbed into the budget baseline for next year, meaning they effectively become permanent, which is the goal for those who believe (along with libertarian anarchist Grover Norquist) that "government should be shrunk to the size where it can be drowned in the bathtub." 

Yesterday, we discovered the state revenue picture is even better than last month -- to date we have collected $228 million more that the budget projected. We did not need to make those cuts to education, job creation, transportation, and child welfare. At all. #RememberInNovember

--> This past session, I was able to successfully quash an effort led by the utility- and mine-funded Arizona Tax Research Association (ATRA) to eliminate desegregation funding to schools districts under federal desegregation court orders. Their bill, SB1371 would have slashed the annual budgets for Tucson Unified School District by $64 million, and Phoenix Union High School District by $58 million.

ATRA testified in committee that elimination of that funding would solve an equity problem by reducing all districts to the same low level. I suggested that a better solution if they were sincere about equity would be to increase funding for all districts to the highest level. 

ATRAnltrblurb.jpg

In response ATRA devoted one-eighth of their most recent newsletter to an attack on me for opposing their attacks and daring to suggest increasing funds to education by what they think is an outrageous amount of $2000 more per pupil. They proceeded to mock my proposal by suggesting that this could only be paid for by a number of tax increases that I (and most others) do not support. 

Then they dismissed the idea of closing special interest sales tax loopholes by only offering up the idea of taxing food, something I also do not support. They ignored the fact that even if you keep sales tax exemptions on food, wholesale, medical and legal services, that leaves more than $5.6 billion a year that could be used to fund all our state's needs AND reduce the overall sales tax rate. That's an option I and many others DO support. 

Beyond that, they failed to admit just how badly we are underfunding our education system at all levels. According to the American Education Association, our K-12 per-pupil funding level now ranks dead last in the country. Number 52. If my "outrageous" proposal to increase per-pupil funding by $2000 were adopted, we would merely be tied with Texas for Number 48. We spend 36% less per pupil than the national average, and 23% less than the average for States 48-51. 

ATRA, our problem is not finding more ways to cut funding to our schools. I hope that someday soon you might be willing to work with me to use your knowledge and creativity to find better ways of funding our schools adequately so our kids can compete for good jobs with the rest of the world. Then your own corporate funders will also benefit from a healthier economy full of well-educated employees and successful entrepreneurs for decades to come. I'll help you make that pitch.

--> One of Governor Ducey's first personnel moves was a controversial one -- the firing of the well-respected and well-qualified director of the new Department of Child Safety Charles Flanagan and his replacement by former Phoenix PD detective Greg McKay, partly on the basis of allegations by McKay that Flanagan was performing poorly after just over a year on the job. 

Since then, McKay has had a whistleblower complaint lodged against him (that was kept confidential by the Ducey administration citing attorney-client privilege because the whistleblower was an attorney) and has already created controversy by issuing a six-page dress code that experienced caseworkers say might make their job impossible, and reinstating a version of the practice of stamping child safety cases as "not investigated", while making no dent in the backlog of cases. Last week, six top managers left the new department, including the attorney/whistleblower, and the Deputy Director Vicki Mayo who was appointed the same day as McKay. 

Yesterday, a report was issued reviewing McKay's allegations regarding Flanagan, and it concluded that Flanagan had done a good job and refuted all charges. Gov. Ducey responded by saying, "We made a leadership change at the Department of Child Safety. Greg McKay is going to lead that agency. That was a decision made out of our office, and we’re 100-percent supportive of the direction." I wish I was 100% confident in the Governor's leadership. 

Meanwhile, I am still trying to get an explanation out of whoever is left at DCS about why they project that we will not have a modern operating database of child safety cases until 2017 although we appropriated the money more than a year ago. Every day that goes by compromises the safety of these kids, since the current system is an ugly and outdated conglomeration of two databases that don't talk to each other and leave kids at risk of falling between the cracks. When kids' lives are at stake, there is no excuse for delaying mission-critical software for three years. I hope to get some definitive action on that soon. 

--> Not to worry, this Report isn't all depressing. Here's a little good news on a new project I am working on to increase high-wage jobs in our state, which I will let the Arizona Capitol Times share with you, complete with their perfect headline:

NOT EVERY JOBS BILL HAS TO BE A TAX CUT

A bipartisan effort is underway to explore how the state can allow venture capitalists to create small funds in Arizona and take advantage of an exemption in federal law that permits such funds to operate with less regulation. The problem is that Arizona law doesn’t allow venture capital funds smaller than $150 million to avail themselves of the exemption under the Dodd-Frank Wall Street and Consumer Finance Reform Act that allows them to avoid registration and audit requirements. The result is that Arizona ends up with a process for creating small funds that is more expensive and burdensome than in other states, particularly California. And while many states were able to carve out room for the small funds through their rulemaking process, that isn’t the case in Arizona, and a statutory change is required. The Business Journal reported yesterday that D Farnsworth and Farley are joining together to convene a task force to examine the issue and develop possible legislation to address it. Arizona BioIndustry Assn head Joan Koerber- Walker and Arizona Technology Council leader Steve Zylstra raised the issue at the Capitol Times’ March 17 Morning Scoop, which focused on the state’s bioscience industry. They both said a statutory change allowing the funds to utilize the exemption in federal law would encourage such funds to be created here, which would result in more capital investment in the state’s bioscience and high-tech industries.

Thanks for your continuing faith in me as your Senator. 

Steve

Steve Farley

Senator, District 9, Tucson

If you like my representation and want to keep me in office, CONTRIBUTE TODAY!

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