The Farley Report from Phoenix #246: 3-30-16

In this Report I will regale you with a little civics lesson — the story of how a dangerous bill almost becomes a law, but is caught just in time, after sliding nearly all the way through the system. If we stop this, we stop a potential $4 billion annual loss for Arizona. 

The details are revealed after the Farley Report pledge break and some Capitol news briefs…

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It’s not been a quiet week in Capitol Wobegon. Here’s a few high-level updates.

—> Budget’s getting closer. The Senate Republicans are holding those legendary “small group meetings” today to go over the Senate’s version of the budget proposals, but the House is still not talking amongst themselves. Since the spring federal campaign fundraising deadline is tomorrow, Speaker Gowan may focus more on budget issues once he is done focusing on his congressional dollar-dialing. That could mean that the House Republicans start their process next week.  

Sadly, the partisan nature of the current majority’s leadership does not give Democrats a formal role in the development of the budget, leaving us to rail against its inevitable shortcomings and propose amendments on the floor that go down on party lines. Consequently, many of us are working with Republican colleagues to assure the placement of certain priorities by proxy.

Bills that would otherwise go straight to the Governor are now being held back from final votes so that they can be used for possible leverage to obtain affirmative budget votes. Once these bills start moving the budget will be imminent, so if you are watching closely look for final votes in the Senate on bills unamended in the Senate. 

The thinking right now is we could have a budget by April 15, although the animosity between House and Senate Republicans could kick that date out indefinitely. Either way, it’s unlikely we end up with a budget worthy of the people and future of Arizona. As you know, I will keep you in the loop.

—> In the aftermath of Maricopa County’s botched presidential preference election last Tuesday, there’s lots of anger in the air. Six-hour waits, voters whose party registration was stripped and ballot requests were rejected, and recriminations among the Maricopa County Recorder, Secretary of State Reagan, and numerous other officials all came to a head on Monday during a nearly five-hour hearing on the topic in the House. Folks were screaming as House Elections chair Michelle Ugenti-Rita lost control of her meeting, a session that raised more questions than it answered and devolved into violence in the House gallery as DPS officers tried to arrest a spectator.

While many majority members expressed sympathy with the public who felt their rights to vote were taken from them, many of those same members had already voted to make it a felony to help your neighbor vote (SB2023, already signed by Gov. Ducey), and voted the next day to pass SB1516, a bill pushed by Secretary Reagan to unleash anonymous dark political money in Arizona. 1516 is now awaiting Gov. Ducey’s signature. A national magazine, American Prospect, published an excellent overview on the battle surrounding 1516 this morning. 

The legislative majority is demonstrating that its members currently stand for voter disfranchisement in all its forms.

Many of us on the other side are gauging support for a referendum drive to gather signatures that would stop these laws from going into effect and force them onto the ballot for the voters to decide in November, like we were able to do with a similar anti-voter bill (HB2305) a couple of years ago. I can’t wait to see these folks run for re-election on the platform of taking away voters’ rights. 

—> Two days ago it was apparently Monday Gun Day on the Senate floor, as we debated three bills to expand gun rights at the expense of human rights. The two worst of the bills were HB2338 which would allow weapons to be carried next to the chain-link fences of school playgrounds, and HB2524 which would cede to a group of other states Arizona’s ability to enact any common-sense gun laws, including voter-approved background checks at gun shows. If you want to read how it all went down, here is Republic reporter Alia Beard Rau’s report. Spoiler alert — they all passed. 

—> How a bad bill almost becomes law while no one paid attention: HB2614 has the inoffensive short title “cooperative associations”. It slid through the entire House and three committees in the Senate with only one No vote. No one seemed to object. It was at the end of long committee agendas, and no one had the energy to raise objections. What harm could it do anyway? 

Plenty, as it turns out. Sponsored by Rep. Rick Gray and Sen. Carlyle Begay, it was purported to be a bill to allow five hydroponic farming companies to market their produce cooperatively. However, as I questioned majority staff analysts in Democratic Caucus yesterday, some serious problems were revealed.  

First off, no one could explain why these companies couldn’t do what they wanted to do in the first place. It appears there is currently no barrier to their carrying out joint marketing. These types of cooperative arrangements have historically been widely used in Arizona as a tool by nonprofit entities to market agricultural products like citrus. 

The real danger comes in how the bill aims to “solve” this nonexistent problem. The text would allow any five (or more) for-profit “small businesses, individuals, or entities” and their investors who are “producing, manufacturing, marketing, distributing, or selling products or services” to sell their products without collecting any TPT (sales) taxes. 

Yes, that’s right. Any five business entities who sell anything would be able to join together and avoid collecting or paying sales taxes. Which given this option, pretty much any business that currently collects and pays sales taxes would want to do. Got five car dealerships? Great! Create a cooperative association, and you can sell them with no sales tax!

Problem is, these taxes make up almost half of our state revenues. Nearly $4.35 billion in this fiscal year. 

Luckily, conversations with several of my colleagues on the Republican side have revealed that they are also worried about this bill, and it will likely now not move forward without serious changes. It appears the really bad stuff was unintentional in this case.

But the fact it got this far without dissent is a cautionary tale. While minority-sponsored bills generally go nowhere, if they are even assigned to committees in the first place, majority-sponsored bills get the benefit of the doubt. They get much more favorable assignments and given the focus on the really bad ideological bills, really bad non-ideological bills are sometimes overlooked. 

The system did work — bills have to pass multiple committees, floor votes, and caucuses with many sets of eyes (inside and outside of the Capitol) on every detail over the course of many weeks. It took my sets of eyes to see the flaws in caucus yesterday. But when the system is shortcutted — through strike-everything amendments or obscure amendments in budget bills — the vetting breaks down. 

Remember the Alt-Fuels fiasco in 2000? It threatened to cost the state up to $685 million that year in handouts to people who bought Hummers with a four-gallon CNG tank on the back. The tax credits that came straight out of the general fund amounted to 50% of the cost for the vehicle. A special session reduced the cost to $120 million and generated lots of lawsuits as state government tried to extricate itself from the disaster.  

The original bill appeared as a 92-page amendment to a late-night conference committee during budget week. No one batted an eyebrow because it was the Speaker’s bill. The process that is supposed to catch mistakes was not followed, and we all paid the price. 

As we near budget time, with conference committees starting tomorrow and many members talking about the importance of voting for “the Speaker’s bills” (see last week’s Report) I hope we will remember our history lessons so we are not condemned to repeat them.

Thanks for your continuing faith in me as your Senator. 

Steve

Steve Farley

Senator, District 9, Tucson

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