The Farley Report from Phoenix #259: 12-12-16

Welcome to the last monthly Farley Report of the 2016 off-session. Next Report will be the opening weekly version of the 2017 legislative session, which is promising to be a busy one. To get a preview of some of the main issues, read on! 

—> It’s been more than a year since the special session that placed Proposition 123 on the ballot, the measure that finally forced the majority and the Governor to pay 70% of inflation funding for our public schools, something we thought we forced them to do 16 years ago. Not 100% of inflation, 70%. That was just enough to raise us from last in the country in state support for K-12 to somewhere around 48th or 49th.  

But it is most emphatically not enough to make a real difference for our kids and our economy. Even Governor Ducey spent a lot of time before the 123 election admitting that it was “just a start”. He promised to get right to work on enacting a Step Two for education funding. 

Since we passed 123, we haven’t heard a peep from Governor Ducey about that step two. In fact, he just released a self-aggrandizing “Year In Review” which all but declares the education funding crisis solved. In it, he even brags about a “a $28 million investment in Joint Technical Education Districts [JTED] to help students learn what they’re passionate about and prepare them to succeed in post-secondary education.”

Governor Ducey fails to say that the previous year he signed the budget that cut $30 million from JTED, a move that set them on a path to destruction, and earlier this year he resisted all attempts to restore the funds until he was forced to relent by a strong bipartisan majority.

It’s time to stop messing around with this. We must prioritize teacher recruitment, training, and retention, as well as immediate upgrades in classroom resources like technology, curriculum, tutoring and teacher aides, and we must start now with what little money we have left in our budget, given that $4 billion a year in corporate tax cuts have been drained from our general fund by the majority since 1996.  

Then we need to have the guts to finally tackle the monster that is our sales tax code. As Farley Report readers know well, we bleed more than $12 billion each year from loopholes that have been placed in law over the past decades, never to be examined ever again. Some are defensible, and some are even good for us as a society. But many, many more are nothing but special-interest giveaways engineered by corporate lobbyists in order to save their clients millions of dollars, and they do nothing to help our economy in general.  

Here’s a place to start: If we charge sales tax on securities brokerage, financial portfolio management, and investment advice — which tend to be used by only by those like our Governor who can easily afford to pay it without even noticing — we can gain another $185 million per year that can be invested in educating the entrepreneurs and the workforce of the future so that we ALL can thrive in the upcoming decades — including those at both ends of the pyramid. 

—> Our workforce preparation is a major problem right now. Bear with me as I set this discussion up with a brief story. 

At last Friday’s UofA Economic Outlook, attendees were first treated to a wildly enthusiastic view of the President-elect’s effect on the economy. The speaker, chief economist for JP Morgan Chase (the biggest investment bank in the world), could barely contain his ecstatic glee at the prospects of the incoming administration “eliminating all corporate regulations” and “slashing corporate taxes,” as oil prices rise (a positive in his finance-exec view, a negative for most of us who buy gas at retail), meaning windfall profits for oil company owners and all other card-carrying members of the one percent. 

It was an astonishing show of full-on gloating over the coming dramatic increase in the gap between rich and poor in our country. Not what the blue-collar Trump voters had in mind, I would think.  

This performance was followed by a more sobering presentation by the chief economist at the UofA’s Eller School of Management, George Hammond, who pointed out in a series of slides how ill-prepared we in Arizona are for the coming education-rewarding economy. Currently, eight years after the last recession, after eight years of supposed economy-boosting corporate tax cuts, the per capita income in Arizona cities is anywhere from 13.4% to 39% less than the average per capita income in the U.S.

Why is this happening? Because those tax cuts from the majority were paid for by cuts to public education, and the results are revealed in these slides from his presentation. Check them out:

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In an era in which a college degree is increasingly a requirement for economic success, we are going in the wrong direction. Belying our wild-west reputation, the first slide shows Arizona actually graduated more citizens from four-year colleges than the U.S. average until 1980, when we started heading the other direction. After the Great Recession of 2008 and the tax cuts and education cuts enacted since then, the gap has widened big-time.  

The second slide shows how this college-graduate gap looks in our workforce. There are considerably more retirees with college degrees in Arizona than in the average U.S. state, but our future workforce lags the rest of the country the younger they get. That’s bad news for business attraction and retention, not to mention the economic success of our people.

This pattern must change. As entire industries face extinction under the dual challenges of globalization and automation, the states that thrive are those that invest heavily in lifelong education systems to train and retrain all of us to adapt to new economies. Education works. Corporate tax cuts do not work. It’s time to change our priorities. 

—> Another urgent priority this year is to fix a side effect of the victorious (by 17 points) minimum wage initiative last month. As of January 1, all employees earning less than $10/hour will get raises to $10/hour. Which is a good thing for the people earning that low wage, as well as for our overall economy. Unlike corporate tax cuts that primarily head out of state to New York investment banks or non-Arizona shareholders — disappearing from our economy — minimum wages are mostly spent in our local communities in local stores on food, clothing, and other necessities, boosting our local economies. 

The problem is that many of the people at the lowest end of the scale are doing some of society’s most difficult work for small private agencies contracted by state government as caregivers of seniors, the developmental disabled, and others. Those agencies do not have the profits to be able to afford to pay the raises as of January 1, since their current contracts with the state do not take those higher wages into account and years of severe provider-rate cuts from this majority has left them barely getting by.

So in order to avoid any closures of these agencies and suspension of vital services, we need to approve an emergency appropriation to increase the provider rates immediately for the rest of this fiscal year, and then structure the contracts appropriately in the next budget year. We have a robust rainy-day fund for surprises just like this, so the problem can be solved as soon as we reconvene. 

Simple solution, right? Sadly, I just heard today that our incoming Speaker is talking about taking a different approach — a lawsuit to stop the minimum wage increase from going into effect. Stop me if you’ve heard this before, education fans — tax-funded lawyers fighting compliance with a popular voter-approved initiative…

Let’s all hope that cooler heads prevail and we end up doing the right thing: Get the lowest-paid workers a decent raise (as required by voters) while we make sure no vital services are interrupted to the most vulnerable among us.

—> I spoke with the director of treatment services for the Arizona Department of Corrections today to get an update on how the newly expanded addiction treatment program is going. 

You’ll recall that we passed a bipartisan law last session to increase the number of inmates participating in these programs — 77% of all prisoners released each year from state prison are released with an active substance addiction, and treatment programs reduce recidivism by up to 62%, studies have shown. Why not treat them all? More rehabilitation, fewer crimes, fewer victims, less cost to the state. What’s not to like? 

The numbers of inmates in treatment are up, but we are not making a big enough dent in the overall numbers. From July 1 - November 30 of last year, there were 410 taking part; in the same period this year under the new law, there are 664. 

That sounds good until you consider that 19,162 prisoners were released last year, 77% of whom were likely still addicted to drugs or alcohol. Doing the math that means — even with the current increased rate of treatment — we will likely release around 13,000 untreated addicts from our prisons in the current fiscal year. 

Public safety suffers if we don’t act more boldly to rehabilitate and treat. I will stay on ADC to fix this because it is so important. 

—> Last Farley Report I shared the atmosphere of uncertainty surrounding health care coverage in our country, particularly for those who are on the individual market or obtaining coverage via the Exchange. I know that many of you are struggling with finding an affordable plan with decent coverage right now, since in much of Arizona, insurers have pulled out, leaving only one plan available with huge premiums, small networks, and high deductibles.  Until we move forward with a public option in Arizona (bringing HealthCare Group back), or something like Medicare for All in DC, we need immediate solutions. Healthcare is as important a priority as we have.

To that end, I have been sharing information on my Facebook page from my constituents as they make discoveries of some health options that may work for them, and for you, if you are in a similar situation. Here is a recent thread on a new, strangely secret plan that is a good option for some, with alternative options among the comments. Feel free to let me know if you find others and are willing to share your work with the community so that my Facebook page can be a clearinghouse of tips for others. 

—> Finally tonight, something to really raise your spirits — some community building at its finest that shows who we really are as Americans. Yesterday we held a Syrian Sweets Sale at Grace St Paul’s Episcopal Church, a bake sale organized by our refugee support group Arizona Welcomes Refugees to help use the free market to bring together the skills of recent refugee families with the money of community members who wanted to buy some sweet holiday treats while directly helping our newest Americans in their time of need. 

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The response was beyond all expectations. The line reached out of the doors and down the street, and even with fifteen Syrian families who had been baking all week, we sold out of everything in less than 90 minutes. Food bridges all boundaries, and the love flowing through that place in all directions was unforgettable.  

If you want to get some wonderful treats of your own, we are having another Syrian Sweets Sale this Saturday morning. Come and experience this wonderful love- and sugar-infused experience of helping new Americans get on their feet financially at the same time as you get your holiday shopping done. Please arrive early, and please be prepared to wait in line. There is a literal and figurative hunger for this type of event, so many others will be there too!

Community building like this is what our country is all about. I’ll see you this Saturday morning at 9:30am sharp at Grace St Paul's Episcopal Church. 2331 E Adams, Tucson.

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!