The Farley Report from Phoenix #261: 1-17-17

It’s the second week of session, and that means this is the Farley Report that annually brings you a point-by-point breakdown of the Governor’s proposed state budget. This year, the numbers reveal that those big raises in teacher pay that Governor Ducey raved about in his State of the State are actually — wait for it — 4/10 of one percent per year for five years. 

That’s an average of $15 a month. And what’s worse? He swipes gas tax money from our transportation system in order to pay for it.

Much more after the Farley Report Pledge Break…

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As you may already know, I am strongly considering a run for governor in 2018. While I have not yet made up my mind to run, the ultimate Democratic nominee will need strong support from the Arizona Democratic Party in order to win. That’s why I am focusing on raising money into the state party, and I need your help.

—> If you live anywhere in the U.S., please contribute what you can to the Arizona Democratic Party right now to build our campaign to transform our state for the better. Thank you for the support. CLICK HERE TO CONTRIBUTE.

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—> The Governor’s detailed budget was officially released last Friday and it reveals the gimmicky truth behind Monday’s pretty words. Many people were hopeful, including me, given the grand sweep of his praise for teachers and stated commitment to funding education. Now that we have the numbers, it’s instructive to compare Governor Ducey’s soundbites (verbatim from his website) with his actual proposals:

Governor Ducey’s soundbite: “I want the teachers of this state to know: You make the difference. I value your work, and it’s time we return the favor. It’s time for a raise for Arizona’s teachers. My budget will outline a permanent, lasting salary increase to all of Arizona’s teachers.”

Governor Ducey’s budget: 4/10 of one percent raise for five years. An average of $15 a month. As one teacher told me, “Oh boy, now I can go to the movies once a month. By myself!” I have not yet encountered a single teacher who felt valued by this pittance thrown their way — in fact, quite the opposite. They are angry. And if you want to look at numbers, this raise will keep us 47th in the country in average teacher salary, between #46 West Virginia and #48 Oklahoma, $12,000 below the national average.

44% of Arizona teachers leave the profession or the state after two years of service, in large part because of the low pay. This “raise” won’t change that.

Governor Ducey’s soundbite: “A per-pupil boost for excelling schools, even more for low-income schools.” 

Governor Ducey’s budget: Only one-third of the money will go to low-income schools. Two-thirds will go to high-income schools. And a proportionally higher amount goes to charter schools than to district schools. 

Governor Ducey’s soundbite: “When we do have available resources, like we do this year — the bulk of these dollars will go to public education. And our proposals will be responsible.” 

Governor Ducey’s budget: Actually, we don’t have the available money, thanks to the massive corporate tax cuts enacted in the past few years. Specifically, revenue from just two of the corporate tax cuts already enacted will decline by $89 million this year, $163 million next year, $219 million in FY19, and $229 million in FY20. 

On top of that, the Governor overestimates economic growth by blithely dismissing the chances of downturn with this astonishing sentence in his briefing book, “The overall consensus among economists is that growth will accelerate, and the risk of recession has fallen precipitously.” This is in direct contradiction to the estimation of the Joint Legislative Budget Committee economists and the JLBC Finance Advisory Committee economists (the most prominent in our universities and the private sector). When I asked the Governor’s budget director where he got this sentence, he told me in committee that he subscribes to a lot of economic journals. 

JLBC points out that there are many other large fiscal challenges in the wings, including costs from the elimination of the federal affordable care act (see below), new school construction (see below), pending litigation against the state worth around $400 million, underfunded contributions to the retirement system, and looming insolvency for one of the state retirement funds.  

Many items in the Governor’s budget are indicated as “one-time”, when in fact they are ongoing costs. This gimmick led Richard Stavneak, JLBC Director, to declare in Joint Appropriations Committee today that the Governor’s budget is “not structurally balanced”, despite our Constitutional requirement for a balanced budget.  

In many people’s minds, the worst part of this budget is that Governor Ducey raids $90 million from gas taxes to fund his programs. Last year a bipartisan majority voted to stop this shift so that cities, counties, and state highways were not allowed to further decay. 

This move was not revealed publicly by the Governor, but in the his budget staff briefing to Democratic leadership (two hours after the media were briefed), I discovered a suspicious line item and asked the budget director — are you recommending the “HURF shift” (gas tax raid) be reinstituted? He admitted that was their strategy for “balancing” their budget proposal. 

We shouldn’t have to choose between good schools and good roads. We deserve both. And there would be plenty of funds to invest in both if the Governor and the current majority were not addicted to corporate tax cuts that do nothing for our economy.

Governor Ducey’s soundbite: “One of the biggest challenges for many new teachers is paying down debt. Let’s lift this burden from our teachers, attract new quality individuals into the classroom.”

Governor Ducey’s budget: This is tricky. A new TIF fund takes $6.5 million from state shared revenues that would otherwise go to cities, towns, and counties (more cuts to them!). That money then goes to universities who will be instructed to sit down with community colleges (who you may recall no longer receive any state funds) and develop a new tuition-free Teacher Academy that will start business this fall, with no new funding. 

Even if this were to happen, it does nothing to affect student debt for current teachers. And it will help create new debt for universities and community colleges who have been burdened with massive cuts since 2008. 

Governor Ducey’s soundbite: “Low-income schools. Let’s do more for teachers willing to make a commitment to these students in these neighborhoods: A $1000 signing bonus, to attract the best and the brightest, and continue to close the achievement gap.”

Governor Ducey’s budget: These $1000 bonuses will go to any teacher who either transfers into a low-income school or is a first-time teacher starting in a low-income school. But excellent teachers who have stuck it out for years in the same low-income school are not eligible for the bonus. And there is no requirement to teach longer than one year to get the bonus. Imagine workplace morale for the long-time committed low-income teachers versus someone new who comes in for a year to get the bonus, then moves on. Or the intra-district shuffle as teachers move to new schools to gain the bonus. This one needs a lot of work.

Governor Ducey’s soundbite: “Dollars for school construction and capital.”

Governor Ducey’s budget: Increases to $30 million per year the money set aside for building renewal and maintenance for schools. This sounds great until you consider that the court-ordered formula for building renewal is actually $280 million per year, and that a lawsuit will be filed in the next few days aiming to force the state to fund this formula. The Governor also does not include money for new school construction even though three districts are currently overcrowded and need new schools.

Governor Ducey’s soundbite: “Career and technical education.”

Governor Ducey’s budget: Let’s not forget, Governor Ducey made massive cuts of $30 million to JTED/CTE programs in 2015. Then under massive bipartisan pressure he agreed to restore $28 million last year, but also put into place various poison pills to hurt the program. One of those was cutting off high school students from JTED/CTE once they graduate, even if they are in the middle of a program. His budget eliminates that one poison pill.

Governor Ducey’s soundbite: “Unlike other foster families, family members receive little assistance for taking in their nephew or grandchild. So let’s change that, with a ‘Grandmother Stipend’ — providing these families with resources to raise these children.”

Governor Ducey’s budget: This needs a bit of background. We actually already have a Grandparent Stipend for grandparents raising their own grandchildren who are in the Child Safety system, thanks to a Democratic bill that was passed in 2014. They currently get $75 a month per child. In comparison, other foster families get an average of $640 a month per child. The Governor’s budget proposes increasing the number of relatives who can qualify for the $75 a month, not an increase to anywhere near parity with the payments to unrelated foster parents. More resources is better than fewer, but $75 won’t go very far to make a difference.

Governor Ducey’s soundbite: “Lower taxes for hard-working Arizonans.” 

Governor Ducey’s budget: One new tax cut for individuals, not a bad one — indexing the $2100 personal exemption for inflation. With this cut, we will be able to deduct $42 more from our income before figuring out taxes. That’s an average tax savings of around $0.41 per Arizona resident per year. Maybe it would have been better to just increase those teacher raises so they could get popcorn with their monthly movie ticket? 

Governor Ducey’s soundbite: “For Arizonans who are actively looking for a job, who are getting their kids to school — let’s extend them up to 12 additional months of cash assistance, known as TANF, as a bridge out of poverty and into a better life.”

Governor Ducey’s budget: Does indeed restore TANF limits to 24 months, which is a good thing, but fails to mention that he pushed for and received a cut from 24 months to 12 last year, the meanest cut in the nation in these temporary assistance funds to families in crisis, often moms and kids running from domestic abuse. And in restoring his own cuts, he wants another restriction — if a mom can’t get her child to school more than 90% of the time, the money is taken away, even if that child has a major health issue. 

Governor Ducey’s soundbite: “Obamacare: The federal government makes a mess out of everything it touches.” 

Governor Ducey’s budget: Does not mention the disaster the state faces once Obamacare is repealed, with nothing to replace it. According to JLBC Director Stavneak, we could be on the hook for anywhere from $100 million to $1.4 billion a year to maintain care for the current Medicaid population, or we would see 709,000 Arizonans lose their healthcare coverage, a 95% increase in the number of uninsured. This pressure would force more hospitals out of business from the cost of unreimbursed care in emergency rooms, and premiums to skyrocket for everyone else. This is serious stuff, not fodder for cheap ideological hits.

It’s time to get serious. We need to stop the bleeding from useless corporate tax cuts and loopholes, and adequately fund our most important programs for education, transportation, public safety, and services to our most vulnerable. We can no longer afford to just say we are doing something, without actually following through on our lofty language. Leadership requires hard choices and true commitments, not soundbites. We deserve better.

Thanks for your continuing faith in me as your Senator. 

Steve

Steve Farley

Senator, District 9, Tucson

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