The end of the fiscal year is about two months away, but there’s been little talk at the state capitol, at least publicly, about a new budget. Last week, GOP lawmakers and the governor reached a deal to fund a program for residents with developmental disabilities for the rest of this fiscal year, but there’s so far no sign of agreement on a new spending plan for next year.
Howie Fischer of Capitol Media Services joined The Show to talk about what to expect this week.
Full conversation
MARK BRODIE: Howie, let's go just a little while back to a meeting of a group called the Finance Advisory Committee earlier this month, basically a group of economists which meets to look at the state's fiscal picture, and that picture looks a little less good than they had forecasted earlier this year. So where do we stand and what do these numbers maybe mean for those budget talks?
HOWARD FISCHER: Well, let's just say it's not exactly a, the sun is shining and the birds are chirping and the, the bees are buzzing kind of story. We already knew that there was going to be some fallback in terms of the amount of new revenues next year. I mean, that just sort of happens. You get to a point where you can, you can't keep doing these 4% and 5% and 6% increases.
But what's complicated it is the economy and more to the point, you know, what Donald Trump is doing, particularly with tariffs, and they say, you know, we've got the economy in the state. That is dependent on sales. Half the revenues for the state come from sales taxes.
And so let's say people don't buy new cars because the new cars coming in that are maybe a Ford nameplate but manufactured in Mexico are now 25% more. The cost of even repairing your cars is, is going up. And so people will buy fewer cars, or they'll buy cheaper cars, or they won't be buying that new iPhone or things like that, all of which adds up to less revenues than they were anticipating.
They had originally thought that next year we'd have a surplus of about $600 million out of a $17.8 billion dollar budget. Well, after, you know, going ahead and doing the little magic incantations, you know, slaughtering a chicken and burning its bones and doing all the stuff that economists do, they say, well, we're now down below $300 million, so we've got a surplus of less than 2%. Which is not exactly a good place to be and that's after, you know, considering everything else that could happen that we don't know is gonna happen.
At the same time when you have uncertainty in the economy, well we need people who are collecting benefits, you know, are more people on the Arizona Health Care Cost Containment System, you've got the expense side of it, so it's gonna be kind of rocky, and the question now for lawmakers is how much do they want to build in. Based on what may or may not happen, I mean it was nice several years ago when every lawmaker was given $20 or $30 million and said go out and find something to spend it on. That's not gonna happen.
There are, however, still people like JD Mesnard, who's a Chandler senator who thinks we can reduce the state income tax rate, not by a lot, but then again we come back to the question here of if we have a budget that's based largely on sales taxes and we're decreasing the other main source of revenues, which is income taxes, are we making the state more dependent and more reliant and more subject to the variances in the economy.
BRODIE: That's really interesting. I, I suspect how you and I are gonna be talking about the budget a lot more, perhaps in the weeks ahead. But you know, so you mentioned state services.
There's a bill coming up this week that would link basically jobless benefits, unemployment benefits to the unemployment rate. What's that about?
FISCHER: This has been an ongoing issue. Now remember the state does not pay unemployment benefits. This is insurance, this is paid by employers. The employers, however, say to the Legislature, well, you know, we don't necessarily want to be responsible for all that even if we did fire somebody for no fault of their own or even if we did have to lay them off.
And so they want to decrease the number of weeks you can get unemployment. Right now you can get unemployment for up to 26 weeks, and the unemployment is supposed to be based on half of your salary but with a cap of, you know, somewhere in the neighborhood of $320 a week. This would cut it down as low as 12 weeks, depending on the unemployment rate.
Now, at the moment we happen to have a relatively low unemployment rate, but let's get back to that committee of economists that we were talking about earlier. They're noticing that there's been an increase in the unemployment rate, and they want to, you know, the question comes down to how long should people have to, you know, be able to get unemployment because of the fact that this is meant to be a transition.
Is it harder to find new jobs? You know, that becomes a serious issue. And since you're only getting $320 a week, it's not like people are staying home for $320 a week, which is taxable in Arizona's boot, but the employers say, you know, we, we need some financial relief and it's nice that they need financial relief, but what about the folks who are working with them?
This is something that I have a feeling will get the legislative vote. I have a feeling it's also going to get a veto from the governor.
BRODIE: Interesting. Howie, there's also a bill that kind of harkens back to earlier in the school year or last year when there were encampments being set up protesting the, the war between Israel and Hamas in Gaza. This is a bill that would, that would deal with those. And my understanding is it would make it much more difficult to set those encampments up on college campuses.
FISCHER: Exactly. Now, there are already laws in the state that limit certain things you do on campuses as long as they're content neutral, that you're not picking on one side versus the other, the universities can establish reasonable time, place, and manner of protests.
This simply says, if in fact you set up an encampment, meaning like a tent or a structure. It cannot be set up overnight, which to a certain extent makes sense, or a quote unquote prolonged period of time which is not defined in the law.
Now there are a lot of folks who say A, you know, you you're interfering with First Amendment rights, but B, from a more technical standpoint, let's assume you're setting up one of these shade tents to go ahead and register folks to vote. How many hours would you have to be there before you're going to be accused of having a prolonged presence on the campus with a structure?
It's, it's kind of nebulous. And for example, Sen. Mitzi Epstein said, look, if two people can look at the same legislation and come up with two different opinions of what it means, that's not good legislation. This should come up this particular week. I think there's a final reading on it in the Senate. I have no idea what the governor's going to do with this one.
This is a little closer call, I think, for the governor, because you do have a number of Democrats, including Rep. Alma Hernandez, who proposed it, who is Jewish, who was very concerned last year about ASU and U of A and, and Jewish students being harassed on campus. So it's, it's more of a mixed bag on this one. It's not, not exactly a partisan affair the way, for example, the cuts in jobless benefits might be.
BRODIE: Yeah, and, and it sounds like this bill is beyond the point of being able to amend it to maybe put in some specificity of what a prolonged amount of time would, would entail.
FISCHER: Well, that's, theoretically you cannot further amend it. Now there is a procedure where you can take a bill back, put it in for further changes, and, and then send, send it back out. I don't think they're gonna be doing a lot of that because what was interesting is, Sen. Analise Ortiz complained about the question of prolonged not being defined.
And during debate, Sen. John Kavanaugh of Fountain Hills said, OK, if we took out the word prolonged, just had it overnight, would you vote for the bill? And she wouldn't answer. So some of these objections are more philosophical.
