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House Awaits Senate Action On Budget

The House adjourned for the weekend on June 5, awaiting action on the fiscal 2004 budget package in the Senate. Both houses voted to extend the legislative session through June 13.

After two weeks of talks, a bipartisan group of nine senators began revealing details of a budget proposal of $6.3 billion to $6.4 billion — enough spending, they hoped, to win support of Democrats and moderate Republicans in both houses and Governor Napolitano’s signature.

Sen. Jim Weiers, R-Dist. 10, told Arizona Capitol Times he expected 23 senators to vote for the budget, including 11 of the 13 Democrats.

Senate Republicans added at least $122 million to revenue projections and increased funding for K-12 education, universities and early childhood education. They also agreed to use at least part of an estimated $300 million in one-time federal aid from President Bush’s economic stimulus package to pay for some Democrat-supported programs.

Senate Minority Leader Jack Brown, D-Dist. 5, told Arizona Capitol Times that funding for KidsCare, the AHCCCS health insurance program for children that had been a sticking point in the negotiations, had been restored.

Like any negotiations over billions of dollars would be, the bipartisan Senate leadership meetings to work out an agreement on the state’s fiscal 2004 budget had their ups and downs. According to negotiators, there were “cordial” sessions, but also moments where voices were raised and fists banged on the table.

It was a political fissure in the Republican caucus that eventually led to the negotiations. Here are some highlights.

Tuesday May 20

Majority Leader Tim Bee, R-Dist. 30, and Assistant Minority Leader Linda Aguirre, D-Dist. 16, meet in a beginning attempt to work out a bipartisan budget agreement, but other Republicans call a halt to future meetings between the two, Mr. Brown says.

Seeking Democratic support for the House budget, Sen. Robert Cannell, D-Dist. 24, is approached to see if he would vote yes in exchange for a committee chairmanship. He refuses and tells Arizona Capitol Times that he told the Republican in jest that he would vote yes for the budget if given an immediate post as chairman of the Senate Appropriations Committee.

Wednesday May 21

Sen. Linda Binder, R-Dist. 3, and Sen. Slade Mead, R-Dist. 20, two moderate Republicans who oppose House budget reductions in education and health care funding, hold a press conference at the Capitol, where Superintendent of Instruction Tom Horne and Attorney General Terry Goddard advocate for increased spending for their agencies.

The two hold-out Republicans also want Mr. Bennett to set the wheels in motion on three bills: university research facility funding; Phoenix Civic Plaza expansion; and a special taxing district for Maricopa County Health System. Mr. Bennett agrees.

It becomes apparent to Mr. Bennett that the Republicans are not going to be able to secure the 16th vote needed to pass the House budget in the Senate, and he calls for a bipartisan leadership group to work things out. They are Mr. Bennett, Mr. Bee, Appropriations Chairman Bob Burns, R-Dist. 9, Majority Whip Marilyn Jarrett, R-Dist. 19, Speaker Pro Tem Carolyn Allen, R-Dist. 8, Mr. Brown, Sen. Pete Rios, R-Dist. 23, Mr. Cannell and Ms. Aguirre.

Thursday, May 22

Ms. Binder leaves for a two-week second honeymoon in Australia, predicting the budget negotiations will still be going on when she returns. Talks begin.

Friday, May 23

Passage of President Bush’s economic stimulus package, which contains federal aid for deficit-ridden states, complicates the budget negotiations. Democrats want to use it to restore funding for their pet programs, and Republicans want to apply it to deficit reduction.

Tuesday, May 27

An optimistic Mr. Bennett says he hopes to have a budget agreement “this week,” but a doubtful Mr. Brown says he doesn’t think that’s possible. “There’s a lot of things we’re not bending on,” the Democrat says.

Mr. Brown also expresses his opinion that the Republicans, despite the bipartisan makeup of the budget-negotiating group, are trying to end up with their brand on the budget. He calls it the “Bennett-Farnsworth Plan.”

On the Senate floor, there are arguments by the Democrats that, despite Republican denials, they were never consulted on the Senate budget plan. Sen. Jay Tibshraeny, R-Dist. 21, and Sen. Jim Waring, R-Dist.7, call for using one-third of the federal aid for deficit reduction and two-thirds to increase spending for certain programs over a two-year period.

Mr. Burns and Sen. Thayer Verschoor, R-Dist. 22, say they won’t support a budget that goes beyond the House’s $6.2 billion in spending.

Thursday, May 29

After 12 hours of negotiations, Democrats and Republicans are far apart on spending issues and revenue projections, and other players are becoming involved in the talks. House Republican moderates and aides from the Governor’s Office are reportedly meeting with negotiators.

Friday, May 30

Ms. Allen says Ms. Binder has become a pawn for the governor’s budget, but that the Republican caucus will eventually recover from her actions against the budget and welcome her back into the fold. Not so for Mr. Mead, says Ms. Allen, and Mr. Mead, who often sides with Democrats on major issues, seems to agree.

“I’m persona non grata,” he says.

Monday, June 2

Mr. Rios says the Democrats are extremely frustrated with a lack of progress. Republicans, he said, agree to put $304 million in federal aid in revenue projections, but they take even more than that off the table in asset sales money and a vehicle license tax fund transfer.

“If they’re not willing to put anything more on the table, we may get to a point where there’s no sense in meeting,” he said.

Projected revenue from the sale of state buildings, says Ms. Allen, is too iffy to put in the budget, and transferring vehicle tax revenues into the general fund is considered “borrowing” by the Republicans.

Ms. Allen confirms that Republicans have agreed to increase revenue projections by $122 million, just enough, Mr. Rios says, to cover spending that Ms. Binder and Mr. Mead want.

Tuesday, June 3

Governor Napolitano speaks out on the budget negotiations, saying it’s “puzzling” why senators are putting more hours into the talks.

If things don’t move along in a bipartisan manner, she says, she will “intervene,” which means she will shortcut the negotiations and call for a meeting with Mr. Bennett and House Speaker Jake Flake, R-Dist. 5, to work out a budget she can sign.

On the other hand, the governor says, “I hear the Senate is moving in the right direction … I am prepared to let it go a little bit longer.” The right direction, says Ms. Napolitano is toward restoration of block grant funding for early childhood education and increased funding for K-12 and universities. She said such funding increases will be necessary to get 16 votes in the Senate for the budget.

Wednesday, June 4

Negotiators meet for nearly five hours, interrupted only by a break when Democrats huddle with George Cunningham, Ms. Napolitano’s budget director. Before the talks end in the early evening and reporters are briefed, Rep. Tom O’Halleran, R-Dist. 1, delivers a document to the negotiators from the House “cellar dwellers,” a group of moderate Republicans who would like to see more spending for education and health care.

Entitled “Alternate Proposal Number 3,” the document contains revenue projections for fiscal 2004 of $6.7 million and spending of $6.4 million.

“We’re getting close to a tentative agr
eement,” Mr. Brown tells the news media. “We’ve worked real hard.”

Mr. Bennett says the two sides are “very close” on revenue projections and spending, somewhere between $6.3 and $6.4 billion, but he and Mr. Brown agree there are issues that potentially could “blow up” the agreement. One of those issues, a Democrat negotiator says earlier in the day, is restoring funding for KidsCare.

The two Senate leaders say they will go to their caucuses the next day to count how many votes they might have in support of the budget proposal.

“Which caucus might be the toughest sell?” they are asked by a reporter. “Fifty-fifty,” Mr. Brown answers.

He says Democrats had only a short discussion with Mr. Cunningham and other gubernatorial aides. “I’m sure they’re going to be unhappy about some things, but I’m sure they will be happy about some,” he says. “We want to make it so when we get through here, it’s something we think the governor can buy.”

Mr. Bennett says the negotiators did not consider the information delivered by Mr. O’Halleran because it would distract from the Senate plan.

“I didn’t feel it was appropriate to shift over to another document,” he says.

Thursday, June 5

One of the negotiators, Mr. Rios, tells Associated Press that Democratic leaders met with Ms. Napolitano on June 5, and she told them to “hold out for as much money as they could get.”

But Ms. Napolitano’s press secretary Kris Mayes said, “We are watching and observing the negotiations. We are not negotiating.”

Earlier, Senate President Bennett said, “We hope that the governor’s agreement is implied in an agreement with the Democrats. I think we have a deal.”

As it stood midday, the Senate budget proposal was between $100 million and $200 million higher than the budget passed by the House at 4 a.m. on May 16, but at least $300 million under Governor Napolitano’s budget. Several policy and spending issues remained to be settled before presentation of the budget to party caucuses and a Senate floor debate and third reading, which were scheduled for Friday, June 6. Both sides said there were issues that still could “blow up” the agreement.

In a morning caucus, Mr. Bennett spoke to Mr. Verschoor, who said he was worried that a budget agreement might lose some overnight votes if it didn’t go to the floor immediately after an agreement on June 5.

“I trust an agreement will carry through a night’s sleep,” Mr. Bennett said.

Late in the afternoon Mr. Bennett and Mr. Brown emerged from a closed meeting to say: “We have an agreement.”

Reporters Phil Riske can be reached at priske@azcapitoltimes.com and Grant Smith can be reached at gsmith@azcapitoltimes.com

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