House Republican leaders decided to go it alone on the fiscal 2004 budget and leave the Democrats out of the final negotiations, a decision that may cause aftershocks in the remaining days of the current legislative session and even into next year.

After three days of intensive negotiations inside the Republican caucus, the budget bills, which provide for spending nearly $6.4 billion, passed the House June 11 by a narrow margin.

House Democratic minority leaders called the negotiations a disgrace and said they were given no chance to participate.

The long-term results may be an even more strained relationship with Governor Napolitano as well as a deeper split in the House Republican caucus, which at times appeared to be on the brink of war, pitting conservatives against moderates.

The 20 House Democrats voted solidly against two of the five budget bills, including the general appropriations bill, and 19 of them voted against two of the other bills.

Passage of the budget in this manner seems to put Ms. Napolitano in an awkward position, perhaps intended by the GOP, controlling the fate of a budget some Democrats opposed but others, in the Senate, helped create. She can sign any or all of the bills, veto any or all, or do nothing, in which case they will be filed into law without her signature. She has until June 18 to make up her mind unless the Legislature adjourns before then, in which case a new signing clock starts to run.

Complicating matters is that Ms. Napolitano says she really wants the Legislature to pass three other bills that have been held by Senate Republicans awaiting action by the House on the budget. House conservatives unsuccessfully attempted to scuttle one, and one of the two others must get through the Senate and then the House.

House Speaker Jake Flake, R-Dist. 5, appeared to have made the decision to leave the Democrats out of the budget negotiations in an effort to keep his House Republican caucus, where there is a growing split between moderates and conservatives, in one piece.

Bringing the disparate factions together required proposing a “trailer” bill to be passed next week and make further adjustments to the budget. The “trailer”, so called because it trails behind the budget, may even turn into several trailers. Senate Democrats were looking at some of its proposed components June 12 and saying they’d like to seem them filed as separate bills.

The trailer, or trailers, could be trampled in the stampede to adjourn the legislative session or could be vetoed.

And even the enticements of the trailer bill were not enough to gain the support of a handful of House Republicans who now refer to themselves as the ultra-conservatives. (See House Budget Vote, Page 8.)

In any event the split in the GOP caucus is apparent. Mr. Flake and House Majority Leader Eddie Farnsworth, R-Dist. 22, face a challenge in keeping things intact. Should the trailer die, they could have an extremely difficult time putting any more deals together.

Deal Announced June 5

After weeks of negotiations between Republicans and Democrats in the Senate, a deal was announced June 5, and the Senate approved the five budget bills on June 6. That sparked three days of wrangling in the House that at times bordered on guerilla warfare.

Republican leaders met privately with Republicans while Democrats milled about trying to find out what deals were being struck.

House Republican moderates, called the “Cellar Dwellers,” attempted to strike a deal with House Democrats to pass the budget without the conservatives.

The deal did not pan out, though there appeared to be a consensus that enough Democrats would join the Cellar Dwellers to pass the budget. Some observers who were counting noses claimed there were as many as 36 votes for the budget.

This lent an air of casual confidence to the proceedings as viewed from the sidelines. There was a general belief that a bipartisan vote was inevitable. Then late in the afternoon of June 10, the casual confidence dissipated.

Conservatives told Mr. Flake they would not vote for the budget unless H2529, the university research facility funding mechanism bill, was either killed or severely watered down. H2529 is one of the three non-budget bills Ms. Napolitano says she considers indispensable.

Conservatives also began telling anyone who would listen that conservative votes on the budget were essential or the moderates would suffer at the polls in the next election. Their campaign was extremely effective for most of the evening.

House members were called to the floor shortly before 6 p.m.

Rep. Tom O’Halleran, R-Dist. 1, who heads the Cellar Dwellers, was ushered into Mr. Flake’s office for a chat, and about 15 conservatives took over a conference room just off the House floor.

Mr. O’Halleran emerged from the speaker’s office from time to time and huddled with other Cellar Dwellers and Democrats, who had several meetings going on at various members’ desks on the House floor.

Meanwhile conservatives continued to demand the evisceration of H2529, and eventually Jim Drake, the House Rules attorney, was brought in to pass judgment on the constitutionality of changes they were proposing for the bill.

About 9 p.m., most of the conservatives emerged from the conference room smiling.

Then a short time later, a rumor circulated that the governor would veto the budget if H2529 was watered down.

Later, Kris Mayes, the governor’s spokeswoman, said the governor’s strong desire to have H2529 was indeed conveyed to legislators, but she said she didn’t think the word “veto” was used in conveying that message.

Whatever word was used, the rumor had its effect. The smiles disappeared, and the conservatives went back into conference.

About 10 p.m., Mr. O’Halleran stuck his head in the speaker’s office and suggested the House adjourn because nothing was being accomplished. Mr. Flake emerged and concurred.

Just before the House adjourned, though, Rep. Russell Pearce, R-Dist. 18, chairman of the House Appropriations Committee, gave a speech skewering Ms. Napolitano.

“In her first week in office, she issued executive orders that created and changed programs clearly within the legislative branch’s purview, in defiance of the Constitution she claims to uphold,” he said. “In recent months, through her staff, she strong-armed volunteer board members by calling their private employers and demanding that they pressure these good citizens into changing policy according to her demands, in defiance of state laws she claims to uphold.”

Democrats left the floor in protest, and the next morning, June 11, Mr. O’Halleran and Rep. Bill Konopnicki, R-Dist. 5, gave floor speeches that did not mention Mr. Pearce by name but said they disagreed with what he had said. Mr. Flake called the governor to apologize.

Mr. Pearce told a reporter he stood by his remarks.

The same morning, Mr. O’Halleran and Rep. Jim Carruthers, R-Dist. 4, another prominent Cellar Dweller, informed Mr. Flake that there were sufficient Democrats and Cellar Dwellers to pass the budget.

The House recessed, Mr. Flake told House members they would probably come back to the floor around 2 p.m. Negotiations resumed behind closed doors, and 2 p.m. came and went with no call to return to the floor.

Rumors were abundant. One recurring tale was that the House Republican conservatives were trying to overthrow Mr. Flake.

One of the conservatives said Mr. Flake was safe and claimed the Cellar Dwellers would attempt to oust Mr. Farnsworth.

‘Trailer’ Bill

Shortly after 6:30 p.m., Republicans met in caucus, and leadership unveiled the proposal for the “trailer” bill. The trailer includes several changes proposed by the Cellar Dwell
ers, including increased funding for community colleges and reducing sweeps of county and municipal court fees into the state general fund.

It would change how often individuals must go through a redetermination process on eligibility for AHCCCS. The Senate compromise would require redetermination every six months, and the trailer would require it every 12 months. House Democrats had requested the change, and it seemed, at the time, to be a peace offering to get them on board.

It also restored a corporate income tax break for multistate companies that manufacture goods in Arizona but whose primary markets are in other states. That seemed to be one of the carrots for the conservatives who did eventually vote for the budget.

During the caucus, Mr. Flake was grilled by Rep. Pete Hershberger, R-Dist. 26, one of the “Cellar Dwellers,” and Rep. Linda Gray, R-Dist. 10, one of the conservatives, on whether the “trailer” bill had a chance of passage. They were particularly concerned about how it would be handled in the Senate.

“I have met with the Senate leadership, and they have agreed to sell it to their membership,” said Mr. Flake. “I can’t make things move over in the Senate.”

Following the caucus, Mr. Farnsworth said the “trailer” was still being drafted and would probably be introduced June 16.

The trailer will have to go to at least one House committee for a hearing before going to the floor for debate and a formal vote. If passed, it then would have to go through a similar process in the Senate, where as noted Democrats already are talking about breaking it into several bills.

Mr. Farnsworth said leadership might try to suspend rules to speed up the process. But suspending rules requires 40 votes, which could require votes from a Democrat or two. Once House members went on the floor shortly after 7 p.m., it was quickly apparent the Democrats were angry.

“This process is nothing short of a disgrace,” said Rep. John Loredo, D-Dist. 13, House minority leader. Mr. Loredo said he had been included in negotiations during the morning, but was excluded from later talks.

“When I left [the negotiations], I had your word we’d be back at the table,” Mr. Loredo said to Mr. Flake, who was presiding over the final vote on the bills.

“I am very disappointed in the process,” said Rep. Linda Lopez, D-Dist. 29, House minority whip. “I had hoped earlier in the day that House Democrats would be brought to the table. At least our voice was going to be heard. I thought we were going to have a bipartisan budget.

“I understand there is a trailer bill,” Ms. Lopez continued. “Some things in the trailer are truly valuable, but some things are trash. I think the trash outweighs any good.”

Voting on the bills lasted until shortly after 10 p.m. as Democrats spent most of the time complaining about the snub and taking potshots at the budget, which was painstakingly negotiated by their Democratic colleagues in the Senate.

Rep. Karen Johnson, R-Dist. 18, spoke for the conservatives who opposed the budget. She called it “a borrow and spend” budget.

“You can’t keep spending more than you’re bringing in,” she said. “The day of reckoning will come sooner or later.”

While outlining spending of nearly $6.4 billion, the budget bills project revenues of slightly more than $6 billion.

Rep. John Huppenthal, R-Dist. 20, noted that it must be a good budget because some critics were saying it spent too much and others were saying it didn’t spend enough.

However, Mr. Huppenthal criticized Democrats for voting in a bloc. Rep. Wally Straughn, D-Dist. 15, interrupted Mr. Huppenthal to complain that Mr. Huppenthal was impugning his character. Mr. Flake ruled Mr. Huppenthal had the floor and could continue, but the remark prompted comments from other Democrats that become more cutting as the evening wore on.

H2531, the general appropriations bill, squeaked by, 32-27, with just one vote to spare

H2533, the public finance omnibus budget reconciliation bill also squeaked by with 32 votes. The others got a bit more breathing room, but not much.

Rep. Jack Jackson Jr., D-Dist 2, cast votes for both H2534, the education omnibus reconciliation bill, and H2535, the health and welfare omnibus reconciliation bill. In brief floor speeches, he explained both bills contained provisions that were vital to his district, which includes the Navajo Nation. He added that he was sympathetic to the criticisms leveled at the bills by his Democratic colleagues.

The bills were transmitted to Ms. Napolitano early June 12.

During her weekly press briefing on June 10, Ms. Napolitano seemed to be leaning in favor of the budget, which had been passed by the Senate on June 6. She said she had called Senate President Ken Bennett, a Republican, to congratulate him on working out a bipartisan budget.