Issue: zoning

Democratic Gov. Katie Hobbs took major heat from many Democrats for negotiating a state budget package with Republican legislative leaders that did not include any changes to the state’s new universal school voucher program.

But Republican Senate President Warren Petersen is heaping praise on Hobbs for the deal, saying she negotiated in good faith, kept her promises and made a rare bipartisan budget happen. And he pointed out that despite Democrats’ anger over school vouchers, “that wasn’t going to get on her desk” because majority Republicans would never vote to curtail the program.

“Kudos to her,” Petersen said about the governor’s direct negotiations with him and House Speaker Ben Toma, which unfolded with direct meetings multiple times a week over two months.

“She was reasonable,” he said.

“And she would keep her word,” Petersen said. “”Whenever she would say ‘I agree to that,’ she did it.”

The deal on the $17.8 billion state budget package for the fiscal year that begins on July 1 came much earlier than many observers expected. Hobbs is the first Democratic governor since Janet Napolitano left office for a Cabinet post in the Obama Administration in 2009, a shock for Republican lawmakers who have had 14 years of working with a GOP governor.

Petersen sat down with Capitol Media Services this past week for a wide-ranging interview as the yearly legislative session takes a virtually unprecedented one-month break called by Petersen and Toma. With the budget done and the only bills remaining needing major work before votes, they called a break in floor sessions to work on those issues.

“We literally have put everything up there that was ready,” for a vote, he said. “And now I’m not going to make people come down here if I don’t have any floor work to do.”

Happy People

He said he was the one who came up with the plan that doled out chunks of a big budget surplus to each of the 47 Republican lawmakers in the House and Senate. Minority Democrats got smaller amounts, and Hobbs also got a big chunk to control.

What that earned was individual buy-in from GOP lawmakers who for the first time had ownership of a slice of the budget, Petersen said. That’s a huge difference from the way the budget has normally been done, with Republican leaders hammering out a deal with the governor and then presenting it to rank and file GOP lawmakers as a done deal.

“It came from the difference between communism and capitalism and the way things normally go and why we always have problems,” Petersen said of his strategy.

“You normally have six people down here deciding how … all the money gets spent,” he said. “And then those six people try to convince everybody else to vote for the budget.”

Giving each lawmaker a portion of the budget — $20 million each for GOP House members, $30 million for each GOP senator – gave them control they did not have previously.

“This time when we passed the budget everyone was actually smiling and happy,” he said. “It was like literally the first time I’ve been down here where people were happy.”

Normally, he said, people are angry, having had to get “wrangled into it.”

“Everyone went in ready to vote for this budget. Why? Because I gave them all a piece of the budget. Everybody got their own piece, and they owned it,” Petersen continued.

Even many Democrats voted for the plan, although many grumbled about how it was presented to them. Petersen blamed Democratic leaders for not adopting his formula with their members and delaying giving him their budget “asks.”

Proposition 400

After the budget passed and was signed on May 12, what’s left is a series of top-tier proposals that currently don’t have consensus among Republican lawmakers, with the governor having the final word.

The biggest issue is the extension of a half-cent sales tax in Maricopa County which pays for transportation projects.

The 20-year, multi-billion-dollar tax expires in 2025 unless voters extend it. But the Legislature has to give its permission for the issue to be put on the ballot; it’s the only county that requires that step to ask voters to approve a transportation tax.

Last year, lawmakers passed the tax extension proposal but it was vetoed by then-Gov. Doug Ducey. With an even more conservative Republican caucus this session, it faces tough scrutiny.

Petersen said he and others have major problems with the proposal presented by the Maricopa Association of Governments, the entity that doles out the money for freeways, major roadways, buses and light rail and clean air programs.

And Petersen has little faith in the agency.

“MAG is completely unaccountable,” he said. “They’re very, very insulated.”

He said that, on paper, the agency led by mayors who are supposed to have some oversight.

“But not really,” he said. “These mayors are overwhelmed, busy.”

Petersen said the plan’s use of 44% of the funds for mass transit — versus new highways and road construction — is a non-starter. And he said it creates what he called a $2 billion “slush fund” that he worries would be used to extend light rail despite promises that’s not contemplated.

And then there’s the part that says air quality is a consideration in what to fund.

“If they’re just saying, we can use any measures we want, they need to define what air quality programs they want to do,” he said.

Without definitions, Petersen said MAG could potentially impose limits on gasoline-powered cars or adopt cap and trade programs or who knows what. If they want flexibility for future technologies, he said a mechanism for legislative oversight should be added.

“Believe it or not conservatives want clean air,” Petersen said, including for themselves and their children.

“But they need to define what it is,” he said. “And yeah, if it’s reasonable, we put that in.”

Petersen had just left a meeting with Hobbs when he sat for the interview in his office, and said it sounds like she may want to be directly involved in the negotiations over Proposition 400, the tax extension.

Miscellaneous Issues

Other remaining issues include a revamped proposal to ban city-imposed taxes on home rentals. Hobbs vetoed that bill earlier this session, saying there was no mechanism ensuring renters facing rising housing costs will see the money. She also opposed the $270 million appropriation to compensate cities for the lost revenue for the first 18 months of the ban, saying it came outside the budget plan.

Toma said recently that tying a signing of a rental tax ban and Proposition 400 in negotiations with the governor was a possibility. Petersen, however, said he’s not doing that.

“I don’t horse trade,” he said.

The other key battle remaining is a Republican proposal to override many city zoning laws to boost construction of lower-priced housing options.

That measure has failed once this year. And new versions pushed by Sen. Steve Kaiser, R-Phoenix, don’t yet have the votes to pass and the powerful League of Arizona Cities and Towns is strongly opposed, calling zoning a quintessentially local issue.

Petersen said he does not know if that will get enough support to pass, and if it does not, that’s OK.

“If he doesn’t have the votes, he doesn’t have the votes,” Petersen said. “It’s really that simple.”

Another handful of bills are also in the mix before lawmakers can adjourn for the year.

“We probably have at least 10 bills that are that have loose ends on them that are really important for Arizona,” he said. “And we’re looking at if we can negotiate what to do with those by June 12, and the rental tax is one of them.”

Petersen, who became Senate President in January after a decade representing Gilbert in the House and Senate, said the unusual long break in legislative action is by design.

He recalled frustration after years of coming in to work, saying the daily Pledge of Allegiance and prayer at the beginning of floor sessions and then adjourning for the day because nothing was ready for votes.

“And so I’ve just told my caucus, and they’ve appreciated this ・ that I don’t just bring people down here to pledge and pray,” he said. “We’re not taking a month off, OK. We just don’t have floor work.”