State Capitol News
Wed January 11, 2012
Brewer Wants Legislature to Buy Back Buildings
Citing the state's upcoming 100th birthday, Gov. Jan Brewer on Monday asked lawmakers to buy back three buildings at the Capitol that were mortgaged off two years ago to balance the budget.
The move will cost the state $105 million out of its current budget surplus. Brewer press aide Matthew Benson said the state has the cash.
Benson acknowledged the state actually got only $81 million for the state House, the Senate and the nine-story executive tower that includes Brewer's office when it negotiated a “sale-leaseback'' arrangement in 2010.
But he said that $24 million difference should not be seen as an exorbitant interest rate for just two years of borrowing. Instead, Benson said, it actually is a savings: If the state had taken the full 20 years to pay off the debt, the cost would be far more.
Brewer, however, said she sees this as more than an issue of dollars and cents. She called it a matter of pride as the state recovers economically.
“Most of our Capitol complex, including the building we gather in today, is not ours,'' Brewer said in her State of the State speech delivered in the House building. “So ... to make all of our Capitol truly ours once again, I'm asking that you send me a bill by Statehood Day that allows me to buy back the Capitol.''
That would be Feb. 14.
The maneuver, though, is a bit more complex than that.
When Arizona borrowed the money two years ago, it essentially promised investors they would get interest for at least 10 years. Hence the $105 million pricetag.
Under the governor's plan, the state would put that $105 million into a special account, with the proceeds earmarked solely to make payments through 2020. That would be enough for the lenders to release their hold on the buildings.
“Together we can celebrate the burning of that mortgage,'' Brewer said.
House Minority Leader Chad Campbell was skeptical of the move because paying off the debt now — plus future interest — does not save any money compared with simply paying off the buildings after 10 years. More to the point, Campbell said, paying off the debt does nothing to create jobs.
Rep. John Kavanagh, R-Fountain Hills, said he remains concerned about what happens when the temporary sales tax ends in 2013 and the state loses about $1 billion a year in revenues. He has proposed setting aside excess funds between now and then to deal with that loss.
But Kavanagh, who chairs the House Appropriations Committee, said he's willing to consider the request.
“We don't have to bank every last dime,'' he said. “I'm open to that — so long as we put sufficient funds away so that in 2014 when, thankfully, the temporary sales tax expires, we just have a little curb that we can easily step over instead of a cliff that will lead to our demise.''
Brewer will release her budget plan at the end of the week.
But in a separate document released after the speech, she provided at least one hint: She intends to restructure how the state gives money for higher education. And that could affect funding for the University of Arizona.
Brewer said the rapid growth of the university system in the last decade has caused an increase in both tuition and class sizes at both Arizona State University and the University of Arizona.
“High volume courses tend to feel impersonal and provide less student support,'' the governor's policy document states.
“Consequently these courses often have higher failure rates,'' she continued. “Just as a student receives little benefit from going to a university only to drop out, the state loses out as well.''
Brewer said she wants to give ASU and NAU money to redesign courses, including providing technology to help students at both schools “go at their own pace, receive extra help and improve their learning.'' And she said she wants to “help close the per-student funding gaps among the universities that have existed in Arizona for decades,'' a reference to the fact that current formulas now give the UA more per student than the other schools.
Benson refused to provide details Monday, saying only that Brewer “is committed to getting appropriate funding levels'' for all the schools.
In her 35-minute speech, the governor also took time to touch on what has been one of her favorite subjects: bashing the Obama administration and its policies.
The governor said there is a legitimate role for the federal government in working with states, such as construction of dams and the Central Arizona Project to bring Colorado River water to much of the state.
“It's an example of how federal and state cooperation should work,'' Brewer said.
But she said that is not the case now.
“Today, Arizonans and Americans are saying to Washington, D.C., we don't like an ever expanding government threatening our personal liberties,'' Brewer said.
“We don't like government living beyond its means and trying to be everything to everyone,'' the governor said. “We don't like unconstitutional — and unfunded — health care mandates. And, by the way, we don't like open borders, either.''
She took a broader slap at “federal land management policies (that) have left our public lands overgrown and vulnerable to the kinds of massive blazes we saw last year.''
“We need a return to responsible thinning and active management of federal lands,'' Brewer said.
“Here is my question to the federal government: How long will Arizona and other Western states have to burn before you do something? We can't afford another disaster.''