Annual Legislative Forecast Luncheon sets stage for 2020 state legislative session

The Arizona Chamber of Commerce and Industry hosted its annual Legislative Forecast Luncheon on Friday, offering members of the business community the chance to meet with and hear from the governor and state legislators about the most pressing issues for the state.

Susan Anable, chair of the Arizona Chamber executive board of directors and vice president of public affairs for Cox Communications, welcomed 1,200 guests during the event at the Arizona Biltmore hotel in Phoenix.

“As I stand here reflecting today on the year ahead, as we kick off 2020 as a state, it strikes me that there’s some irony — the irony of the frustrations that we as a business community face today — and they are truly indicators of how successful our economy is, and how strong our growth is right now,” Anable said.

“As businesses, we have an ever-tightening labor market, low unemployment, more-than-ever jobs to be filled to keep up with a booming economy; it’s harder than ever,” she said.

New businesses and new residents — including employees, students and retirees — are entering the state at a rapid pace, tightening the labor market and making it more challenging to get building and construction permits, she said.

“And there’s money to fight over: I don’t envy the job of the governor and the legislators who have to figure out how to spend those surplus revenues that we haven’t seen in a very long time,” Anable said. “But don’t get me wrong; these are good problems to have, and I’m grateful for them.”

The highlight of the luncheon was a fireside chat with Gov. Doug Ducey hosted by Glenn Hamer, president and CEO of the Arizona Chamber.

“How’s the economy?” Hamer asked to start off the discussion.

“It’s pretty good; it’s pretty good,” Ducey said. “It’s booming, and in addition to the growth that we’re seeing, I would say the biggest difference is our economy is diversified.

“We’ve got more manufacturing jobs in the state of Arizona today than construction jobs, so this is all very positive,” he said. “And I think the future is bright — blue skies ahead.”

Ducey said he’s not losing any sleep about a possible recession, because the Arizona state government is prepared for it.

“The first time [I spoke at the Legislative Forecast Luncheon] we had a $1 billion deficit, and our state was still coming through the Great Recession,” he said. “Today, we’re in a completely different position. We’ve planned ahead.”

Ducey said an eventual economic downturn is inevitable and often unexpected.

“We’ve been able to repeal a lot of regulations; we have not been able to repeal the law of economics,” he said.

But $1 billion in the state’s Rainy Day Fund, lower debt and a balanced budget will make any future recession easier to navigate, he said.

Ducey said the state’s reputation has also improved since the Great Recession, turning Arizona State University from “the No. 1 party school in the country” into “the No. 1 most innovative university in the nation.”

The state economy has contributed to that as well, he said.

“If you look at Arizona when the Recession did come, and we were so dependent on homebuilding and construction, it was seen as an economic basket case,” Ducey said. “Today, we’re seen as a jobs juggernaut, and we’re locking down companies and cutting ribbons and making announcements like never before. So, that reputation and brand of the state really matters.”

The governor said he is looking forward to a productive legislative session in 2020 that is “brisker” than normal.

“We want to give the appropriate time to conduct the people’s business, but I don’t think we have to spend more time than is necessary,” he said.

Public education for kindergarten through 12^th grade is another major topic for the upcoming session.

“We’re always going to talk K-12 education, and of course we’re going to complete the teacher pay raise — the 20×2020 teacher pay raise will be completed in this next budget,” Ducey said. “I think we can also talk about how we have some targeted spending where it’s needed most. We have such great examples in the state of Arizona of public schools — both district and charter — that are excelling, and we’re doing this in all parts of our state — not just Maricopa and Pima, but our rural areas and lower-income areas — and taking those best practices and finding the right way to structure the funds so that we can replicate that.”

Ducey said he made a promise when he was first elected that he would lower or simplify taxes every year he is in office, and he said he remains committed to that pledge.

When asked about his legacy after office, the governor said he has too much to do in his remaining days — 1,085 as of the State of the State address — to have “the legacy discussion.”

“If you think these first five years have been transformative to our state, you should have the same expectation for what happens in these next three years, and that’s what we’re going to kick off on Monday afternoon,” he said.

The luncheon ended with a panel discussion between four Arizona legislators, hosted by Arizona 360’s Lorraine Rivera. All four panelists noted education as a pivotal issue for 2020.

House Minority Leader Charlene Fernandez, D-Yuma, said House Democrats would like to see a raise in pay for public school teachers and support staff.

“This is an issue that, when we’re knocking on doors throughout Arizona, the people that we talk to, no matter who they are — whether it be a mom with a child in a play pen right behind her or a 75-year-old man that comes to the door — they tell us that they want to see significant investments in public education, and that is the message we’re taking back,” Fernandez said.

Speaker of the House Rusty Bowers, R-Mesa, said the state’s Career and Technical Education (CTE) programs across the state have provided a very important function by increasing graduation rates and helping kids focus on the important aspects of school, both academically and socially.

“But CTED is supposed to bring us something at the end, that these kids can be ready to plug into a working economy, which we all in the room have expressed interest in having, and more employees,” he said. “So, getting the jump on that is always important to us.”

Bowers said the way additional CTE funding is structured is “very critical” but that he will look at outcomes to determine how to proceed.

There are 14 CTE Districts, or CTEDs, across Arizona.

Senate Minority Leader David Bradley, D-Tucson, warned that any budget surplus could quickly be eaten up by paying off the capital needs of K-12 and higher education institutions. Instead, he proposed the Legislature stop making tax cuts that could damage long-term education goals.

“There are needs that are enormous, and we have to stop the cuts in order to start to attend to those needs,” Bradley said.

Senate President Karen Fann, R-Prescott, said her one-on-one conversations with members of the state Senate of all parties revealed that education is the No. 1 priority for 2020 — especially K-12 — and right behind that is infrastructure.

“We know that for goods to move, for us to have a good economy, that means we have to have a good infrastructure system with our highways. So, I think those two are going to be right at the top of the agenda,” Fann said.

In response to a question from Rivera about higher education funding, Fann said state legislators had met with the Arizona Board of Regents and lobbyists for higher education to learn more about their request for additional funding for state universities.

“I think the number was somewhere close to $200 million that they want, and we know that investing in education is huge; it’s very important,” Fann said.

One thing to watch out for, though, is separating ongoing funding with one-time funding in order to protect the state’s robust economy, she said.

“We cannot afford to be put in the position where we allow too much ongoing funding, and then that recession hits and we cannot sustain it,” Fann said. “We’re going to be very, very careful about figuring out how to spend that money.”