Monday, September 30, 2013

Education inflation restoration

The Arizona Supreme Court last week issued a final ruling in a case that will permanently impact K-12 education funding in the state of Arizona. 

The justices unanimously found that the year 2000 voter-approved Proposition 301 requiring the Legislature to make annual inflation adjustments to the K-12 budget is constitutional. The Court also held that Proposition 301 is covered under the Voter Protection Act. This means that the Legislature must increase the base support level and transportation support level that it provides Arizona’s K-12 schools every year to account for inflation. 

For Arizona schools, this means an additional $80 million in funding next year. The legislature included $80 million in new education funding in this year’s budget as a contingency plan in case the Supreme Court held that it must make the inflation adjustments. An additional $77 million is expected in fiscal year 2015, which starts July 1, followed by $100 million in each of the following two years.

Keep the government open and the visitors coming

The Arizona Chamber has signed onto a letter spearheaded by the U.S. Chamber of Commerce calling on Congress and the president to come to a deal on the federal budget.

If the government shuts down, so called non-essential services will be unavailable. In Arizona, that means a closure of our national parks, including the Grand Canyon.

I did a segment on TV last week where I talked about the negative effects a government shutdown could have on Arizona’s tourism industry, a major contributor to our economy. In 2012, total direct travel spending was $19.3 billion. Tourism is one of Arizona’s leading export-oriented industries and it’s responsible for over 161,000 jobs in Arizona.

The national parks are responsible for over $13 billion in direct spending nationwide. The Grand Canyon alone supports over 7,300 jobs, had 4.3 visitors in 2011 who spent over $467 million. Back in April 2011 when the last shutdown was threatened, it was estimated that over $485,000 in park entrance fees alone were at risk.

Uncertainty over park openings leads to canceled flights, canceled hotel rooms and canceled reservations with tour operators. This political gamesmanship is doing nothing to grow our economy or create jobs.  It’s important for Congress and the president to negotiate a resolution to this impasse. 

Friday, September 27, 2013

"Lower than anticipated" doesn't mean affordable.

The U.S. Department of Health and Human Services (HHS) earlier this week released some preliminary premium prices for health insurance plans that will be available on the federal exchange. Supporters lauded these as “lower than anticipated” and pointed out that Arizona’s expected exchange premiums are among the lowest in the country. That’s like being the cleanest shirt in the laundry bin, and it doesn’t mean much for Arizonans who struggle to afford coverage now, and for whom coverage likely won’t become any more affordable when the exchange opens for business next week.

To really understand what these premium prices mean, we need to compare them not to the Congressional Budget Office’s (CBO) projections, or to premium prices in other states, but to real prices that people were paying prior to the Affordable Care Act. For working Arizonans whose premium prices shoot up, it will be of little comfort to know that they are paying less than someone in California, or less than the CBO expected them to have to pay.

A 27-year-old male living in Phoenix, for example, will be able to get “bronze level” coverage on the exchange for about $139 a month before subsidies. Currently, the 27-year-old could get coverage for about $38 a month. The relative value of these plans is still in question; HHS has not released information about network availability, deductibles or consumers’ out-of-pocket costs. This means that he is going to see his premium payment nearly triple, while his ability to see the physician he sees now remains in question, and his deductible and out-of-pocket costs will likely stay the same or increase. If he is eligible for subsidies, that could help. But if he’s like most Arizonans he will face a double whammy: higher premiums, and higher taxes to pay for the subsidies that others will receive.

It is important to qualify this analysis with the fact that private commercial individual policies outside of the exchange will still be available. These plans may remain cheaper than plans on the exchange, as they are currently, and offer consumers more choices (between 14 different carriers, as opposed to 7 that will be available on the exchange). However, for those who are eligible for and wish to take advantage of subsidies, they must purchase insurance on the exchange.

It is very possible that premiums will go up both in the exchange and on the private market in the future. The Affordable Care Act requires insurers to provide more expansive coverage and changes the way insurers calculate premiums. Insurers must cover a broad array of “essential health benefits” and can no longer exclude those with pre-existing conditions or charge more for consumers with chronic conditions. They must also allow dependents to stay on their parents’ plan until they are 26. 

The health insurance companies are working to implement the changes required by law in the most affordable and least disruptive way and working with hospitals to improve the quality of health care and make it more affordable. It is also important that consumers do their research to ensure they find the right affordable plan for themselves and their families. But, as the law is fully implemented, consumers won’t be judging its effectiveness and affordability based on numbers coming in below what the CBO and others projected. After all, the administration didn’t title this the “Lower than the CBO anticipated” Care Act, and these recently released premium prices are yet another indicator that the bill isn’t living up to its promise of providing more affordable health care for more Americans. 

Wednesday, September 25, 2013

Let's Move Forward on Resolution Copper

The Arizona business community is fully supportive of this critical bipartisan project

By Glenn Hamer

Imagine you could deliver 3,700 jobs and $61 billion of economic impact to the state of Arizona simply by saying “yes.” It might seem too good to be true, but Congress can take the first step to make it happen by voting for the Resolution Copper land exchange this week.

No doubt you’ve heard about it. In 1996, one of the great copper ore discoveries in history occurred near Superior, Arizona. In fact, Resolution Copper may be as familiar to us as the “5 C’s” themselves. It could become the next great project in a long line of Arizona mining operations, which has led the nation in copper production since 1910.  And while the “Copper Triangle” has been producing world-class metals since the 1700s, this one is a game changer for our state.

A land swap is needed to move this project forward. A bipartisan bill, HR 687, sponsored by Arizona Reps. Gosar and Kirkpatrick would allow this to happen. The House of Representatives is scheduled to vote on the bill this Thursday.

In the land swap agreement, Resolution Copper would transfer 5,344 acres of land in exchange for 2,422 acres owned by the federal government. It should also be noted that Senators McCain and Flake have a companion bill waiting in the Senate if it passes the House.

The land exchange is widely supported by a majority of our state leaders and numerous local and state organizations, including the Arizona business community. For us, this one is a no-brainer. It’s a bipartisan agreement that will pave the way for the production of more than one billion pounds of copper annually. That equates to an economic impact of $13 million in direct economic impact for the Town of Superior and $1 billion, including $90 million in taxes, for the state of Arizona every year, for the next sixty years. The 3,700 jobs created will generate more than $220.5 million in annual wages.

While the project is not without its opponents, it is clear the local community wants this project to move forward. In what was viewed as a litmus test for the project, the August 27 Superior Town Council recall election resulted in a pro-Resolution candidate ousting the incumbent who opposed the mine, by a margin of 2-1.

The land exchange is an excellent opportunity to provide an ideal balance between the expansion of jobs, local and state revenues, and diverse economic activity while conserving ecologically sensitive lands for future generations.

The residents of Superior support it. Members of both parties from our state delegation support it. We support it.

The people of Arizona expect Congress to do the same.

Thursday, September 12, 2013

Dispatch from Mexico: Arizona Delegation Visits with Mexican Senate

The latest entry from Glenn Hamer, who is traveling with a bipartisan delegation to Mexico City.

Our delegation on Wednesday visited with Mexican senators to discuss the unique relationship between the U.S. and Mexico and, more specifically, Arizona and Mexico. Our discussion with the five senators lasted almost two hours.

The state of our shared border was raised, with all in agreement that the issue of security unites us. More streamlined customs processes and improved resources at our ports can not only strengthen our competitiveness, but they can strengthen our security as well.

We also discussed the need for improved transportation infrastructure. Speaker Tobin shared with the Mexican senators the potential for Interstate-11 linking Las Vegas and Phoenix, and we heard from Jaime Chamberlain, past chairman of the Fresh Produce Association of the Americas in Nogales, Ariz. about some of the bottlenecks experienced on the Mexican side of the border and in trying to move freight out of the Mariposa port of entry on U.S. highways.

Rep. Juan Carlos Escamilla, former mayor of San Luis, Ariz. shared the challenges of moving agricultural workers in and out of the port in that city. Sixty-five thousands workers cross the border every day to work in Yuma County, the supplier of lettuce and winter vegetables for much of the world. Rep. Escamilla has a lot of insight on this issue and could be a great resource for potential reforms.

As we experienced throughout the trip, the Mexican senators were extremely warm and welcoming and very interested in learning more about our shared interests. I’m thankful to Speaker Tobin for his leadership of this mission and for inviting members of the business community to participate. 

Wednesday, September 11, 2013

Dispatch from Mexico: Arizona House Heads to Mexican House

The latest entry from Glenn Hamer, who is participating in a trade mission to Mexico City led by Arizona Speaker Andy Tobin.

As part of a historic bipartisan delegation to Mexico, Arizona House Members and business community stakeholders on Tuesday headed to Mexico’s House of Representatives, the Cámara de Diputados.

Arizonans should be proud of these fine ambassadors led by Speaker Tobin. The representatives here are from both rural and urban communities. A nod to the urban and rural makeup of Mexico’s House is on display here, too, where outside the building are symbols of the country’s urban and rural populations.

Our Mexican hosts welcomed our group with open arms, inviting the delegation of Reps. Tom Forese, Karen Fann, T.J. Shope, Lydia Hernandez, Catherine Miranda and Juan Carlos Escamilla onto the floor of the House chamber.

Arizona House members visit Mexico's Cámara de Diputados

We had a deep, nearly two-hour discussion on ways to strengthen the trade relationship between Arizona and Mexico. We visited on the topic of congestion at the port of Long Beach and need for a deep-water alternative potentially in Guaymas, and the need for expanded north-south trade corridors such as I-11, which would connect Phoenix and Las Vegas.

From the business side, we discussed the need for the U.S. Congress to pass a major immigration reform package, and reflected on how some U.S. companies could cease to exist if not for an ability to employ foreign workers.

Reform is in the air in Mexico as well. Mexican President Enrique Peña Nieto successfully navigated a major education system overhaul to passage, striking a major blow against this country’s powerful teachers unions. In fact, there are protests right now in Mexico City as a result of passage of these reforms. It’s interesting to see how this rising economic power recognizes the importance of better educational output in order for it to take its place as a major player on the world stage.

Tuesday, September 10, 2013

Dispatch from Mexico: Delegation Talks Trade

Glenn Hamer is in Mexico City this week as part of a bipartisan delegation led by Speaker of the House Andy Tobin. Glenn will be blogging from the trip, offering us a look at what the delegation is learning on this historic visit by a legislative delegation to Mexico City.

The bipartisan Arizona House delegation led by Speaker Andy Tobin last night in Mexico City met with two federal Mexican senators, Marcela Guerra of the PRI and Ernesto Ruffo of the PAN,  as well as the secretary of Economic Development of Mexico City, Salomón Chertorivski. Each of the Mexican officials offered comments and the speaker and his staff provided an overview of the Arizona economy, as well as details of the two once-in-a-generation jobs bills that passed during the past three years.

The consensus that emerged from the discussion is that it is desirable for both Arizona and Mexico to find any and all ways to increase our trade.

Mexico is already Arizona’s largest trading partner, accounting for about one-third or $6 billion of our $18 billion in exports. Yet, there is a feeling we can do more. By contrast, Texas in 2012 exported $94.5 billion to Mexico while even a non-border state like Illinois exports $6.4 billion.

There was also a discussion on the need to improve customs and ports of entry on both sides of our shared border. Clogged arteries of trade cost wealth, not to mention have a negative effect on the environment, with idling vehicles belching exhaust sometimes hours on end. When the U.S. House takes up immigration reform, it needs to look to be more aggressive in putting resources into our port operations as opposed to a full doubling of the Border Patrol.

Glenn Hamer with Nuevo León Senator Marcela Guerra

Mexico City’s economic development secretary provided some interesting facts on his city, one of the largest by population centers in the world. About nine million people live in Mexico City, but the city swells to about 23 million during the work day, about four times the entire population of Arizona! The city has a thriving financial services sector, and the per-capita income in the capital city is about twice that of the rest of Mexico.

The conversation was warm and a great start to this historic legislative delegation visit. With Arizona's budget in balance and nation-leading efforts to improve our competitiveness, we should all be ambassadors throughout the U.S. and around the world to sell what is now one of the most competitive places to do business in the country.