Legislative Weekly Report 02/14/2011

Legislative Weekly Report for the Week of February 14, 2011

February 17, 2011

Overview of the Week at the Capitol

This week wraps up the last week to hear bills in the house of origin (meaning House bills in the House and Senate bills in the Senate) and as such it was a frenzied week at the Capitol.  40 days of session and a total of 1335 bills have been introduced, 6 passed, and 5 signed into law.

The biggest news at the Capitol this week was by far the passage of the Jobs Bill in both the House and Senate.  It was sent through both houses in record time, just a few days, and as a result of the speed left a few Legislators voting no.  In both the House and Senate it passed virtually along party lines with only one Republican voting no on both sides.  Senator Ron Gould (R-Lake Havasu City) and Representative Eddie Farnsworth (R-Gilbert) were the two Republicans voting no and both listed the speed at which the bill was sent through the Legislature as one of their reasons for not supporting.  You can read a copy of the bill here.

The announcement of Republican Senator Jon Kyl’s resignation at the end of his term has sparked a firestorm of names with some individuals stepping up already to run for the seat.  US Congressman Jeff Flake (R) and Former State Representative Chuck Gray (R) have already officially stated that they will run for the seat.  Other names that have been hinted at include Corporation Commissioner Gary Pierce (R), Former Congressman JD Hayworth (R), Ben Quayle’s older brother, Tucker Quayle, and US Congressman Trent Franks (R).  This race will prove to be a crowded and competitive field of candidates and more are expected to come forward as well.

The Health and Human Services Secretary Kathleen Sebelius has responded to Arizona’s waiver.  While not granting the current wavier pending at HHS, she has stated in the letter that Arizona’s current demonstration agreement expires on September 30, 2011 and that the state could choose to not renew the demonstration.  Secretary Sebelius’ letter states that Arizona could not reduce their AHCCCS eligibility under the current demonstration because it would violate the Maintenance of Effort (MOE) requirement under federal healthcare reform, but if a new demonstration agreement was entered into and the state chose to reduced their eligibility requirements in that demonstration, that would not be a violation of MOE requirements.  This came as a surprise to many down at the Capitol and there are still many questions on how what the Secretary outlined would work.  But this letter seems to pave the way for the legislature and the Governor to move forward with plans to reduce eligibility and remove approximately 280,000 Arizonans off of AHCCCS and cut the budget by $540 million.  More details are expected in the coming weeks.

AHPA Key Issues:

Pension Reform

• HB 2726 public retirement systems; plan design (Adams) – HB 2726 was heard in a special meeting on Thursday, February 17^th in the House Employment and Regulatory Affairs Committee.  AHPA opposed the bill in committee.  The hearing lasted for almost four hours and many stakeholder groups, including the Arizona Highway Patrol Association and Arizona Police Association, voiced their opposition to the Speaker’s pension reform bill.  The most egregious provisions of the bill are the total elimination of COLAs in all four systems, the elimination of DROP, the increase in years needed to retire from ASRS and the increase and change in employee contributions for PSPRS and CORP.  Three amendments were adopted that included an amendment that would not allow a COLA to be paid unless the MARKET value (not actuarial value as used by the board) of the assets were above 70% and xxxx.  The adopted COLA amendment would not pay a COLA if the market value of the assets were below 70%, one-quarter of the earnings above 9% would go into the excess earnings fund to pay for a COLA if the market value of the assets were between 70-80% and half of the earnings above 9% would go into the excess earnings fund to pay for a COLA if the market value of the assets were above 80%.  The bill passed 5-4 with Representative John Filmore (R-23) joined with the three Democrats to vote against the bill stating that he would not vote for a bill that took away benefits promised to the members and retirees of these systems.  The bill was expected to be voted out of committee strictly on party lines.  Representative Bob Robson (R-20) explained that the bill had a ways to go and that he expected that stakeholder meetings would be held and that further changes would be made prior to the bill passing out of the House.  You can watch the committee hearing, see the vote or review the bill and amendments by going to www.azleg.gov. 
• SB 1609 retirement systems; plans; plan design (Yarbrough) – The Senate will hold a special hearing next week on Wednesday, February 23^rd at 9:00am to hear SB 1609 which is being sponsored by Senator Yarbrough.  Senator Yarbrough has been holding stakeholder meetings over the past 5 weeks to discuss changes that can be made to PSPRS, CORP and EORP to stabilize the funding of the systems.  While AHPA has been appreciative of the stakeholder process, not much has been accomplished.  The bill will not be available until late afternoon on Monday, February 21^st and is expected to include a contribution rate increase; COLA increase change, DROP changes and a second tier of benefits for new hires that may include an elimination of DROP.  Because of changes to retirees and existing members that AHPA believes cannot be done due to the constitutional protection against diminishment of benefits, we will most likely oppose the bill.  Look for the bill on Monday night and it should be available online at www.azleg.gov.  
• Budget – Now that the Jobs bill has passed, the legislature and Governor will turn their attention towards the budget.  The Governor’s proposed budget did not include any cuts to DPS and transferred Capitol PD from ADOA to DPS with the funding included necessary to make the transition.  Jimmy Chavez and Kelsey Lundy have held numerous meetings with Legislators, both Republicans and Democrats, and the majority have been very supportive of DPS and are not supportive of any further cuts to the agency.  Joint leadership budget discussions have begun between the House and the Senate and both chambers have begun small group meetings with members to discuss their priorities for the budget.
• Union Dues Deduction Bills – Two bills that would not allow “unions” to have their dues deducted passed the Senate Government Reform Committee.  AHPA and APA have commitments from the bill sponsors to exempt law enforcement associations.  The two bills are SB 1365 (Antenori) and SB 1555 (Murphy).
• AHPA Legislation – With this week being the last week to hear bills in the house of origin and next week being the last week to hear bills in the Appropriations Committees, the list of bills AHPA is monitoring will exclude any bills that did not get out of committee.