Could Dems save Ducey’s university bonding plan?

With Gov. Doug Ducey’s $1 billion university funding proposal at a standstill at the state Legislature, Democrats are offering to support a retooled plan to give Arizona’s three public universities greater bonding authority.

An unlikely lifeline from the minority party, coming late in the session, signals Ducey’s initial idea — to let universities keep sales taxes they generate to bond for infrastructure projects — could otherwise be dead. Cities and towns would lose about $7 million a year in revenue under the Ducey plan.

Rep. Don Shooter, an influential Republican and chairman of the House Appropriations Committee, acknowledged late Tuesday that Ducey’s plan is being reworked, and lawmakers were holed up trying to find another way to

get universities more money for bonding while leaving cities unscathed.

Ducey’s idea has encountered stiff resistance despite its status as one of the governor’s signature policy proposals this year. Many have ripped the plan for taking sales-tax revenues from localities. That opposition to the bonding proposal, which is included in the budget, has delayed work on the state’s spending plan at the Legislature.

The Republican governor, however, appears unwilling to abandon his efforts to get more money to the universities, and high-profile university supporters are meeting with lawmakers on a revamped plan that would still send significant new dollars to the schools.

“In conjunction with the Senate and the Governor’s Office, we are looking at more-conventional ways of accomplishing that,” Shooter said. “I guess that’s about all I can say at this point, because it’s in active negotiations.”

Shooter, of Yuma, said cities and towns would feel “zero” impact under the plans being discussed.

The state’s highest-ranking Democrats in the House and Senate separately said Tuesday their party would support an increase to the schools’ bonding authority as long as it didn’t take money from cities and was separate from the state budget.

Rep. Rebecca Rios, the minority leader in the House of Representatives, said she left a message on Ducey’s personal cellphone last week to see if he wanted to talk about the budget — specifically, the university bonding issue.

“We understand that the university bonding is the sticking point, and I think as Democrats, we’re willing to negotiate on that issue,” she said. “The majority of our members have a concern, obviously, with taking the cities’ … (sales tax) dollars. We do not support that. But we do support university funding, and whether that is maybe considering bonding, or more favorably would be a direct appropriation, you know, Democrats are willing to work on that issue with the governor if his party is not.”

The legislative lifeline comes after Ducey expanded the state’s schoolvoucher program and after he backed restoring a year to the state’s cash-aid program, but with significant restrictions. Both actions deepened rifts with Democrats, but the party says it is willing to support the university bonding issue on its merits.

“You have to be big enough to address each issue on its own,” Rios said.

Sen. Kate Hobbs, the Senate minority leader, said she met Monday with Neil Giuliano, president and CEO of Greater Phoenix Leadership, which represents some of the most powerful business and government leaders in the state, including Michael Crow, president of Arizona State University.

“They just wanted to find out where we’re at with support,” she said. If the package did not redirect sales-tax dollars and was a stand-alone bill, “as a caucus, we would be a solid yes,” Hobbs said.

There are 24 Democrats in the 60member House and 13 in the 30-member Senate.

Giuliano said Tuesday that his meetings with lawmakers left him with the impression that “there is a bipartisan opportunity to do something really significant, and really important, for Arizona.”

He said he sees a way for universities to receive significant money if Ducey’s plan is altered to not allow the schools to keep tax dollars that would otherwise go to cities and towns, and if enough lawmakers agree on a “mechanism” to allow for bonding.

“Now, the challenge, of course, is they’re all going to have to talk to each other and figure it out,” he said. “In listening to everybody, I think there really is a path toward making this happen.”

Daniel Scarpinato, a spokesman for Ducey, said the governor has always been flexible on how to raise the universities’ bonding authority. He would not discuss the specifics of any proposals under consideration.

House Speaker J.D. Mesnard and Senate President Steve Yarbrough did not return The Arizona Republic’s calls to discuss how the bonding plan was being reworked.

Three months after Ducey outlined his plan, it has gained no traction in the Legislature, where it has helped stall the fiscal 2018 budget.

The issue has pitted officials in higher education, looking to reverse a decade of austerity, against localities already feeling pinched by recent budgets that have sapped local funds while adding new responsibilities.

It was unclear Tuesday whether the funding would still include $30 million from the state, which Ducey wanted to give the universities to help manage any new debt, but would not allow the schools to keep sales tax they would otherwise owe the state and their local communities. Under his proposal, which universities have said they support, the schools would match the state’s contributions.

Any plan to give the universities access to significant money would be a shift from years of cutbacks to Arizona State University, the University of Arizona and Northern Arizona University. The cutbacks began with the Great Recession and continued into 2015, when lawmakers sliced $99 million from higher education in an effort to put the state’s finances on more-solid ground in Ducey’s first year in office.

As he works on his third budget, Ducey has sought to remake education, from K-12 to college, though his plans have encountered significant pushback in the Republican-controlled Legislature. Lawmakers in the House and Senate have indicated an interest in boosting teacher pay more quickly than his fiveyear timetable, and have shown little appetite for other initiatives laid out in his State of the State speech in January.

Meanwhile, Republican leaders have said they would be willing to provide more to higher education, but chafed at the structure of Ducey’s bonded debt proposal. Some didn’t like allowing the schools to keep sales taxes, technically paid by contractors working with the universities, that would otherwise go to the state and localities. Others balked at adding up to $1 billion in debt to the state’s liabilities.

School executives have pushed the bonding idea as a test of the state’s commitment to higher education.

ASU, for example, wants to use the extra bonding authority to help construct biodesign facilities that research Alzheimer’s, Parkinson’s and other diseases. There are also plans for an anchor to the school’s downtown Phoenix biomedical campus.

The UA has identified $200 million in facility needs, ranging from upgrades to the century-old Forbes agriculture building to improvements to the microbiology building and Steward Observatory.

NAU has grown its enrollment nearly 50 percent since 2008 and doubled its degrees in science, technology, engineering and math since 2009, even as state support has plummeted.