Glenn Farley, the director of policy and research at the Common Sense Institute Arizona said there are dual federal and state economic factors that are contributing to the state’s current financial status. He was joined by Katie Ratlief, the executive director of the Common Sense Institute on a recent podcast episode.
“At this point, two things are sort of occurring in real time,” Farley told host Leyla Gulen on the Grand Canyon Times Podcast. “The national economy appears to be slowing in response to rapid post pandemic inflation. That slowing national economy doesn't bode well for the state's fiscal fortunes going forward.”
“At the same time, the state has also exhausted most of those significant cash reserves. We went from that 2. 5 billion cash surplus to a projected 10 million cash surplus today. Just a few months after that 10 million projection, fortunes reversed again,” Farley said. “So that gives you an idea of how quickly things can turn and why it's important to maintain fiscal discipline to keep things balanced and on an even keel going forward.”
This full episode is available on Apple Podcasts and Spotify.
Katie Ratlief is the executive director of the Common Sense Institute Arizona (CSI-AZ). Glenn Farley is CSI’s director of policy and research. Their organization recently released the 2023 edition of Arizona’s Free Enterprise Report.
This report includes the “Free Enterprise Competitive Index,” which measures Arizona’s alignment with CSI-AZ’s policy areas on topics including: Education, Energy, Healthcare, Housing, Infrastructure, Public Safety, State Budget and Finances, and Taxes and Fees.
CSI-AZ is affiliated with CSI Colorado, which was founded in 2010 as the Common Sense Policy Roundtable. CSI-AZ’s mission is to examine and inform Arizona citizens about the fiscal impacts of policies, initiatives, and proposed laws in the state.
Full, unedited transcript of this episode:
[00:00:00] Leyla Gulen: Welcome to the Grand Canyon Times Podcast. I'm your host, Leyla Gulen. In this episode, we welcome our guests, Katie Ratlief and Glenn Farley. Katie is Executive Director for the Common Sense Institute Arizona. She also served in former Arizona Governor Doug Ducey's administration as Director of Legislative Affairs, Senior Advisor, and Deputy Chief of Staff.
[00:00:24] Leyla Gulen: Glenn is Director of Policy and Research for Common Sense Institute. He also worked for Governor Ducey as Chief Economist and Policy Advisor. Katie and Glenn, welcome.
[00:00:35] Katie Ratlief: Thank you for having us, Leyla. We're happy to be here. So much, Leyla.
[00:00:38] Leyla Gulen: Well, you both have extensive experience in economic policy, planning, and so much more.
[00:00:43] Leyla Gulen: The Common Sense Institute is an organization dedicated to researching and compiling data across many categories, particularly the fiscal state of Arizona. Glenn, let's start with you. Perhaps you can jump off with us here and give us a kind of a macro view [00:01:00] of Arizona's economic health.
[00:01:02] Glenn Farley: Oh, yeah, let's start with positive for sure.
[00:01:04] Glenn Farley: So the state of Arizona is ending a period of about 10 years of extremely rapid growth and that extremely rapid growth has paid dividends for various participants in the state's economy, but that includes the state of Arizona itself. So the state budget today is significantly larger than it was a decade ago, but it's also significantly healthier than it was a decade ago.
[00:01:25] Glenn Farley: Some of your listeners may recall that when Governor Ducey was originally elected back in 2015 and 2016, the state was still trying to recover from the great recession, which it itself ended five, six years prior. It was structural changes to the budget in 2016, coupled with that rapid economic growth that I just talked about that turned the state's fiscal fortunes around.
[00:01:48] Glenn Farley: And over the ensuing five or six years, Or so we went to roughly a 1 billion deficit to roughly a 2 billion surplus when Governor Ducey ultimately left office. The [00:02:00] state was in the strongest fiscal position it had ever been, more than 2. 5 billion cash in the bank and significant cash surpluses. That results in the ratings of five, the highest possible ratings for the state of Arizona in terms of its state budget and its tax fee and regulatory structures.
[00:02:15] Glenn Farley: Unfortunately, the outlook is a little more mixed and I use the word ending a decade of Very rapid growth at the beginning of this talk at this point, two things are sort of occurring in real time. The national economy appears to be slowing in response to rapid post pandemic inflation. That slowing national economy doesn't bode well for the state's fiscal fortunes going forward.
[00:02:36] Glenn Farley: The same time, the state has also exhausted most of those significant cash reserves. We went from that 2. 5 billion cash surplus to a projected 10 million cash surplus today. Just a few months. After that 10 million projection, fortunes reversed again. Now legislative budget offices are projecting a 400 million cash shortfall in the coming fiscal year.
[00:02:57] Glenn Farley: So that gives you an idea of how quickly [00:03:00] things can turn and why it's important to maintain fiscal discipline to keep things balanced and on an even keel going forward. And so that results in that negative outlook you can see in our free enterprise report for the state's budget going forward.
[00:03:11] Leyla Gulen: Now, let me just ask you this.
[00:03:13] Leyla Gulen: As far as the surplus that you were enjoying for quite some time, what do you think is credited to that? Yeah,
[00:03:21] Glenn Farley: that's a great question. I, I sort of alluded to this at the beginning, but there's two big factors. The first is fiscal discipline. The budget expenditure growth under the last eight years or so under former Governor Doug Ducey was relatively slow and moderate.
[00:03:37] Glenn Farley: It picked up steam Around 2020 in the periods thereafter, when there was rapid revenue growth and rapid demand for services in the K 12 space and the public health space and others, but overall, over the 8 to 10 year period, beginning in 2015, 2016, spending growth was relatively tame and relatively, so at the same time, economic growth was very robust, that [00:04:00] economic growth Fueled rapid revenue growth and the combination of the two tame expenditure growth, rapid revenue growth led to that reversal in fiscal portions, bringing us from that billion dollar structural deficit to a one to 2 billion structural surplus.
[00:04:16] Leyla Gulen: Yeah. And we're living in such different times now than we were after the great recession. So I want to come back to you and talk a little bit more about, can we see those days come back again? How would You do that, what would it take in order to get back to that 2 billion surplus? But first, Katie, your organization just released the 2023 Free Enterprise Report.
[00:04:37] Leyla Gulen: It covers just about everything from education to health care to the housing market. Were there any findings that surprised you or were disconcerting
[00:04:47] Katie Ratlief: in any way? Well, thank you, Layla. And yes, we've released this free enterprise report and we intend for it to be sort of a road map for policymakers, business and community leaders, the public [00:05:00] to see across eight different policy areas where our free enterprise system and our economy are strong.
[00:05:07] Katie Ratlief: Where there is opportunity for growth and improvement, and we think that it is a completely comprehensive assessment of kind of where things stand, and that includes things like you mentioned. Health care, education, the state budget, taxes and regulatory fees sort of runs the gamut. I think what people might find surprising.
[00:05:30] Katie Ratlief: Is we evaluated it on two different things. We have sort of an objective criteria. Where are we today? What is our free enterprise system look like given the policy conditions that exist right now at this moment? And then we also gave an outlook. What do we think? Subjectively looking at kind of Where policymakers are at, what's happening in the state economy, what's happening at the city and county level even, where do we think this is going [00:06:00] to go in the future?
[00:06:01] Katie Ratlief: And so there are a number of issues where sort of a dichotomy emerges. Glenn sort of alluded to this, for example, in the budget. We're very, the state is in an incredibly strong position right now, for all of the reasons Glenn said, a lot of leaders at a lot of levels of government have worked very diligently for over a decade to completely transform the state's economy.
[00:06:23] Katie Ratlief: The state's economy is more diverse and more resilient today. You see that in our ability to recover from Economic disturbances like the Great Recession. Other states didn't fare so well as Arizona did through the recession that the covid induced recession. We came out incredibly strong, and that was due to an intentional decision made after the Great Recession.
[00:06:49] Katie Ratlief: To fundamentally transform our economy. And you're seeing that pay dividends now. Another example is when we were looking at the state's education system [00:07:00] and the outcomes that we're currently seeing our high school graduation rate is too low. A lot of that is due to learning loss that occurred over the last three years that we haven't seen a reversal of yet.
[00:07:13] Katie Ratlief: Common Sense Institute. Glenn did another report earlier this year on the economic impact of that learning loss. What will that mean for outcomes going forward? So the state ranks relatively lower because of that. However, because of policies that have been enacted over the last couple of years, the expansion of school choice, significant investment in quality choice and quality opportunities for students, we see nothing but a positive outlook for Arizona's education system going forward.
[00:07:47] Katie Ratlief: I think that may be something that's surprising to folks as they flip through the report that there are a number of places where Arizona is currently strong, but we are concerned about the direction moving forward. And there are a number of places where we [00:08:00] may not rank as highly right now, but because we're optimistic about the implementation of policy decisions that have been made more recently.
[00:08:12] Leyla Gulen: Yeah, and I love the report itself because it's very easy for the layperson to read and I want to talk a bit about some of the research, the exhaustive research that went into collecting all of this data and putting it in a way where it's easy. You have a one through five sort of a meter as to how well something ranks.
[00:08:31] Leyla Gulen: It's very easy to digest and to read and to understand. But where are you pulling your data from and how are you compiling all of this
[00:08:38] Katie Ratlief: information? I'll let Glenn expand a little bit on that, but I think one thing that's important to note is that the sources of data that we use go back many years and are available across all 50 states.
[00:08:52] Katie Ratlief: So we can compare Arizona, not just to ourselves this year, but to ourselves over the last decade or so, [00:09:00] and to all 50 states at the same time. And that was incredibly important to us to find those easily available, easily comparable data sources. So that going forward, we can continue to compare Arizona's progress against our, against other states.
[00:09:16] Leyla Gulen: Absolutely. And as far as higher education goes, since we're talking about education, we've all been caught in this firestorm of wokeness and professors indoctrinating students with their ideologies. And I've had the opportunity to speak with Anne Atkinson, the former executive director of the T. W. Lewis Center for Personal Development at the Barrett Honors College at ASU.
[00:09:37] Leyla Gulen: Her experience losing her job. Overbringing conservative speakers to address students, uh, this doesn't seem to bode well for future college students. So we're talking about higher education and their ability to freely navigate their own academic career. So, so you've given us a picture of primary middle school and high school.
[00:09:59] Leyla Gulen: But what [00:10:00] about higher education
[00:10:01] Katie Ratlief: in Arizona? Higher education certainly has a role in economic development. It can be a real economic engine for the state. But the first thing we need to focus on is ensuring that students graduate high school and that they're ready to perform at the college level. And that's where I think the state still has a lot of growth opportunity.
[00:10:24] Katie Ratlief: I do think that our public universities And our community colleges and Grand Canyon have done a better job than most states. In the last several years of working with employers to develop programs that are going to ensure students who participate in those programs have a job in our career ready on the other end.
[00:10:47] Katie Ratlief: That's something that we've looked at and would like to see more of that sort of collaboration between employers and universities and higher education. It's [00:11:00] better for students. It's better for the universities. It avoids a lot of this stuff that you've mentioned, because students are focused on a career, they have a path, and they have a purpose.
[00:11:12] Leyla Gulen: And discovering themselves, too, in the process.
[00:11:14] Katie Ratlief: Exactly. Exactly.
[00:11:17] Leyla Gulen: Before we get into public safety, health care Infrastructure, housing, all those good things. Glenn, I did want to ask you, going back to the compiling of all this research, because it's a lot. It's a lot of information that you've boiled down into some pretty easy to understand terms.
[00:11:35] Leyla Gulen: So where do you get your information, first of all?
[00:11:38] Glenn Farley: Yeah, just like Katie said, there's sort of three criteria that we were looking for when deciding what specific data points to include in each of the policy areas to construct the performance rating. And the first is it has to be objective, right? We didn't want subjectivity, sort of analyst discretion affecting the ratings in each of the policy areas.
[00:11:57] Glenn Farley: So, so all the data included, we've [00:12:00] disclosed and it's all objective. It's available. It's impersonal. Such as it has to be consistent and robust across time. This was so that we could compare the states to themselves over time. So, for example, we can talk about the change in Arizona's performance between 2011 and 2023.
[00:12:15] Glenn Farley: Even though this is the first year of producing the index, we can do this because we've deliberately chosen data sources that are available consistently and robustly across time. And then the third criteria is it has to be comparable across states. So, any data source we've chosen, is available from all 50 U.
[00:12:31] Glenn Farley: S. states and the District of Columbia as well. And so this leads to the answer to your final question, which is, what is the source? There's really only one possible source and that's federal statistical data. Most of it comes from there. And the vast majority of that federal statistical data is census data.
[00:12:47] Leyla Gulen: Great. So let's dive into public safety. Where does Arizona rank on that scale? Public
[00:12:53] Glenn Farley: safety is one of the areas that, uh, Arizona ranks poorly, and we score one out of five. And to give a [00:13:00] little context, uh, that I'm not sure we've shared yet for your listeners, the index ratings one through five are themselves objective.
[00:13:08] Glenn Farley: They basically tell you which quintile the state falls in. So, so a score of one out of five implies that a given state, Arizona, in the case of public safety, is in the bottom 20 percent of all U. S. states. A score of five out of five would imply that the state is in the top. 20 percent of all U. S. states for that particular metric.
[00:13:25] Glenn Farley: So in the case of public safety, Arizona scores a one out of five. That means that we score relatively poorly compared to other U. S. states by this metric. And the primary things that are driving this are the fentanyl crisis, the homelessness crisis, and the southern border crisis. And it's no coincidence that Arizona's position as a border state has led to that relatively poor showing.
[00:13:47] Glenn Farley: It's also no coincidence that the ongoing struggles of the border patrol and the national government to get control over that southern border lead to the continuing negative outlook.
[00:13:58] Leyla Gulen: And how do you reverse [00:14:00] that? So, so you've seen these numbers, I imagine it's been going down. So, so was it ever at a five and have you been seeing it steadily go down to a one?
[00:14:09] Glenn Farley: A good question. I think the answer is no, it was never at a five, though. We've certainly seen recent performance in this metric decline. How do you reverse? It is an excellent question. I think policymakers first became aware of the fentanyl crisis years ago in 2016, At the time, interest and focus was really on opioid abuse, prescription opioid abuse, specifically, and policymakers responded to that sensibly by trying to curtail the reckless prescribing of opioids in sort of the world called the legal gray market.
[00:14:42] Glenn Farley: That was largely successful. We see that today opioid abuse is much reduced. That tells us Policy can work in addressing the fentanyl and drug crisis. I think it has downstream benefits to both homelessness and the crime crisis that's facing the state nationally. But the unexpected consequences, it really shifted a lot of demand [00:15:00] for opioids and fentanyl away from the prescription drug market and into the illegal street drug market that then became satisfied by imports across our southern border from Mexico.
[00:15:10] Glenn Farley: So I think The solution here has to be a refocus of policy efforts away from prescription opioids. That crisis is much better today than it was five years ago. And back towards sort of a law enforcement focus on the sale and abuse of street drugs and the interdiction of the flow of those street drugs across the southern border.
[00:15:31] Glenn Farley: That alone would probably help. Solve the drug crisis, which in turn would probably help address the crime and homelessness crisis.
[00:15:39] Leyla Gulen: I want to give you an opportunity, uh, Katie, to add to that and also to talk about what else ranked one on the scale, which was housing.
[00:15:49] Katie Ratlief: Well, yeah, Leila, I just wanted to add to Glenn's comment and a little bit on the housing issue as well.
[00:15:55] Katie Ratlief: We were evaluating the state on the current policy [00:16:00] conditions, as we've said, and some of these, the outlook is negative because, as Glenn mentioned, some of it is outside of our control. What the federal government does or doesn't do at the southern border is not totally within the state's control.
[00:16:12] Katie Ratlief: However, when we released the free enterprise report, we did it at our free enterprise summit where we had the opportunity to recognize and acknowledge some leaders, bipartisan leaders who are working with individuals on both sides of the aisle to try and solve some of these problems. So we gave our visionary for the future awards to Maricopa County attorney, Rachel Mitchell.
[00:16:36] Katie Ratlief: and Phoenix City Councilman Kevin Robinson, because they're both focused on housing, homelessness, the fentanyl issue. And they're working in a nonpartisan way, really, to bring community leaders, public safety, city leaders to the table to solve some of these issues. So while we may rank low and we may have a negative outlook [00:17:00] in our report, We are optimistic that the state has leaders in place, and we were honored to be able to recognize them who, who are working to solve this, and we hope to see some of their ideas and their work reflected in future reports.
[00:17:17] Katie Ratlief: And
[00:17:17] Leyla Gulen: Glenn, did you have anything to add on the housing situation?
[00:17:21] Glenn Farley: No, you alluded to this already, which is that housing is the other area we rank one out of five, and I don't think this will be terribly surprising to, to many folks here who have been paying attention to the state of the housing market in this state, particularly over the past couple of years, but what's interesting to me about it, so let's first establish why we rank so poorly for housing.
[00:17:40] Glenn Farley: affordability, For home buyers and home affordability in Arizona today is worse than it's ever been worse Even than it was in the run up prior to the Great Recession's combination the two factors rapid price appreciation and then more recently the rapid Interest rate increases, but what's interesting to me about this is we're [00:18:00] sort of victims of our own success here What what happened from and after 2020 that grow that rapid price appreciation was rapid in migration We saw a hundred thousand people Move to Arizona during 2020.
[00:18:13] Glenn Farley: The average between the period of roughly 2008 and 2020 is about 50, 000 years. So the rate of immigration more or less doubled virtually overnight. The home construction market simply couldn't keep pace with that. Demand exceeded supply. Prices increased as a result. And that immigration has remained elevated.
[00:18:31] Glenn Farley: It's cooled off of those 100, 000 levels. But remained well above that 50, 000 average over the two years since 2020. So we're continuing to attract a large number of movers, particularly from neighboring California. Those movers come in, demand housing and bid up the price of those houses. What's happened since is the interest rates have increased rapidly.
[00:18:50] Glenn Farley: That's cooled a lot of that demand. There are far fewer folks interested in buying homes today than there were 18 months ago. At the same time, though, there are far fewer [00:19:00] folks interested in selling homes. today than there were 18 months ago. So the whole market has cooled off, but prices are neither rising nor falling.
[00:19:08] Glenn Farley: They're sort of sitting at these elevated levels. Kind of interesting.
[00:19:11] Leyla Gulen: Sure. Yeah, absolutely. And as far as healthcare goes, it didn't rank one, but it only ranked two on the scale. So as far as healthcare is concerned, access to healthcare costs, what contributed to such a low rating on that front?
[00:19:25] Katie Ratlief: One of the things that we looked at and where the state has invested a lot of dollars Recently is what is our health care workforce look like?
[00:19:35] Katie Ratlief: Do we have enough doctors and health care providers to meet the demand? Another thing we looked at is who is providing health care coverage for Arizonans are most people on private insurance are most people on Medicare Medicaid that can contribute to the overall financial health of the health care system because Some [00:20:00] systems have much lower reimbursement rates than others, and so the ability of hospitals to expand and provide services and doctors to open up new practices and to serve patients can rely a lot on what patients health care coverage looks like, and so do we have the right kind of payer mix to contribute to a healthy and robust health care economy, and those are some of the reasons that you see Arizona ranks low.
[00:20:26] Katie Ratlief: We don't have enough Health care providers per capita. Although, as I mentioned, there have been significant investments made recently to try and improve that and our payer mix. We have a low rate of private insurance in the state as well. I miss anything. Glenn.
[00:20:44] Glenn Farley: No, that's perfect. And to expand on that, why we have the positive outlook.
[00:20:48] Glenn Farley: He alluded to the relatively low rate of private insurance participation in Arizona. A lot of that was driven by a pandemic. You're a policy public health. Uh, that prohibited the state from removing [00:21:00] folks from the state's Medicaid program. That policy has since expired. And so I think you're going to see over the next couple of years, not just in Arizona, but nationally, but particularly in Arizona and states like it with a large Medicaid population, a sort of rebalancing of the healthcare insurance market, at least with folks coming off of public insurance and returning to the private insurance market.
[00:21:22] Glenn Farley: And that drives that positive outlook.
[00:21:24] Leyla Gulen: What am I, interesting, where you did rank a bit higher on that scale was infrastructure. So infrastructure has certainly been, I think, Arizona sort of led the charge and really invested a lot of money in providing decent infrastructure, whether it's roads or, Internet or things like that.
[00:21:43] Leyla Gulen: So, so would you say that those investments is what's now paying off and especially with the population boom that Arizona has been experiencing the last several years that has shown to be something that really gained traction and you can hang your hat on that.
[00:21:58] Glenn Farley: Just say, I think that's a fair [00:22:00] point. I agree with that.
[00:22:01] Glenn Farley: But I also think, um, what really is worth mentioning in the context of Arizona's infrastructure in particular is we're a young state. We benefit from the fact that our infrastructure, as well as young, the roads, the bridges, the utility systems compared to. Some of the New England states, for example, is all relatively, um, built to relatively modern standards and specifications.
[00:22:23] Glenn Farley: And we really benefit from that. We also benefit, of course, from the fact that rapid economic growth we talked about at the beginning has allowed for the investments that you just talked about, new roads, new bridges, new telecommunication systems, things like that, which contribute to that positive outlook going forward.
[00:22:39] Glenn Farley: But Just to introduce a little bit of tepidness, while we rank well on the Outlook is Positive, particularly because there's significant federal resources newly injected into those, into this space, those federal resources in particular come with a lot of strings. And we talk about this in the narrative particular, but, but it remains to be seen how those strings might impact the state's ability [00:23:00] to efficiently employ those resources.
[00:23:02] Leyla Gulen: Okay. Katie, did you have
[00:23:03] Katie Ratlief: something to add to that? The only thing I wanted to add is to Glenn's point, we are a relatively young state and so our infrastructure is fairly young as well. But I think this is one where policymakers over the years have stayed really focused on it. When we didn't have to invest in infrastructure, they could have taken a pass and said, Oh, we're a young state.
[00:23:23] Katie Ratlief: Our highway systems are in pretty good shape. We don't need to continue to maintain and invest and expand. And look to the future they did anyways, and we're benefiting from those decisions today. But those
[00:23:36] Leyla Gulen: construction contracts, those aren't cheap. That's a lot of money. So, and coming from California, it seemed like there's construction all the time.
[00:23:45] Leyla Gulen: But when you're unnecessarily doing road improvements or expansions or things like that, does it ever kind of come down to some people viewing that as just a waste
[00:23:55] Katie Ratlief: of money? I don't think they've ever done it unnecessarily. I think [00:24:00] they have, there have been a lot of decisions that were incredibly forward looking to plan for those projects so that the state was ready to go when they were
[00:24:09] Leyla Gulen: needed.
[00:24:10] Leyla Gulen: I want to get to this. There was a page titled Issues to Watch with the population boom that we were talking about. Renewable energy is a major concern and states like California, New Jersey, Massachusetts, I think maybe six others. Setting deadlines to ban gas cars, for instance. Where is Arizona headed and what impact would similar policies have on the Grand Canyon State?
[00:24:35] Leyla Gulen: Katie, I'll send this one over
[00:24:36] Katie Ratlief: to you first. Yeah, so in Arizona, we don't have any statutory mandates similar to what California has. In fact, we've done the opposite here. We've banned, in some cases, cities from implementing gas bans, especially natural gas bans. So I think we're in a much better and much more competitive [00:25:00] energy position.
[00:25:01] Katie Ratlief: We, the state ranks fairly high in our free enterprise report for Our energy outlook, and that's because we have more reliability of our grid and affordability than states like California, because we've kind of let the market and market demands reflect what our energy portfolio looks like, not sort of unnecessary statutory or other mandates.
[00:25:25] Katie Ratlief: How about for you, Glenn?
[00:25:27] Glenn Farley: Yeah, I agree with everything Katie said. And, and just to add to that, the state also benefits from the presence of Palo Verde Nuclear Generating Station as the largest nuclear plant in the country. It just had its operating license extended. No one can remember it here for 20 additional years.
[00:25:43] Glenn Farley: That provides significant Cheap base load power that most other states do not benefit from, and that will help support the grid during the transition that you alluded to going forward. Because even though, as Katie said, Arizona lacks some of the mandates that California, for [00:26:00] example, has. Arizona is still a participant in the national energy market, and there's tremendous incentive from federal regulators.
[00:26:06] Glenn Farley: Federal subsidies and national groups to conduct this transition. So with or without the mandates, I think Arizona is going to adopt these wind and solar technologies going forward. The question is, can we do it in a way that's responsible, maintains grid affordability and grid reliability? And I think Palo Verde Nuclear Generating Station, our large natural gas base will help
[00:26:26] Katie Ratlief: support that.
[00:26:27] Leyla Gulen: And was there anything else that you found in that report that was just of a concern to you or you just want to make sure that our listeners know about it that we haven't talked about already? Just to keep an eye on it as voters, as heading into a new year, as heading into an election year.
[00:26:45] Katie Ratlief: I think the main thing we're going to be focused on is just keeping an eye on the state budget and state finances and ensuring, as Glenn said, that we maintain that fiscal discipline and that all of these other components and [00:27:00] maintaining competitiveness in them will contribute to whether or not Arizona continues to grow.
[00:27:05] Katie Ratlief: I would encourage your listeners to check out another report. That we released earlier this year called the job killers report that we did in partnership with the Arizona Chamber Foundation which looked at our neighboring state of Colorado Colorado coming out of the Great Recession Grew much faster than Arizona They recovered much faster than we did but then because of policy decisions that they made They have slowed that growth down and now Arizona is growing faster than Colorado.
[00:27:38] Katie Ratlief: We've completely reversed those trends. So, I would encourage listeners to, to recognize that the reason Arizona's free enterprise system is strong, the reason that we have seen economic growth over the last 10 years that we have, is because policy matters. Policy decisions that are made have a direct impact on the conditions that can either create growth [00:28:00] or discourage growth.
[00:28:01] Katie Ratlief: We've benefited from a really positive policy environment. You see that in the free enterprise report that a number of these indicators of the health of our free enterprise system are in a good place or have a positive outlook. But as we've learned from Colorado and we're trying to, to learn from their mistakes, those policy conditions can change and they can have a very direct and significant impact on the growth of a state going forward.
[00:28:30] Katie Ratlief: And so that's kind of what we'll be keeping an eye on is sort of which direction will the state go? Will we continue down a path of growth, expansion opportunity, or will we make different decisions that will start to slow that
[00:28:44] Glenn Farley: just to expand on that? I completely agree with everything Katie said, but your listeners.
[00:28:49] Glenn Farley: are likely to hear a lot about the state's cash shortfall and they're going to hear a lot of blame cast on various sources for that shortfall, be it tax cuts or the empowerment scholarship [00:29:00] accounts or something else. A little context that I think folks should keep in mind as they hear about that is how rapidly the state budget has grown in recent years.
[00:29:09] Glenn Farley: A decade ago, State budget was half the size it is today. So, so your state of Arizona is spending twice as much today as it was 10 years ago. Education, K 12 public education spending alone has increased about 50 percent in about five years. So we've seen very rapid growth across the board in state expenditures.
[00:29:27] Glenn Farley: This dwarfs any of the spending on either tax cuts or the ESAs. So I would ask that folks, policymakers, the public, et cetera, consider the context of this deficit against that larger picture of the total increase in change. And then ask what the correct path going forward is to Katie's point.
[00:29:46] Leyla Gulen: And Katie, what was the name of that report that you mentioned?
[00:29:49] Katie Ratlief: It's called the Job Killers Report. We analyzed several bills that were adopted in Colorado that have been introduced in Arizona but never heard here and the impact that those could have in [00:30:00] Arizona if we were to follow Colorado's path. Okay, great. And where can people
[00:30:03] Leyla Gulen: find those
[00:30:04] Katie Ratlief: reports? They can find that report, the Free Enterprise Report, and all of our research on our website, commonsenseinstituteaz.
[00:30:12] Leyla Gulen: org. Great. And as we close out this year, what are we looking forward to in 2024, Katie?
[00:30:18] Katie Ratlief: I am, I'm looking forward to seeing how policymakers address, as Glenn said, this, this cash shortfall and sort of readjust their budget expectations, because I do think the state has. Such a positive economic outlook. I think we still have so much opportunity here.
[00:30:38] Katie Ratlief: You're seeing continued big jobs announcements. There was just a huge announcement yesterday. The semiconductor industry continues to grow here. And so I think we have nothing but positive economic opportunity ahead if we choose to continue down that path. So I'm looking forward to seeing how policymakers kind of embrace this challenge, um, and the other challenges that we've laid [00:31:00] out in our report.
[00:31:00] Katie Ratlief: What do they do about housing? How do they address homelessness? To ensure that Arizona remains the best state to live, work, and raise a family in what
[00:31:10] Glenn Farley: I'm looking forward to seeing what the sort of ongoing renaissance in k 12 education Not just in Arizona, but really nationwide since 2020 means for kids growing up and sort of future cohorts were in the second We're third year basically of a massive shift in how, and you alluded to Layla, some of why this is happening, I think, but a massive shift in how folks educate at the K 12 level, you alluded to it asking when will there be implications at the higher education level, and I think the answer is About five years, right?
[00:31:43] Glenn Farley: Because these K 12 kids need to grow through the system. But I think there are permanent changes in how folks are going to choose to get their education in the future and those permanent changes are gonna have interesting implications. I think positive implications, but interesting implications going forward and I can't wait to [00:32:00] see what.
[00:32:01] Leyla Gulen: Katie Ratliff, Executive Director for the Common Sense Institute, Arizona, and Glenn Farley, the Institute's Director of Policy and Research. I want to thank you both for joining
[00:32:09] Katie Ratlief: us. Thank you so much, Layla.
[00:32:19]
m:12pt;">
Alerts Sign-up