December 18, 2003

And it was $28 million. Up $28 million. And that was the first ray of sunshine that we've had. In fact I thought it was Christmas.

Reporters (in order of appearance):

KEN VERDOIA, KUED Channel 7
RICH PIATT, KSL-TV Channel 5
TOM JORDAN, Metro Networks
LEE AUSTIN, Utah Public Radio
KIRSTEN STEWART, Salt Lake Tribune
JERRY SPANGLER, Deseret News

Transcript:

KEN VERDOIA, KUED: Governor Walker, thanks for joining us today. You presented your budget recommendations for the upcoming legislative session, you've put a clear emphasis on public education, and in some corners those have received a pretty chilly response. Yesterday the executive appropriations committee of the recommend of the Utah state legislature says you may be overestimating the amount of money that's available, perhaps by some $20 million. Perhaps, by extension, your public education initiative won't get the money you desire. How do you respond?

GOVERNOR WALKER: I would say simply, we went to the midlevel of the revenue projections. We thought that was a very fair place to be, because traditionally when a recession comes we underestimate revenues going down, and likewise, when we come out of recession we tend to underestimate coming out. So we thought it was a very conservative estimate of $104 million, we went to the midrange, and quite frankly, I hope that the legislature has the luxury of seeing even higher revenue projections. Certainly by, toward the end of February we'll have a clear picture of whether they will continue to increase, or where we are.

You know, we got the TC-23 report, which is the report coming out of the tax commission, and for the first time we saw significant increases. Ironically, that was, it came out the same day the budget came out. And it was $28 million. Up $28 million. And that was the first ray of sunshine that we've had. In fact I thought it was Christmas. But that $23 million is a good indicator, if it holds up the next two or three months, I think that's a very strong positive. Quite frankly, I felt I was very conservative in going to midrange, but because of the history I was comfortable with it. My hope is at the time the legislators are finalizing their budget that they will even see better revenue projections.

RICH PIATT, KSL-TV Channel 5: Governor, another major portion of your budget is recapturing portions of the sales tax that go to subsidize water and B and C roads, something rural districts and counties, especially, depend on. Legislators have already indicated they're not going to go for that. Does that, is that a significant blow, and is the alternative raising taxes?

GOVERNOR WALKER: Quite frankly, it isn't a blow. I was in the legislature, I know what's happened. Happening. They have a different perspective, they need to look at it. You know, if they were to totally accept my budget, they could pass it in three days and go home. And that's never going to happen. So every governor's budget is scrutinized, and it should be. I want them to look at it. I want them to analyze it, and if they can find better revenue resources, I say, congratulations.

We looked at areas, not only because we needed revenues, but we looked at areas that they need to seriously consider in terms of the future of Utah. For example, the B and C roads. It's a question, in the good times when we have lots of money, we tend to say, "Okay, we'll share that," with, quite frankly, a form of vertical revenue sharing, and say, "Okay, we'll help the cities and counties." But when you look at the next ten years in Utah, and realize what is happening in education, what is happening in terms of the needs of, not only roads, but other transportation, commuter rail, light rail, we've got to make some serious decisions how we're going to fund them.

And on the B and C roads is a perfect example of saying, "Can the state adequately fund its obligation? Or can we continue to share money with other entities?" And perhaps we ought to look at the tax structure to make certain that they can fund their responsibilities, and the state fund their obligations.

In water, we've had a drought for the last five years. But that isn't talking about the drought. We're not talking about irrigation water or agricultural water, we can do great things with conserving water. But those are not the issues.

Over the years we have built up a fund of $700 million to fund, the purpose originally was to fund small rural municipalities that couldn't get loans elsewhere. And likewise, small, rural water districts that couldn't get funds elsewhere. But because the money's been there, we've had a lot of larger municipalities, larger water service districts, borrow money at very low rates.

The $700 million rotating loan fund is more than adequate to meet the purposes it was originally designated for. A year ago we even suggested taking money out of that fund. I'm not doing that. I'm just saying, let's not put additional money in when we have crisis elsewhere. And quite frankly, some of those municipalities, the larger urban municipalities, or larger water districts, should go elsewhere for funding. They are perfectly capable of doing that. So philosophically, I'm saying those that it was set up to fund, there is adequate funding to continue that purpose.

TOM JORDAN, Metro Networks: The point is, you're going to fight for education wherever the money comes from.

GOVERNOR WALKER: That's right. There are three things in my budget that I feel very, very strongly. One is funding education. I can't even use the word "adequate," because as long as we're $240 below Mississippi in per-student expenditure, the money that I'm putting in won't change that. But I'm saying it's time that we look at education.

In the next ten years we're going to, it's predicted we'll have 145,000 new students. That's twice the city of Ogden. In the last ten years we've only had 17,000. That's eight times more in the next ten years. And it's because of the baby bubble, baby boom bubble that started back in the late '40's and early '50's. The ripple effect. That's a serious, serious concern, and we've got to start and look at it.

And so I'm focusing in to continue competency-based education on the early grades, K through 3, and doing something that I believe we can accomplish. Make certain every child reads by the end of the third grade.

This is totally re-looking at performance plus. Because as it was originally formulated, it focused on high school, and over many subjects. But I went to those five summit education meetings. I missed one, went to the other four, stayed to the end of the meetings and heard people say, "We need to start at the lower grades. We need to focus in on something that's doable. Much smaller." And we're not going to get nearly $400 million. Let's do something that's reasonable to fund. I think that's what I've put in the budget. And it's a very, very high priority as far as I'm concerned.

Not only funding the mission that focuses on the early grades, reading, but also we've gone two years without any increase in state, for state employees, for public employees, for public education employees, for higher education. And it's time that we give them at least a two percent salary increase. So that's my second priority. And I hope it stands. Because we are losing people to counties, to cities, in high-tech, in law enforcement, in many other areas. So it's important that we look at that.

Quite frankly, if you look at the past eight years, some of them good years, some of them lean years, quite frankly, you look at salaries in the four major counties along the Wasatch Front, their salaries have increased 35 to 48 percent, while state salaries have increased 22 percent. That's a very high priority.

And finally, I don't know whether many people have focused on the fact that I actually took money out of the bonding on highways, because I was so critically concerned about keeping our AAA rating. It's a very conservative move to say, it's critical that we can keep that AAA rating.

So those three things are my priorities. I will work very hard to see that they're in the final budget. How they fund it is up to them. If they can come up with a better solution, a better idea, I say fine. I will listen.

KEN VERDOIA, KUED: Governor Walker, we now turn our attention to Logan, Utah, where we have a reporter standing by at our microwave location. It is in fact Lee Austin of Utah Public Radio.

GOVERNOR WALKER: Hello, Lee.

LEE AUSTIN, UTAH PUBLIC RADIO: Thank you. Hi, it's a pleasure to see you.

GOVERNOR WALKER: Thank you.

LEE AUSTIN, UTAH PUBLIC RADIO: Let me just return to the use of the highway funds, the $65 million. Some legislators have been quoted as saying that money is needed in part to pay off bonds on highways that are already built, and that if you use that stream of revenue you virtually guarantee a gas tax increase, if not now, in the very near future.

GOVERNOR WALKER: Quite frankly, I can guarantee you we can meet the bonding obligations to the year 2007. And even then I can guarantee you that we will find ways to meet that debt service on bonds. That's a given. Quite frankly, those that say, "oh, if you take this $65 million of general fund money out, you will cause that crisis."

Quite frankly, if you look at the Centennial Highway fund, we've got to find other ways to fund it anyway. Take I-80, for example. Part of that was to put $40 million in over two years, $20 million a year to fund it from I-15 to the mouth of Parley's Canyon. Even back in 1996 it was $200 million projected. I don't know what it is today, but certainly that $40 million was, I was going to say a drop in a bucket. $40 million can never be a drop in a bucket, but they were going to have to make adjustments anyway to accommodate that one change.

Certainly there have been many other changes in the Centennial Highway Fund. It was a plan, it wasn't set in concrete. There were areas in it from the beginning that legislators and our office knew that we'd have to make adjustments. And those adjustments will need to be made.

There's four ways to accommodate that in '07. If the revenues are so great, that's the easy way. Secondly, they may have to again look at deferring some of the projects for a year or two. Finally, if - -they'll have to maybe look at revenue enhancement, and in this case it may even be at some point increasing the gasoline tax. But that's clear down in '07 and '08, and they may have to do that anyway. Quite frankly, the original plan called, that was formulated, called for a 4.5 tax increase back in '96, and a 3-cent gas increase in 2000. Of course that didn't happen in 2000.

So every budget you've got to look at in terms of revenues. I had to look at it in '05, they'll have to look at it for '06 and '07, and you've got to meet what needs to be done at that time. But I can guarantee you, money will be there to pay the debt service on the bonds.

KIRSTEN STEWART, Salt Lake Tribune: Governor, you said you're a champion of education. You said that they're facing a funding crisis but nevertheless they've done a lot with very little money. You've also said that there are some problems with No Child Left Behind. I'm wondering though if you're at all concerned about the fact that were it not for some statistical safety nets, hundreds more, in addition to the 244 that fell short of federal performance standards, hundreds more schools would have fallen short?

GOVERNOR WALKER: There are some parts of No Child Left Behind that many Utah schools will never be able to meet. And I met with associate deputy of education just this past, this week, and he said, "We realize that, and we're working on making adjustments."

The easiest one to describe is the fact that it says in high school every teacher has to teach in their major. And the best example, again, is the physics teacher who in Tabiona or Altamont, or I could go on and on, maybe teaches one or two classes of physics, they also have to teach chemistry, they also have to teach general science, maybe geography, and everybody also has to teach one PE class.

So there's a problem there. But they recognize it in Washington, and they need to make some adjustments. I could go through the full list of areas that they recognize that they've got to make some adjustments. But the concept is still right. It's what we're doing in reading, saying that it's critical for every child to read. And they're saying, no child left behind. It's sort of the same concept.

I think their plan has got to be adjusted, because their plan fits far better in an equally, a state that's equally populated, like Ohio or in Indiana. It wasn't built for Utah and Idaho et cetera, but they recognize that, at least according to the deputy secretary, and they said that they were willing to make adjustments, and were looking at doing so.

KEN VERDOIA, KUED: A number of schools that received, not passing, I don't want to use the word "failing" because that's not really the standard they employ, but a number of schools that had difficulties in achieving the levels were school that is had numbers of students with severe disabilities.

GOVERNOR WALKER: Right.

KEN VERDOIA, KUED: And questions have been raised even by the parents of those students saying, "Is it appropriate for my twelve-year-old child who reads at a three-year-old level to be tested as a twelve-year-old child?

GOVERNOR WALKER: And I think that that's one of the issues they've got make a determination. Quite frankly, we had to make a determination on setting the goal that every child could read. We really weighed it, because it may have been more realistic to say 90 percent of every student. But I didn't want to be the one that determined which students we would not focus on to make certain they could read.

I'd much rather have the goal that every child can read, even though I know there's some children with unique problems in special education that will not reach that goal. But I don't want teachers very early making a determination, "Well this child is one that will never meet the goal so let's not try." And so I don't know what the federal government's thinking was on No Child Left Behind, but my concept in saying that every child will read by the end of third grade, is that every child deserves the opportunity to be given a chance. And at least have special attention where special needs are, to make them as self-sufficient and self-reliant--and it's very difficult to reach those two things if you don't read--as possible. So I don't want teachers to give up on anyone. But I also realize that the 100 percent goal may be a little unrealistic.

DAN BAMMES, KUER: Governor, a political question, if I might.

GOVERNOR WALKER: Yes.

DAN BAMMES, KUER: This past week Marty Stevens has announced his intention to run for governor, entering a really crowded Republican field. Do you see, over the next year, this group of Republicans as they try to distance themselves from each other, all running against the incumbent, whether you choose to run yourself or not?

GOVERNOR WALKER: They may. Right now I must tell you, I am enjoying the luxury of looking at the state and the citizens and saying, "What can I do in this relatively short period of time that's best for the state of Utah and the citizens?" Once I start thinking about the political aspects, I have to look at them differently.

A month ago somebody asked me a tax question, and I happened to mention that the whole system needed to be reformed, but politically it wasn't smart to do. As I got into the budget, more and more I realized it's got to be done sometime. And I'm in a great position to do it. If I had announced that I was running for office, I'm not certain I would have said that was smart to do, because it wouldn't have been. But having the freedom to say, "What needs to be done for the state of Utah?" and working to get it done is a luxury that I am enjoying.

I know once the political fray is tough, it's hard fought, it takes a lot of time, concentration, and we've got a lot of great candidates. But I also know it's a time of a lot of pressure in terms of the, what you can do in terms of that campaign time.

So I'm going to put off a decision as long as I can. I'll make that announcement right now. I don't know whether they'll be running against the incumbent. They've got a very strong candidate on the Democrat side, and I don't foresee anyone else jumping in the arena. So as usual, it'll be a hot and heavy primary campaign and convention campaign on the Republican side among some great candidates that I really think their focus will be on the Democratic candidate, because it's a known, rather than on my being an incumbent.

REPORTER: Governor, regarding the budget, again, low-income citizens of the state are concerned that, and with regards to Medicaid, that vision and dental benefits are not being restored in your next budget, but you point out that you worked hard not to cut Medicaid further.

GOVERNOR WALKER: Right.

RICH PIATT, KSL-TV Channel 5: Should these people be thankful that their benefits are not being cut, or do they have a right to ask the restoration of the vision and dental benefits?

GOVERNOR WALKER: Both. I think that we worked very hard not to cut benefits. It's a growing concern. Every year we're amazed at the growth in Medicaid. It would be nice to restore those optional benefits. But there are optional benefits that we didn't cut, and I'm just delighted that we had the money, that we didn't have to cut any additional services.

I'm particularly concerned about dental. And I will say to the legislature, if you can find the revenues, if the projections when you work on it or finalize the budget or such, you need to talk about that.

But there are many other issues that are also there, but we simply didn't have the money to do it. Quite frankly, we worked with nursing homes to get additional provider money without any additional cost to the patient. That's because of the mix of federal and state money. We did offer the same opportunity to the hospitals. They chose not to take it. But if the legislature would continue to work with them, that may free up a little additional money in Medicaid.

But again, I'm suggesting an opportunity for the legislature, and it's- - I'm not dictating that that's the direction they should go. But I've been there in the process. I think that they need to look at every option. And again, if they can find a better solution, I will work with them.

JERRY SPANGLER, Deseret News: Governor, how do you respond to local communities, cities and counties who say that your budget is a pass-through tax on them, that their budgets are also in dire straits, and now you said they have to pick up the cost of firefighter retirement, of water and roads?

GOVERNOR WALKER: I- - True, I was looking for revenues, but I also looked at areas that we needed to have serious talks about. On the firefighters, I realize that there are many volunteer firefighters, that maybe we should pick up at the state. Quite frankly, there's 1,538 firefighters in the retirement system. One is on the state- - is a state employee. Twelve are with the Utah National Guard. I think we should fund their retirement. Again, it's a question of maybe, in times of critical needs, that it's time that we look what we're doing. Is it the state's responsibility to pick up the retirement for the county and municipal employees that's on their rolls in terms of retirement?

Now, I want to assure every firefighter out there, this has nothing to do with whether you get retirement. You will get your retirement, period. It is just the question of who funds retirement for those firefighters. Since they are county and local government employees, doesn't it make sense that they fund it? We've got to find some solutions, Jerry, in that area.

I know there are many counties that are really hurting. There are many cities that are really hurting. I purposely put some of these things on to open up the discussion, to say with the future obligations the state has in terms of education and transportation. Because I mentioned I-80. We've got to talk about I-15 through Utah County, that isn't on any Centennial Highway fund. We've got major obligations. And isn't it time that we seriously look at such questions?

KEN VERDOIA, KUED: Governor Walker, on that note we must acknowledge that we've run out of time for this edition of the monthly news conference. We want to extend to you the happiest of holiday seasons, and to you, as well, a reminder that the news conference is available on line in transcript form at www.uen.org courtesy of the Utah Education Network. Until the new year, we'll see you again. Good night, thank you for joining us.

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