Bank economists expect ‘breakout year’ of growth

Arizona Republic 01/17/2014, Page B06

By Russ Wiles

A panel of 13 bank economists predict 2014 will be a “breakout year” with slightly higher growth as private-sector demand accelerates and Washington’s fiscal drag eases.

The American Bankers Association committee forecasts the nation’s gross domestic product will expand 3 percent above inflation in 2014, which would exceed the post-recession annual high of 2.8 percent in 2010. By the fourth quarter, growth will be around 3.1 percent, they say.

“This will be the strongest economic growth since the expansion began in 2009, and the committee’s strongest forecast since 2005,” said Christopher Low, chairman of the Economic Advisory Committee and chief economist at FTN Financial, in a statement. “We expect faster growth in business investment and stronger job creation as the economy improves.”

Slightly rising interest rates will help savers but work against borrowers. Conventional 30-year mortgages are expected to carry average interest rates of 5 percent by the end of the year, up from 4.5 percent in late 2013. Yields on 10-year Treasury notes will climb to 3.4percent from around 2.9 percent over the year.

Economists predict the housing market will continue to grow and wages will increase as the unemployment rate falls to a projected 6.4 percent by the end of the year. The committee forecasts that home prices nationwide will rise solidly, with the strengthened housing sector supporting consumer spending on appliances, furniture, electronic equipment and building materials.

Consumers find themselves on a stronger financial footing and have regained confidence.

That also should support automobile sales, economists say.

“Household balance sheets are healthier than they have been in years,” Low said. “The consumer is the key; if people loosen up their wallets and pocketbooks, economic growth will be even stronger.”

The committee also sees business spending and exports gaining in 2014, and it forecasts a federal deficit of $560 billion in fiscal 2014, down from $680 billion in 2013, thanks in part to higher tax receipts.

Job growth is expected to grow from below 180,000 payroll positions a month in 2013 to above 200,000 monthly in 2014, helping to push the unemployment rate down to 6.4 percent by the fourth quarter.

The American Bankers Association previously reported that consumer-loan delinquencies have dropped sharply, and that trend is expected to continue, while lending to consumers and business will rise moderately. Consumer-loan delinquencies are expected to average 2.2 percent both years.

Reach the reporter at russ.wiles@arizonarepublic.com or 602-4448616.

Posted in Economy, Public Policy | Comments Off on Bank economists expect ‘breakout year’ of growth

New agency to get Cabinet-level status; reaction is mixed

Arizona Republic – 01/14/2014 – By Mary Jo Pitzl

Gov. Jan Brewer punctuated her State of the State address Monday by announcing that she had abolished the problem-plagued Child Protective Services, rebranded it and would push for it to become a stand-alone office reporting directly to her.

The move got a mixed reaction from lawmakers. Although lawmakers and Capitol observers acknowledged something had to be done about an agency that has been swamped by complaints of child abuse and neglect — and that most recently shelved more than 6,500 such reports without any investigation — they said the move must be approached cautiously.

Brewer acknowledged the move alone won’t solve the problems at CPS, which is housed within the Department of Economic Security. But, she added, it’s a needed first step. She called on lawmakers to “statutorily establish a separate agency that focuses exclusively on the safety and well-being of children and helping families in distress without jeopardizing child safety.”

“It is evident that our childwelfare system is broken, impeded by years of structural and operational failures,” Brewer told lawmakers. “It breaks my heart and makes me angry!”

Her executive order makes the new Division of Child Safety and Family Services part of her Cabinet, effective immediately.

She named Charles Flanagan to lead the new division. Flanagan is on leave from his post as director of the Department of Juvenile Corrections while leading Brewer’s handpicked Child Advocate Response Examination Team, which is poring over 6,554 reports of abuse and neglect that were discovered 2 1⁄2 months ago.

Brewer’s order also moves the Office of Child Welfare Investigations, which discovered the uninvestigated reports, to the new Cabinet agency and makes it responsible for overseeing the CPS hotline. That office no longer reports to DES Director Clarence Carter, although it will take a state law to formally change the arrangement.

Carter remains head of the DES, a mega-agency that includes food-stamp administration, child-support enforcement and unemployment benefits.

Brewer wants lawmakers to build on her executive order and make the newly named Division of Child Safety and Family Services a stand-alone agency. It takes a state law to do that, a move many have discussed during the most recent CPS crisis. In addition to handling reports of child abuse and neglect, the division is responsible for foster care, adoption services and a medical and dental program.

Rep. Kate Brophy McGee, RPhoenix, has been working on a bill to detach CPS from the DES. The governor’s endorsement of such a plan gives it a boost, she said.

However welcome the attention on CPS, many at the Capitol said the governor needs to provide more details before they can gauge whether her announcement will bring meaningful change to child welfare.

“I don’t think anyone thinks pulling it out is a panacea,” said Sen. Nancy Barto, R-Phoenix, who chairs a legislative oversight committee on CPS. If all the Legislature does is unplug it from its parent agency and plug it into another office, nothing will change, she said.

Senate President Andy Biggs, R-Gilbert, echoed that sentiment. Biggs said the state first needs an outside party to do an objective analysis of CPS and help develop solutions to the agency’s problems.

That’s similar to what the Children’s Action Alliance has been calling for since the uninvestigated abuse and neglect reports were found in November.

Dana Wolfe Naimark, president and CEO of the alliance, said Brewer’s Monday move steps up the pace of revamping the state’s child-welfare system.

But more details are needed, Naimark added.

Some details may come Friday, when the governor is expected to reveal her budget for fiscal 2015. The CHILDS database, which child-welfare workers rely on to track cases, is aging and clunky, something Flanagan said has slowed work on the neglected reports.

Rep. Debbie McCune Davis, D-Phoenix, a CPS oversight committee member, said a key question is the cost to replace the database, if that is in the budget.

“The database they have is antiquated and useless,” she said.

McCune Davis said the creation of a stand-alone agency brings greater transparency and makes it harder for its operations to get lost among the other duties of a big agency, something Carter claimed was the case with the neglected files.

Rep. Eddie Farnsworth, RGilbert and a member of a task force that recommended CPS changes two years ago, said he wants any changes to include an examination of the child-welfare mission, one that he believes must focus on criminal cases of abuse and neglect.

Republic reporter Alia Beard Rau contributed to this article.

Posted in At the Capitol, CPS, Politics in the News, Public Policy, Rep. Kate Brophy McGee | Comments Off on New agency to get Cabinet-level status; reaction is mixed

Now, its up to the legislature

The Arizona Republic – 01/14/14 – Editorial

Gov. Jan Brewer’s State of the State announcement that she abolished Child Protective Services was a flashback to last year, when she went off script to call for Medicaid expansion.

This year’s surprise could result in real change to a troubled agency — or it could provide a dramatic distraction from the real problem.

If the governor shows the kind of energy and determination she used to win Medicaid expansion, she might achieve reform that helps Arizona’s most vulnerable children.

But there is one important difference. Medicaid expansion did not cost the state money. It brought federal funds to the state.

Arizona’s child-welfare system has been chronically underfunded; it needs a huge infusion of money. Brewer did not identify any new sources of revenue to address this.

Lawmakers — like everyone else in the state — have been moved by the serial horror stories coming out of CPS and appalled by the news of 6,500 uninvestigated reports.

If Brewer can show that a new agency promises better results, the Legislature might be willing to provide funding. Especially if Brewer, a Republican, is once again willing to rely on a coalition of Democrats and moderate Republicans.

The executive order Brewer used to abolish CPS and establish the Division of Child Safety & Family Services within the Department of Economic Security is a short-term fix.

She put Charles Flanagan in charge, a positive sign. Flanagan heads Brewer’s CARE Team, which is looking into the uninvestigated reports and preparing recommendations for revamping the child-welfare system. He was appointed by Brewer in 2011 to lead the Arizona Department of Juvenile Corrections. He shows insights into the need for more staffing and better technology in the child-welfare agency.

Brewer is asking lawmakers to create a permanent, separate agency to handle child welfare. This is a tough and time-consuming assignment for lawmakers who were hoping to get the session over quickly so they can focus on campaigning.

Hard tasks rarely present themselves at convenient times, and Brewer is inviting the Legislature to be part of a historic change. We hope the lawmakers recognize that.

In addition to the need for lawmakers to cough up adequate funding, this task will require deep thought about the right model. A well-functioning child-welfare agency needs to remove children who are not safe in their homes, but it also needs to recognize when parents need help to succeed.

In recent years, Arizona experienced the largest increase in the number of kids entering foster care of any state, and the vast majority of those cases involved neglect, not abuse, according to Casey Family Programs.

CPS suffered cuts in services to families during the recession. It lacks enough staff to properly monitor children. A new agency will not succeed if it faces similar challenges.

CPS is also steeped in a culture of secrecy. It covered up mistakes. A new agency needs to be transparent, something Brewer stressed in her speech and executive order.

Sweeping away the name “CPS” does not change those underlying problems. It does not clear up a 10,000case backlog. It does not provide permanence for more than 15,000 kids in foster care. It does not protect one vulnerable child.

Brewer’s dramatic announcement could provide a handy distraction from that hard reality. Or it could spur lawmakers to create a better agency. We will hope for the latter.

Posted in At the Capitol, CPS, Politics in the News, Public Policy, Rep. Kate Brophy McGee | Comments Off on Now, its up to the legislature

Brewer steps up for kids across Arizona

Arizona Republic – 01/14/2014 – By Laurie Roberts

Cue the hallelujah chorus and break out the hosannas. Gov. Jan Brewer hopped up there on a wrecking ball on Monday and did what so badly needed to be done for vulnerable children in this state.

Instead of reaching for the well-worn box of Band-Aids, she abolished the woeful Child Protective Services and replaced it with a new Cabinet- level division, one that now reports directly to her.

She also called on the Arizona Legislature to turn it into a new stand-alone agency that will deal with child-welfare issues.

“Enough with uninvestigated reports of abuse and neglect,” she said in her fifth and final State of the State address. “Enough with the lack of transparency. And ENOUGH with the EXCUSES.” 

Can I get an amen?

CPS has been a disaster for the two decades I’ve been following it. Band-Aid after Band-Aid has been applied, yet nothing ever seems to change.

Good money has been poured in (before being siphoned right back out), with no improvement.

Now comes a governor faced with 6,554 reports of abuse and neglect that the agency simply decided not to investigate. A governor who angrily stood before reporters two months ago and vowed “never again.”

A governor who is now following through on that vow.

The new Division of Child Safety and Family Services will remain — for now — within the massive Department of Economic Security. But its new director, Charles Flanagan, will report directly to Brewer.

It’ll be up to the Legislature to turn it into a stand-alone agency — something that was recommended, by the way, a decade ago when then-Maricopa County Attorney Rick Romley commissioned a study of CPS following a string of child deaths.

Then, the idea was DOA at the Legislature.

And now? Well, now, it’s an election year, and people are fed up and watching as they never have before.

Of course, simply slapping a new name on an old division won’t cure what ails CPS.

What’s needed is a new culture that will promote openness and accountability, one where no longer are the ashes of children swept under the rug down at bunker central.

What’s needed is realistic funding for an agency in which front-line workers are overrun, resources to prevent abuse are scarce and the computer system harkens to the days of the Commodore 64.

What’s needed is the right people to run the place, as a stand-alone, streamlined agency where the mission is clear: to protect children.

Flanagan, the juvenile corrections director who is heading up Brewer’s Child Advocate Response Examination Team, will run the new Division of Child Safety and Family Services. That’s a solid choice, given the way this guy has dug into the problems at CPS — both to handle those 6,554 uninvestigated cases and to take a deeper look at how to fix what ails CPS. His suggestions are due in two weeks.

Flanagan, like everybody else, has been appalled at what went on at CPS — that senior-level managers would simply ignore cases despite a state law that says every one must be investigated.

“I think a situation like this where a policy decision was made — that was not in statute or in policy — at a lower level of the organization to do something that is clearly in conflict with law and policy is unbelievable and unacceptable,” he said Friday during a meeting with The Arizona Republic’s editorial board.

Flanagan said what happened at CPS couldn’t have happened at the Department of Juvenile Corrections, where there are independent eyes and checks and balances that allow the director to know what’s going on at every level.

Look for him to install such a system within the new Child Safety and Family Services, along with a request for more staff, better computers and a sharpened mission.

“We, as a society, need to determine what’s the primary focus of this agency,” he said. “It should be the protection of vulnerable children as the first priority in everything we do.”

Can I get another amen?

Brewer took a step on Monday unlike any that any other governor before her has been willing to do.

One focused on protecting children, not a bad bureaucracy.

Of course, now comes the tough part: persuading the Legislature to create this new agency and to fund it at a level where committed caseworkers can not only hear the cries of vulnerable children but do something about them.

If Brewer succeeds, this will be her legacy: champion to children who have none.

Not a bad way to spend your final days in office.

Posted in At the Capitol, CPS, Healthcare, Politics in the News, Rep. Kate Brophy McGee | Comments Off on Brewer steps up for kids across Arizona

Free ride, Clear path to general election provides a boost to DuVal, but …

By Jeremy Duda – jeremy.duda@azcapitoltimes.com 

Published: October 15, 2013 at 7:35 am, Arizona Capital Times

Fred DuVal

After five Republican gubernatorial hopefuls held their first candidate forum, some observers said the big winner was a candidate who wasn’t in the room — Democratic nominee-in-waiting Fred DuVal.

DuVal, a former Board of Regents president and longtime Democratic operative, is effectively running unopposed for his party’s nomination. House Minority Leader Chad Campbell eyed the race for months but ultimately chose not to run, giving DuVal a clear path to the general election.

That will likely give DuVal an advantage going into the election. He’ll be able to stockpile campaign cash while the eventual Republican nominee spends heavily on the GOP primary, stay close to the political center while Republicans run to the right to appeal to their base and avoid the direct attacks while the Republicans train their fire on each other.

There are downsides to DuVal running uncontested in the primary, political observers say. Because he has no primary, DuVal will receive little media or public attention until after the primary, while the Republican nominee will have already spent months in the spotlight. With less than three months between the primary and general elections, DuVal will have a relatively short amount of time to introduce himself to the voters.

But most politicos say the positives outweigh the negatives for DuVal.

“Obviously a free ride is better than paying for it,” said Republican campaign consultant Chad Willems.

Political consultant and lobbyist Chuck Coughlin said there are pros and cons to DuVal’s situation. But the conventional wisdom is that it’s better not to have a primary opponent.

“On the whole, I would say conventional wisdom rules,” Coughlin said.

Fundraising advantage

Fundraising may be the biggest advantage for DuVal. This year, the Legislature increased campaign contribution limits to $4,000 per person instead of $912 that statewide candidates had been limited to raising from individuals. With decades’ worth of connections in Arizona and Washington, D.C., DuVal, a former Clinton White House aide, is expected to have a well-stocked war chest.

If DuVal can bring in a lot of $4,000 checks and carry most of the money into the general election — which will probably require additional legislation, thanks to a kink in the new campaign finance laws — he could bring millions to bear against a Republican nominee who most likely will have broken the bank to win the primary.

Political observers expect strong fundraising from some of the Republican candidates as well, especially state Treasurer Doug Ducey, former GoDaddy executive Christine Jones, and Mesa Mayor Scott Smith, if he decides to run. But even if candidates like Ducey and Smith raise $2 million to $4 million in the primary, they’ll probably have to spend most of it to get to the general election, said Republican political consultant Kyle Moyer.

“Whoever comes out will come out bloody and broke,” Moyer said.

An uncontested primary will also help DuVal stay closer to the political center, an advantage for any Democrat in a predominantly Republican state like Arizona. DuVal has run so far as a moderate Democrat, and without a primary opponent like Campbell to force him to the left, he’ll be able to run that way through next year’s election.

In the meantime, GOP candidates tend to run to the right to appeal to the conservative primary base. Democrats are already trying to paint the Republican field as a group of extremists. After the Oct. 3 GOP candidate forum, the Democratic Governors Association took aim at the Republican hopefuls.

“Tonight’s debate demonstrated that every Republican running for governor of Arizona makes Jan Brewer look like a liberal. This group of Tea Party radicals is pointing Arizona straight in the wrong direction: away from jobs, away from good schools, and away from the investments required to thrive in a 21st century economy,” DGA spokesman Colm O’Comartun said in a press statement.

Rodd McLeod, DuVal’s campaign consultant, said not having a primary will help DuVal push a moderate message. McLeod said focusing on moderates and independents during the primary is a winning message that has served Arizona Democrats well in the past, such as in former Congresswoman Gabrielle Giffords’ 2006 race.

“We made a decision in May that we were going to win this primary and be mindful every step of the way of the voters we would need in the fall, even though our primary was on Sept. 12, 2006,” McLeod said.

Coughlin said staying close to the center will benefit DuVal. But being a moderate Democrat may not be enough in Arizona. Coughlin said DuVal will have to depart from “conventional center-left thinking” and said he’ll have to find a traditionally conservative issue, such as voter identification laws, to support in order to win.

“In order for a Democrat to win a statewide race in Arizona, the Democrat will necessarily have to offend part of his Democratic base,” Coughlin said. “If you just run a centrist campaign, you’re going to lose.”

Forgotten candidate

A clear primary field creates some challenges as well. DuVal may lose out on the publicity and attention that candidates get from contested primaries. While Republicans will be running television ads and getting media attention, DuVal may be largely unknown to voters who are already used to seeing and hearing from the Republican nominee.

“I think this makes him the forgotten candidate,” said Brian Seitchik, Jones’ campaign manager. “There will be no attention, no interest in his candidacy, while folks will be taking a good, hard look at the Republican candidates. And I think that will be a benefit in the general election.”

McLeod acknowledged that a contested primary has some advantages. A vigorous primary energizes volunteers and contributors, he said. And it provides experience for campaign staffers who can put their refined skills to use in the general election.

A contested primary also helps candidates gain attention and name ID, McLeod said. But that can sometimes be negative, he said, such as in the 2010 GOP primary for attorney general, when Republicans Tom Horne and Andrew Thomas savaged each other for months.

“It can also become poisonous,” McLeod said of contentious primaries. “The ball can bounce in lots of different directions.”

McLeod said there would be some benefits to a contested primary. But in the end, DuVal is better off with a clear field, he said.

“There is truth to that concern, but on balance I would rather have a campaign where I didn’t have a primary challenger,” McLeod said.

Arizona Republican Party Chairman Robert Graham said he would prefer it if DuVal had a primary opponent. But primaries are good for energizing the base, he said, and DuVal’s campaign will suffer if it doesn’t do that next year.

“He’s going to be a standalone candidate that hasn’t engaged his base to get out there and do anything. So I’ll take it, all day long,” Graham said. “DuVal is a plain vanilla candidate. He has no texture to him and he has a party that’s not working for him at this particular point.”

Posted in Election News, Kyle Moyer & Company, Politics in the News | Comments Off on Free ride, Clear path to general election provides a boost to DuVal, but …