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October 7, 2003

Host: Michael Grant
Topics:
· Indian Gaming;
· New Corporation Commissioner Kris Mayes
In-Studio Guests:
Howard Fischer, Captiol Media Services;
Kris Mayes;
Paul Bullis, Executive Director, Arizona Gaming Association and Director, Arizona Department of Gaming;
David LaSarte, Executive Director, Arizona Indian Gaming Association

>>Steve Tully: our job is done here. We're just -- you know, Our job in this matter, the speaker has made this clear to investigate allegations of wrongdoing by officers. It resulted in a resigning and we have the power to impeach him. Now, if someone feels that he has done something criminal, that's their job.

>>Cary Pfeffer: Lawmakers announce the results of an investigative report on the alleged wrongdoing of Jim irvin. The report finds the former corporation commissioner committed impeachable offenses and should be barred from holding office again. Good evening, I'm Cary Pfeffer. Tonight on "Horizon," we'll take a closer look at the impeachable offenses of irvin. Also Kris Mayes, the person replacing irvin on the commission talks about her new job. Plus an update. Lawmakers release an investigative report by special council Melvin Mcdonald that would have been used to impeach Jim irvin, but the embattled corporation commissioner resigned after his attempts to keep the report secret failed. The report is two volumes containing 350 pages and looks into five separate areas where he was accused of misconduct. The special council recommends his impeachment and banishment from holding public office in Arizona on three charges. His interference in the sale of southwest gas, one of the two competing companies, Irvin's attempt to fabricate evidence in a civil trial which resulted in a $60 million verdict against him, and his intervention on behalf of a campaign worker. The report also found his treatment of corporation commission employee Jim fisher so outrageous that irvin be removed from office. Finally, this special council found he did not violate campaign laws when collecting signatures and $5 contributions to qualify as a clean elections candidate. In his report to lawmakers special council Mcdonald wrote: McDonald concluded:.

>>Steve: I think that overall our theme of the narrative, as you read it, is that Mr. Irvin took actions which were inappropriate for his office. He recognized that they were inappropriate. He was even still pursuing them even with the knowledge of the impropriety of his actions. When it was brought up to him that his actions were improper, he lied about it repeatedly over a long period of time including forging documents at trial to prevent the finding out of his actions and continues to go about his activities even to the point a month ago when Mr. Mcdonald was taking his deposition.

>>Cary: joining me now is Howard. We should point out that you are not only familiar with this case you were in and heard some of the arguments in that famous $60 million case-- Familiar with that side of issue as well. First of all, do you think that criminal case will now be pursued in this situation?

>>Howard Fischer: I'm guessing not, and I realize that what he came up with is there is clear and convincing evidence that crimes were committed. You have a fraudulent schemes charge under the southwest gas case. You have wire fraud dealing with the same case. You have a whistle blower violation having to do with the Jim fisher, commission employee. You have a question of malfeasance in office. The problem becomes that clear and convincing is a standard that is used in civil cases. A prosecutor could get an indictment on that but a prosecutor needs to come up with what they call beyond a reasonable doubt. The U.S. attorney's office looked at some of the state's evidence and concluded there were no prosecutable crimes at least as far as southwest gas went. The prosecutor did not look at the issue of fraud upon the court where there was fabricated evidence, but I'm not sure that the U.S. attorney's office wants to go back and revisit that territory.

>>Cary: we have the Mcdonald report. You couldn't be more clear, Banned from serving in elected office ever again. Where does that stand? This is a case that is never going be made. Conceivably down the road, if Jim irvin could decide to run for office, I guess.

>>Howard: If he did we would pull out the report and say what part of this don't you get? For example, the issue with the fraud upon the court. Mcdonald said he fabricated evidence and -- he says this shows a strong disregard for the judicial process and laws of the state. Such actions are not benefitting a public official entrusted by the people of Arizona with carrying out the duties of corporation commission. Talk about not being clearer. Anyone can run. Anything is possible. Arnold Schwarzenegger could be governor of California in the next hour. I think at a certain point the evidence becomes so overwhelming that people will say there is no chance to come back and say even if he got the $60 million verdict overturned, Even if no criminal charges were filed, the weight of two volumes of evidence here suggest that he basically misused the office for his own purposes.

>>Cary: in a clear cut of sort of a way that is outlined on these pages. Given what is in here and the previous information that we knew about him anything interesting revealed in the report that might be surprising or might have underlined the information we heard previously? >>Howard: there really wasn't anything new. This is a case going on four years now. We knew there was harassment of Jim fisher. He was a commission staffer who reported what he knew of irvin's activities. There was specifics of exactly how irvin tried to fire him and when he couldn't fire him tried to keep him from getting a new job. While Carol irvin said she overheard a conversation her husband, they had a private investigator was monitoring Jim irvin and said Carol was nowhere around.

>>Cary: little details.

>>Howard: little details but in terms of essence all of this would come out. The question in the clean elections. There were allegations raised that perhaps he didn't follow the law in gathering those $5 donation. When Mcdonald said was that there was no evidence he didn't follow the law.

>>Cary: last question on this topic. When you look at the amount of material amassed in this, the case that had gone to trial previously and the allegations that were raised before, After going through and some of the questions that came up with the former governor, you have to be more amazed at his insistence at staying on it seems?

>>Howard: I think he believed -- I sat through the trial as you point out. It wasn't my fault. I was doing my job. I was investigating a possible buyer for southwest gas and or my hand picked assistant didn't tell me what he knew and he had a conflict. His attorney told me tonight that's garbage. He believed in the end as he saw this coming out and his wife getting involved. When he approached Rick Romley he asked if we could get immunity or bury this report so we wouldn't be talking about it. When those were turned down, he saw the handwriting on the wall. All politicians believe they are different. They can survive; the rules don't apply to them.

>>Cary: sit tight right there because we're going to get back to you in a moment. Jim irvin's replacement on the commission will be sworn in tomorrow. Governor Janet Napolitano tapped Kris Mayes, her 32-year-old press secretary, for the job. She is a familiar face to "Horizon" viewers. She was a regular guest on the journalists' roundtable and later as a political reporter for the Arizona republic. She has a bachelors degree in political science and a law degree she finished while working for the governor. Her former colleagues had this to say.

>>Chip Scutari: people who know her know she is smart, capable. She's probably going to study real hard. There's a steep learning curve. Everyone pointed out her lack of qualification, that maybe the governor should have appointed someone elected.

>>Mark Flatten: to that point, in all of years I have been doing the journalists' roundtable, I always thought you were the only one qualified to be on the commission. But I was wrong. You have to look at what the governor is looking for. She didn't want to appoint a Republican that was going to run again in the next election.

>>Cary: joining me now is corporation commissioner or soon-to-be officially, Kris Mayes. Thanks for being here.

>>Kris Mayes: that was not fair. That was not fair.

>>Cary: any time you take journalists talking about former journalists.

>>Kris just harsh.

>>Cary: there's will be BARBS that will come out. How do you feel about not running or running? What is your take on that?

>>Kris: mark never asked me. He should ask me first. It's early in the process for me to be talking about politics. I'm getting started, really learning the issue as chip said it is a steep learning curve. Howie knows this for covering this for 20 years.

>>Howard: almost as old as you are.

>>Kris: hardly. That's what I'm focused on right now.

>>Cary: that's what we were talking about before the program. I had a briefing book this thick and lots of details. In some ways you were a surprising choice because you didn't have the long and storied history with the issues that will be taken up. Is that a problem?

>>Kris: I don't blame people for being a little bit surprised but it's not too shocking really when you look back at the history of corporation commission, how it was founded, what values the founding fathers of this state were looking for when they created this the commission. Frankly, Howard, I don't know if you know this, but it was founded, the people who created it were progressive Republicans who were looking for people tough minded and look over the interests of consumers and rate payers. That day it was look after the interests of people when it came to the railroads which were the powerful entity in the state Ben then.

>>Cary: it's a citizen oversight matter.

>>Kris: it is. I know there are people who suggest that maybe the governor should have tapped someone who had sort of experience in utilities or who come from -- that would have been a big mistake. I think that what we needed right now in particular at this time in our state's history is somebody who could go in and join with the commissioners who have done a fabulous job under very difficult circumstances quite Frankly, when you read the report, and ask tough questions. That is Howard, what my training is.

>>Howard: I appreciate the asking tough questions stuff. I have seen you at press conferences. The question is I have seen governors appoint to the commission before and people who have experience in the private sector, people who have run businesses and everything else. The other people on the commission have been through the voters.

>>Kris: not all of them. Not by a long shot have all of them been elected officials. Look at the commission and you have a group of people with widely varying qualifications and backgrounds. And you are right, I think most of them are former state legislatures right now, and like I said, I think the folks that set up the commission really wanted people with diverse backgrounds. One of the things the governor was looking for was someone outside the Maricopa County. I was from Prescott, Arizona, born and raised there. Someone who could bring that perspective to the job.

>>Howard: I realize you can't talk about specific cases before the commission but the people who run for office have given general ideas about how they feel about issues. One of the big issues had to do with electric deregulation and the role of deregulation versus competition. What are your thoughts on that?

>>Kris: in terms of the role of the commission in fostering competition and in regulating utilities is that we're in sort of a in between period where we don't have pure competition yet and pure deregulation. As you know Arizona and other states didn't go as far in deregulation and in deregulating utility as people expected. There's a strong role for the commission. As you know there's a couple of large rate cases coming up that we're going to have to deal with. We're going to go forward and do that and see how that goes. For now, I think competition is in sort of a state of flux and a state of development.

>>Cary: we'll see what happens. You are going to have a full plate over the next few months and we'll see what -- how all that plays out. Best of luck to you.

>>Kris: thank you.

>>Cary: a game of blackjack is something you wouldn't have found at Arizona Indian casinos a year ago but the passing of proposition 202 added a lot more than blackjack. It turned them into state regulated games. It increased the minimum gambling age from 18-21. As Paul Atkinson reports the initiative gave the state a cut of casino profits.

>>Reporter: the salt river Pima Maricopa community runs two casinos. It's large casino is just minutes from Mesa and Tempe. It's smaller casino is a few miles north just east of Scottsdale. The talking casino recently added a second building to house table games.

>>Ramon Martinez: customers like it. It's busy every night. The other night we did a car give away we had 4,000 people at the facility. It's successful for us.

>>Reporter: the valley news newest facility overs keno, off track betting, blackjack and tons of slot machines.

>>Ramon: we decided to theme it as a sports theme casino. We have our large nine by nine large screens bringing in sporting events from around the world. So you see the advertisements it's like the sports bar on steroids.

>>Reporter: the salt river community got its shot in the arm by releasing the slot machine rights of two small tribes who live along the upper Colorado river.

>>Leonard Rivers: we're working with two communities that really need the economic stability to do the things they need to do and they are the two tribes we're working with. We're proud of that.

>>Reporter: the increase in slot machines and the addition of table games also benefits the state. The state gets 1-8% of profits depending on how much money a tribe makes. The first payments totalled only $4 million. Gaming officials he estimate the state will make $50 million by the end of one year.

>>Leonard: it's a win/win for everybody in the state of Arizona.

>>Cary: joining me now is the executive director of Arizona gaming association and the director of Arizona department of gaming. Paul, let's start with you we're into this for a few months, how do you take it so far?

>>Paul Bullis: it's working the way they are supposed to be working. The compacts have creates a partnership between the tribes and the state of Arizona a government to government partnership. We're working together to implement the compact as questions come up about how things are supposed to work we sit down together we talk them out and try to figure out how it is moving forward.

>>Cary: how much has there been that give and take and the need to sort out the details. Passing a measure at the ballot box is one thing and implementing can be something else.

>>Paul: I don't think there's more questions you might anticipate with a large document negotiated with a large number of folks. Questions come up and as a say we sit down and talk about them and try to work through them as partners in this document.

>>Cary: I want to put up information and numbers on the screen. We can talk a little bit about the amount of money that has come in so far and where it has been directed. We're talking more than $4 million at this point and we're seeing that money going to administrative costs. The first one right off the top at $3 million. Then we see education and areas like wildlife and tourism. Explain why that $3 million to administrative costs is off the top.

>>Paul: we need to look at the longer picture. We have just one quarter payment reflected right there. Over the first fiscal year that $4.1 million is going to reflect our guess is $44 million. The way they are going to be distributed we expect that $20 million will go to the structural improvement fund which is dollars that go to school districts within the state. We think $10 million to the trauma and emergency services fund, $3 million to the Arizona tourism fund, $3 million to the Arizona wildlife conservation fund. In addition, as a part of that probably $1 knoll provide treatment and education for problem gambling and in addition part of the dollars go to pay for the costs of Arizona department of gaming.

>>Cary: that's what we see off the top.

>>Paul: that's right.

>>Cary: that's why that $3 million is the biggest number on that particular list?

>>Paul: that's right. That is part of the -- what we need to run the department over the first fiscal year. That total will be $8 million and the bigger chunks will go to the funds I mentioned to you.

>>Cary: David, let's get you in on this discussion. What is the view from your side of the equation? This was something much debated multiple items. People had to sort through these things and decide what they wanted to do at the ballot box. Ultimately this was the choice. How are you looking at it now?

>>David LaSarte: the whole point of prop 202 in the first place was to really insure that the tribes could continue to game because gaming is the only successful tool they have been able to use to rebuild their economies. The stability provided by the new compacts is accomplishing exactly that. In your piece you discuss inner tribal transfers there's a revenue flowing to tribes that they have never had before. The tribes have been able to open head start centers, early Childhood development centers and new schools. These are things they couldn't have done without the certainty they would have the revenue from gaming. Then when you toss in the fact that there are also revenue streams going to education, health care.

>>Cary: statewide sources.

>>David: exactly that benefits all Arizonans the tribes are happy with the way things are going. But again the stability, the long term stability was always the number one priority. That's really paying dividends down.

>>Cary: take the tribe as an example. How much might they end up at the year get because of the result of what we're seeing here. What might it mean for their bottom line at the end of a year?

>>David: it's hard if tell right now. As Paul was saying all the revenue sharing inner tribal transfers is set on a fiscal year. After one quarter it's hard to tell what impact it would be on anybody. A tribe like Havasupi has no realistic opportunities for economic development.

>>Cary: they are not opening up a casino on their lands.

>>David: they'll likely not be opening up any businesses. They have done work with a hotel and tourie. Efforts. The children there right now their school only goes to 8th grade. If those children want to continue 9-12 grade they have to go 200 miles away to a different school on the Navaho reservation. The type of revenue stream they could be looking for is the difference between night and day.

>>Cary: Paul, looking down the road. Now you are seeing a little bit of a pattern at least with first quarter results, looking down the road with this maybe beyond this year, are you seeing things now that you couldn't have sort of set out in more specific planning now that you have gone through -- you've got a little bit of time under your watch and gotten a chance to see where this might be headed?

>>Paul: I think that's a fair statement. There are always be issues that you are certain you had nailed down in the language of the document and when they are put into practice it doesn't quite work out that way. But the process -- the compacts do set out a process for the state and tribes to sit down and work out ways to clarify that language. You have to remember those are -- this is a long term process. These compacts are there for ten years plus a renewal period for ten years plus a three-year-old period. It's a 23 year period. We have to take the long term view and take the time to see what the issues are and get those resolved.

>>Cary: part of this process also included expand regulation. What can you tell people about how that is going and what information has been gathered as part of that process.

>>Paul: the biggest area of expanded regulation is in the area of the card room where's they play poker and blackjack. The department of gaming for the first time has a hand there, has responsibilities there. That's a different animal than the type of surveillance you have for example over a slot machine because with card games you have dealers handling cards. You have chips moving.

>>Cary: it's a moving proposition all the time.

>>Paul: there's are human beings involved rather than a person and a machine. We have taken a lot of care to make sure surveillance systems are set up appropriately and that people understand what they are looking for and looking at.

>>Cary: one of the things that came up during the election process is getting a handle on how much money ends up going in here. Do you have a sense of that? Have you been able to get a better picture? People were at a blank in answering that question.

>>Paul: in terms of size in the industry in Arizona. I know the republic estimated it at as a billion dollar industry. We see that increasing this year and for some time.

>>Cary: David talk a little bit about that. Not that I expect to you start spouting bottom line numbers but it's what people are trying to get a handle on and try to figure out where this industry is going. What can you tell bus that?

>>David: it's hard to judge after the first quarter. Some of the tribes haven't begun black jack operations. I haven't seen any benefit from additional opportunities under the new compacts. Some tribes have. At the same time, we have had this first quarter payment to the tribes as part of their sharing but the biggest payments won't come into last quarter. It will take a good year, maybe a year and a half before not only the state and the tribes get an idea of how much are they paying to the state and how much if any have their profits increased. Just get an idea of what is the new sort of state of equilibrium of where everybody is at. Another year we'll know for you.

>>Cary: all right David LaSarte thanks for being here. Paul, we appreciate your insights and look forward to further reports on where things are headed. Hear is a look at what is on "Horizon" tomorrow.

>>Reproter: one valley business owner is celebrating a victory in a fight that could have left him without his property. The court ruled in favor of Bailey's brake shop in Mesa. Now other property owners facing similar cases have new hope. We look at imminent domain Wednesday on "Horizon".

>>Cary: also a preview of the upcome coming debate here in Phoenix featuring democratic presidential hopefuls and some of the folks no longer part of that list and Thursday a preview of the latest Supreme Court session. Thanks for watching on "Horizon". Michael grant is taking a couple of days off I'm Cary Pfeffer Hope to see you tomorrow. Have a great night. .

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