The insurance industry and its allies in the GOP leadership could have won, if they just hadn't been so greedy.
They could have come up with a bill to revamp Arizona's automobile insurance laws that would have satisfied enough Republicans--and maybe even a handful of Democrats--to get the necessary votes for approval in the last hours of the just-completed legislative session. And while they might not be able to stop Representative John Kromko from trying to enact a clone of California's Prop 103 insurance reform, they at least would have given constituents a reason to say no.
Instead, they tried to put out what was, at least in part, a scam.
"I don't understand what the Democrats want," whined Glendale Republican Karen Mills as she watched support for her package evaporate in the early hours of Friday morning. "We gave them the three things they want: a rate freeze, a consumer advocate and prior approval," the last to require companies to seek state permission before raising rates.
Yet even her own party leadership couldn't say that with a straight face.
House Majority Whip Chris Herstam, preparing for a joint TV interview with Senate Minority Leader Alan Stephens, asked a staffer to prepare a "crib sheet" for him on the provisions of the insurance bill. The internal memo suggested that Herstam avoid discussing the rate-freeze provisions of the bill.
"Don't you bring it up because it's been gutted," reads the memo. "It only addresses rates, not premiums." The difference is crucial. A state insurance regulator says rates are the basic figure for what a company charges for coverage. But the premium includes the various extra charges for things like how far someone drives each year, the motorist's accident record and even his or her age. The "rate freeze" is meaningless because it would have allowed a company to impose sharp price hikes in all the factors it uses to determine premiums, thereby increasing what motorists pay.
"If Stephens attacks this provision, your only comeback may be to say that it is patterned after the California initiative," the memo reads.
Herstam dodged questions about knowing the rate-freeze provision wasn't worth the paper it was written on, complaining instead how it wasn't right that someone took his copy of the memo.
Beyond that, the insurance company lobbyists who camped outside Mills' office for much of the session forgot it was in their interest to come up with a meaningful compromise. Mike Low, lobbyist for Allstate Insurance, complained the industry really hated having to get prior approval for rate increases. And that, he said, showed how they were dealing in good faith.
But the industry wouldn't settle for a simple bill. Instead, its lobbyists tacked on a host of provisions to overturn Arizona court rulings which gave motorists specific rights to collect under their insurance policies. Adding all that extra baggage didn't get them any more Republican votes and only served to ensure that the final package would be too distasteful for even the most business-oriented Democrats to support. "This thing had too many moving parts," Low conceded after the 27-28 defeat. "In hindsight, maybe we could have improved the bill."
But Don Isaacson, lobbyist for State Farm, was unapologetic for trying to load the bill up with industry goodies. "Reform works both ways," he insisted.
Even Mills didn't understand that the road to legislative success was taking out the unpalatable sections rather than try to bribe House Minority Whip Debbie McCune--the leading opponent of the Republican plan--with more largely meaningless concessions. "Debbie said she wasn't interested in anything," Mills said. "So, as far as I'm concerned . . . " Mills raises her thumb to her nose and wiggles her fingers.
But it may be the Democrats who end up making the gesture at Mills, Isaacson, and Low. Without a bill, the only game in town belongs to Democrat Kromko, who will start gathering signatures late this summer for a wholesale revamping of the insurance code. And it's for sure that whatever Kromko wants, the industry will hate.
Having told the Democrats to take a flying leap, that left it up to the Republicans to pass the bill by themselves, the way they put out the budget and revenue package. But as Thursday evening turned to Friday morning, it became painfully obvious to the GOP leadership the votes weren't there. Two of their members were absent. And others found something to hate in the multiprovision bill. Those in this last group were marched into a back office, one by one, and asked what it would take to get their support.
Bill Mundell and Susan Gerard knew exactly what it would take: Resurrect a measure to increase the power of the Department of Environmental Quality over polluters and increase the size of some fines. The measure actually cleared both the House and Senate earlier this session. But when lawyers for industry couldn't strip some provisions from the bill, they decided instead to lean on Senate Republicans to kill the measure. Senate President Bob Usdane was happy to oblige, burying it by refusing to appoint a conference committee to work out the differences between the House and Senate versions of the bill.
Mundell and Gerard still didn't like the auto insurance bill. But, as Gerard figured, it was a safe vote. "The governor's going to veto this thing anyway."
News of the pair's middle-of-the-night offer traveled fast--and far. Word got all the way to Jim Bush, lobbyist for the Arizona Mining Association, who was vacationing in Colorado. He promptly called Usdane to remind him, in rather strong words, of the industry's opposition to the measure. And Usdane, who probably would not have unearthed it anyway, assured Bush he could go back to sleep.
So Bush went back to sleep. The environmental bill stayed dead. Auto insurance reform went nowhere. And the legislators went home as the sun rose.
THAT'LL TEACH YOU, CAROLYN Usdane was in the middle of yet another issue during the last-night follies at the legislature, this one over his commitment to allow senators to vote on a paid holiday for Martin Luther King Jr.
Phoenix Senator Carolyn Walker, who has championed the holiday in the Senate for the last several years, extracted a promise earlier this session from Usdane: If she could get the necessary sixteen votes for approval, he would not block the measure from coming to the floor. That was an important concession, as the Republican majority has a rule that nothing gets to the floor unless at least half the seventeen Republicans agree. Walker knew she could never meet that test, since most of her support came from the thirteen Senate Democrats.
When Usdane made the promise to Walker, it seemed a pretty safe deal, since he knew only two Senate Republicans supported creating a new state holiday. But he didn't count on Walker working out a compromise. She got a third Republican, Leo Corbet, to agree to vote for a King holiday if the state would eliminate the little-noted paid holiday for Columbus Day. It wasn't exactly what Walker wanted but, she figured, it was better than nothing.
That gave her the necessary sixteen votes for the measure, which already has been approved two years in a row by the House. But when she went to Usdane to collect on the promise, he insisted that she was actually seeking a different deal and, no, there would be no floor vote. Usdane's explanation was that, because the bill was now different, it must have the nine votes in the GOP caucus. "This caucus policy has been strictly adhered to throughout this session, and any departure from this procedure would be a breach of trust between the elected leadership and the caucus members," he said. Never mind that his original deal with Walker was never approved by the caucus.
The real difference, though, was that Usdane never thought he'd have to honor the original promise. WILL BILL ENGLISH EVER GROW UP?
Other deals fell apart during the last hours of the session, including a measure sought by Phoenix city lobbyists to protect residents from insincere promises by developers.
When developers ask for property to be rezoned, city officials often impose special conditions before granting the request. These conditions do not deal directly with the rezoning--which governs only what can be put on the land--but other things the city wants the developer to do.
Such was the case with gubernatorial wanna-be Fife Symington with his Esplanade project. As a condition of getting the high-density zoning at 24th Street and Camelback Road, Symington agreed to pay for improvements in roads around the commercial and office center to alleviate anticipated traffic problems. But when Phoenix officials pressed him to cough up the bucks, he balked, saying there really wasn't any specific promise. (In fact, even some members of the council agreed that the stipulations were poorly drafted.)
Symington did finally agree--again--to pay for the work once the city council granted him even more zoning density on the parcel.
The dispute made the city realize there is a gap in state law. It can go to court when a developer violates the zoning itself, but it is powerless to sue when the developer ignores the conditions or stipulations imposed as part of the rezoning.
A bill crafted by city lobbyists was approved in March by the House Counties and Municipalities Committee and slated to be heard by the Rules Committee, chaired by Bill English. He never really liked the measure in the first place but was prepared to hear the bill. That is, he said, until he was driving to the State Capitol the morning of the hearing and got stuck in traffic because the city had closed off Washington Street for the Fiestaval. In a snit, he pulled the bill from consideration.
English had just about recovered from his traffic-induced temper tantrum when the city began trying to unravel water-transfer legislation. So English, who supported the water bill, yanked the zoning-condition bill again to get its attention. "It was extortion, blackmail," he admitted, "whatever you want to call it."
In the interim, however, English and lobbyists for Phoenix found language that both could live with in the zoning bill. And English had arranged to strip the compromise onto a bill during the closing hours of the session. But Jack DeBolske, executive director of the League of Arizona Cities and Towns, saw some sinister motives in English's interest in the bill. He contends it would preclude cities from "downzoning" land, limiting the number of homes on a property.
Neither English nor the city's lobbyist read the bill that way. But DeBolske, who has been pulling strings at the capitol longer than either of them, made sure the bill was killed. English was furious.
"That's okay," he said sarcastically. "They [the cities] are not getting their bill this year. And they're not getting it next year or the year after that or the year after that." And, with all bills having to pass through the Rules Committee, English can make that stick.
GILLESPIE: HOME FREE The end of the session has more meaning for one lawmaker than his colleagues. Jerry Gillespie should get word this week he can keep his license to sell insurance.
The Department of Insurance has been investigating since last fall whether the Mesa Republican senator lied on his 1984 renewal application when he said he had never been under criminal investigation. That act would be grounds to conclude he is unfit to sell insurance in Arizona.
When Gillespie signed that application, he was being investigated by the state Attorney General's Office for selling unregistered securities. During one deposition an assistant attorney general told him that "this matter" is or might be the subject of a criminal investigation.
Gillespie subsequently signed a consent order admitting a variety of civil charges, including violations of the state Consumer Fraud Act, and paid a $5,000 fine.
The wording of the warning he was given during the deposition left state insurance officials with little to work with because Gillespie was never told he personally might be under criminal investigation. There were a number of other defendants in the inquiry, including two corporations.
The real irony is that Gillespie might have lost his insurance license years ago if the Attorney General's Office had bothered to tell the insurance department it had him under investigation.
Insurance regulations allow the department to yank a license for a variety of reasons, including fraudulent acts, whether criminal or civil. Insurance officials would have been able to conduct their own parallel investigation at the time and determine whether Gillespie was fit to sell insurance. But they didn't find out about the attorney general's investigation until last fall, and then only from a reporter.
Now, with more than eight years in between, it would be virtually impossible for the insurance department to find all the witnesses to build a case against him, officials say. Besides, they'd have to fight off charges they were hounding him after all these years.
Not only were insurance officials kept in the dark about the attorney general's investigation, they were never consulted about the wording of the consent decree Gillespie eventually signed. The decree stipulates Gillespie's admission of guilt cannot be used anywhere else. That precludes the insurance department from ever considering he admitted to fraudulent acts when deciding if he should continue to be licensed.
IRISH BLARNEY AT OUR EXPENSE While state lawmakers were singing the blues last week trying to close down the six-month session, members of the Phoenix City Council were bursting into a chorus of "When Irish Eyes Are Smiling."
The council had appointed a special committee to study the Deck Park being created over the Papago Freeway between Third Street and Third Avenue, with the goal of recommending what should be built there and how it should be designed. That panel, headed by MeraBank president Ernie Modzelewski, found most of what the city staff suggested to be fine. That is, however, with the exception of a proposal to erect an Irish cottage.
Modzelewski told the council last week the committee is aware that Phoenix is sister cities with Ennis, Ireland, and there was no intent to slight the Irish-American population of the Valley. But he said the cottage "would not only be at variance with, but actually disruptive of, the carefully integrated design and use concept for Deck Park." He also said he did not want to start a precedent, with the tiny park overrun by representative buildings from around the world.
But that didn't deter Phoenix's Irish councilmember Howard Adams, who insists on the $500,000 stone-and-thatch structure built largely at taxpayer expense. He argued that this wasn't just an Irish cottage but really a tribute to the Old World roots of many Valley residents. "The Irish cottage typifies many, many European cottages, from whence came a lot of folks who helped build this city." With that rousing blarney, Adams got all his colleagues except Linda Nadolski to approve the cottage, despite the committee recommendation.
"The bottom line is we're the ones delegated with the responsibility of determining what's right and what's wrong," said Phoenix's Swedish councilmember Paul Johnson. And English Mayor Terry Goddard was equally philosophical about ignoring the committee's report: "It won't be the first time."
The crib sheet on an insurance rate freeze warned Herstam, "Don't you bring it up because it's been gutted."
Usdane never thought he'd have to honor the original promise.
"It was extortion, blackmail," English admitted, "whatever you want to call it."
