PHOENIX -- A move by Gov. Jan Brewer to buy back three state buildings in time for the state's birthday will save Arizona taxpayers nothing at all.
The state will have to put $106 million into a special account by Feb. 14 to get back the title to the House, the Senate and the capitol tower. That account will be used to pay off the lenders who gave the state $81 million for the three buildings two years ago in a sale-leaseback deal.
And the cost of making regular payments to retire that same note in 2019? The exact same $106 million.
"This is a purely symbolic gesture by the governor,'' said House Minority Leader Chad Campbell. The Phoenix Democrat said if the state has extra cash there are far better uses for it.
"I don't think it's purely psychological,'' said gubernatorial press aide Matthew Benson. He said there are lots of good reasons to pay off the debt now, while the state has the money, rather than risk the cash not being there when the note comes due.
Still, he conceded that perception does matter.
"If the Democrats want to argue that the deed to the Arizona State Capitol is just a piece of paper, then I think they should run with that,'' he said.
The issue stems from the state's efforts two years ago to deal with a gap between revenues and expenses.
Lawmakers made sharp cuts in spending. And the governor spearheaded a successful drive for a temporary one-cent hike in the state's 5.6 percent sales tax.
But that still left a gap of about $1 billion. That was made up through what amounted to mortgaging various state buildings, getting investors to buy them and then lease them back to the state on a payment schedule that eventually would give title back to the state.
These were negotiated as 20 year notes, with a provision for payoff in 10 years. Benson said that long-term note, with the minimum 10-year term, enabled Arizona to borrow the money at a very competitive rate, in the 3 percent range.
Benson said an early payoff, before 2029, saves the state an extra $47.5 million in interest.
Campbell said that is true. But what also is true, he said, is that the state gains nothing by paying off the 10-year amount now.
"It would be like paying off a car lease early,'' he said.
"You're still going to pay the same amount,'' Campbell continued. "It just doesn't make any sense whatsoever.''
He said if the state has an extra $106 million it could be used for some one-time expenses that would stimulate the economy.
For example, he said, the state could finally restore the payments it is supposed to make to schools for maintenance but has not made in years. Campbell said that would finally let schools hire firms to do the major repairs that have gone undone.
Benson said Campbell is making the assumption that Brewer will not provide building renewal funds. He said the governor believes the state will have an extra $1.3 billion between what's left over at the end of this budget year and an anticipated surplus next year.
"Many of these things will be addressed as part of the (governor's) budget,'' Benson said, which is scheduled to be unveiled today (eds: friday).
"The governor has said consistently that she's interested in using these one-time surplus dollars for one-time needs,'' he said. Benson said that means saving some, using some to stimulate the economy and even upgrade the state's antiquated computer system.
And it also leaves enough, he said, to buy back the House, the Senate and executive tower.
"The governor, and I believe most of the state Legislature, never wanted to sell the state Capitol in the first place,'' Benson said. "This was a move that was made during a dark time in the state and it allowed us to avoid $81 million in additional cuts in areas like education, public safety and health care.''
Campbell said, though, the Democrats provided other alternatives, including revamping the state's tax structure to close what he believes are loopholes in the code.