Ducey takes oath; faces big decisions

• Unlike outgoing Gov. Jan Brewer%2C Doug Ducey%27s experience in government is limited to a single term as state treasurer
• But many of the issues that confront Ducey are the same ones Brewer grappled with
• Ducey%27s inaugural speech will likely be aspirational%2C with policy details to come later in January

When Doug Ducey takes the oath of office today as Arizona's 23rd governor, it will represent the passing of the torch to a new generation.

Ducey, a Republican and former CEO of the Cold Stone Creamery ice-cream chain, has promised to bring a business-like approach to state government. Unlike his predecessor, outgoing Gov. Jan Brewer, who spent decades in elected office, his experience in government is limited to a single term as state treasurer, making him a relative newcomer to the State Capitol. He also has signaled that he intends to be more accessible than Brewer.

Inaugural ceremonies begin at the state Capitol at 11 a.m.; Ducey is scheduled to be sworn-in around noon.

What Ducey didn't talk about:

"The style, in contrast to Brewer, is going to be enormously different," predicted Bruce Merrill, an Arizona State University professor emeritus, veteran political scientist and senior research fellow at the Morrison Institute for Public Policy.

But many of the issues that confront Ducey, at least in the short term, are the same ones Brewer grappled with as her tenure came to a close: budget deficits, immigration policy, education funding and Common Core, and the governor's relationship with the Legislature.

How Ducey handles those challenges will define his first 100 days in office and likely set the tone for what follows.

"The budget is going to be the issue, and all things here in the short term are going to revolve around solving the budget crisis," said Doug Cole, a longtime Republican political strategist, a veteran of Gov. Fife Symington's GOP administration and a Brewer confidant.

Ducey also "is going to have to get his sea legs in dealing with the legislative branch of government," Cole added. "You have a new speaker and House leadership team and (it matters) how they interact and face the budget challenges together."

Budget

Once he's sworn in, Ducey has 11 days to produce a budget proposal that addresses a projected $1 billion budget shortfall. He also must close a $520 million gap in the current budget.

His options are limited. Many of the one-time budget tricks — from selling off state buildings to borrowing against future lottery revenue — were used to bridge similar shortfalls during the Great Recession. In addition, Ducey has vowed to not raise taxes or postpone a $226 million corporate tax-cut package that will be phased in over the next three years.

Ducey has been vague about how he will fix the budget. But the people who will have his ear on state spending are fierce advocates of lower taxes, smaller government and free-market policies.

Shortly after he was elected, he assembled a budget study committee made up of current Governor's Office financial staff and individuals from the private sector. He later announced that Victor Riches, a lobbyist for the Goldwater Institute, will serve as his new deputy chief of staff for policy and budget. Riches was chief of staff at the House of Representatives and worked on the passage of school-choice measures and tax cuts.

Senate President Andy Biggs, R-Gilbert, is expected to be the Legislature's point person on the budget. Ducey began meeting with legislative leaders on the budget immediately after being elected. Biggs said last month that he hoped Ducey's proposal would mesh with the Republican legislative leadership's agenda.

"The goal is to get everybody engaged ... so when he has to present the budget on January 16, it would be fantastic if we could stand behind him and his budget," Biggs said.

That would be a significant departure from recent years, when lawmakers and the governor battled over funding for pet projects as well as key issues like education and child welfare. Under Brewer, the Legislature's final budget typically was smaller than the governor proposed.

Immigration

Ducey also is entering office during a period of continued tensions over illegal immigration. He succeeds a Brewer administration that was viewed by immigrant advocates as divisive and mean-spirited. Decisions and expected developments in the coming weeks and months will set the new administration's tone and strategy on the issue.

In 2010, Brewer signed the controversial Senate Bill 1070, which at the time was the toughest state immigration enforcement law in the nation. Much of it has since been gutted by the courts. More recently, Brewer has tried to defend in court her executive order barring "dreamers" from receiving driver's licenses. The young immigrants are participating in President Barack Obama's 2012 Deferred Action for Childhood Arrivals program.

Ducey has expressed support for Brewer's driver's license ban and indicated that he is willing to exhaust all legal avenues to maintain it. Brewer's team has vowed an appeal to U.S. Supreme Court, forcing Ducey either to take up that case or change course.

"I'm going to be consistent in the themes regarding border security first, then step-by-step immigration improvement and reform," Ducey told The Arizona Republic during last year's campaign. While stressing that "the southern border is unsecured and wide open" and blasting the federal government, Ducey declined at the time to provide specifics on how he would accomplish his border goals.

Other immigration issues could challenge Ducey in the early days of his administration.

A big question is how the Ducey administration responds to Obama's more sweeping executive action on immigration announced Nov. 20. The new program, which is expected to go into effect in March, affects five times more immigrants than the DACA program.

In addition, there's the possibility of another surge of unaccompanied minor immigrants from El Salvador, Guatemala and Honduras — numbers have been rising again after dipping in the wake of last year's border crisis — in 2015.

In response to last year's surge, Brewer blasted the Obama administration as inhumane, noting families that had been apprehended in Texas were dropped off at bus stations in Arizona in 100-degree heat. She joined other Republicans in blaming Obama's policies for the surge and citing the influx as proof the U.S.-Mexico border has not been secured.

Medicaid expansion

A lawsuit filed by 36 Republican lawmakers challenging the way the state expanded its Medicaid program is moving forward, thanks to a state Supreme Court ruling that arrived just as 2014 was ending.

Brewer had pushed for the high court to drop the suit; with last week's ruling, she is using her parting statements to urge continued support for a program that has extended health coverage to nearly 300,000 low-income Arizonans. In addition, she noted, the program helps rural hospitals stay afloat by increasing the number of patients with health coverage, and adds, rather than subtracts, to the state budget.

With the case now headed back to a lower court, Ducey must decide if he will continue to defend the program, as Brewer has done. His staff says he is studying the court's decision and waiting for advice from his newly appointed legal counsel.

Education

The immediate challenge on the education front is directly tied to the budget.

Ducey must decide how to comply with a court order to hike funding to the state's K-12 system, while at the same time keeping to his campaign pledge to "fund the wait lists" at charter and district schools.

Both efforts require more spending, money that will be hard to find given the budget deficits. So far, the governor-elect has been mum on how he would tackle these challenges, other than to say he supports GOP lawmakers' challenge to the K-12 rulings.

That will buy time, but not necessarily a different outcome.

The state Supreme Court last year ruled the Legislature underfunded K-12 education by not covering inflation, as required by the state Constitution. The bill to fix that: an extra $337 million in base funding for the schools. Republican lawmakers are contesting that figure, saying it is their job to appropriate money, not the courts.

Meanwhile, a court ruling could come any day on the schools' efforts to recoup $1 billion in back payments, to compensate for the years they were underfunded. Lawmakers rejected an offer to settle that tab, leaving the matter in the lap of Maricopa County Superior Court Judge Katherine Cooper.

While Ducey supports the litigation as a way to buy time, if not reduce state costs, he is still working on how to find the money needed to fund the wait lists. This would require dollars to construct extra space in high-demand schools to accommodate more students.

This poses two problems: the state has provided scant funding for capital projects in the district schools; and there is no provision in state law to pay for construction costs for charter schools. It would take a new state law, and a funding source, to make this possible.

Additionally, Ducey has criticized the Common Core standards, saying Arizona education standards should be tailored to the state's needs. But the standards, which were adopted by the state Board of Education in 2010, are already being taught in Arizona classrooms. He has said they will remain in place while he works with educators, parents and the business community to craft an alternative.

Legislative relations

Although he has spent four years as state treasurer, Ducey has had limited interaction with the Legislature. He will need their support for his agenda to succeed.

GOP leaders in both the House and Senate say they believe they will have a more genial relationship with Ducey than Brewer. Brewer did not spend much time cultivating her relationship with lawmakers and had bitter policy differences with her own party, particularly when she pushed for a temporary tax increase and to expand the state's Medicaid program. She won those fights by assembling a bipartisan coalition of lawmakers.

Rep. David Livingston, R-Peoria and the incoming House majority whip, said Ducey has sent a positive signal by reaching out to lawmakers and meeting with many of them one on one.

He predicted the Republican majority will find a lot of common ground with the new Republican governor on key issues, including budget cuts to address the state deficit. Across-the-board cuts are inevitable, Livingston said.

"Ninety percent of the cuts he'll propose we'll accept," he predicted.

GOP leaders are also encouraged by Ducey's early staff picks. His chief of staff and his main budget-policy adviser both have experience in the Legislature, both having worked in the House in recent years. Kirk Adams, Ducey's chief of staff, is a former House speaker.That experience, Livingston said, should reverse the "strained" relations many of his colleagues had with Brewer's crew.

Democrats, the minority party at the Capitol, said they have appreciated Ducey's overtures to meet with them. However, he hasn't shared his policy priorities, instead choosing to listen, they said.