PHOENIX — There’s an argument to be made that Republican Doug Ducey would not be governor today if not for Kirk Adams, who on Monday announced he is quitting as Ducey’s chief of staff.
American Encore, a group linked to the Koch brothers, for whom Adams was working at the time, put $750,000 into ads attacking Ducey’s Democratic rival, Fred DuVal, during the 2014 campaign. The group, which does not disclose donors, also spent another $650,000 promoting Ducey.
Adams’ ties go back even further to 2012, when Ducey, as state treasurer, was leading the campaign to defeat a proposition that would have enacted a permanent 1-cent sales tax, largely to fund education. It would have kept in place a temporary penny levy pushed through by Gov. Jan Brewer in 2010 to help balance the state budget during the recession.
Americans for Responsible Leadership, another “dark money” group, put $500,000 into killing the ballot measure — and raising Ducey’s profile. Adams, who headed that group, said the money came from the Center to Protect Patient Rights, which became American Encore.
But Adams, in an interview Monday with Capitol Media Services, said it would be wrong to link Ducey’s rise to the state’s chief executive post to that 2012 campaign.
“The campaign certainly assisted in introducing him to the Republican electorate,” Adams acknowledged, particularly around the issue of his opposition to anything he sees as a tax increase. “So he was on-brand and was clearly on-message.”
Adams said, though, that people underestimate Ducey because of his demeanor. “He has this sort of Midwestern ethic about him that’s modest and low-key and all of that.”
Plans to work in private sector
As to what’s next, Adams said he’s not interested in seeking an appointment to the U.S. Senate despite his flirting with Potomac Fever in 2012 with a bid for the U.S. House. He ultimately lost the Republican primary to Matt Salmon, who went on to win the general election.
A Senate seat may be open if Jon Kyl, appointed last year after the death of Sen. John McCain, opts to quit in January rather than serve out the term.
About all Adams will say is he plans to work in the private sector. But that, he said, will not involve working again with the Koch brothers on their agenda, but on something more “traditional.”
Ducey didn’t look far for a replacement. He chose Daniel Scarpinato, who has been in charge of his communications team, to fill the spot. Scarpinato, who grew up in Tucson, is a former Arizona Daily Star and Arizona Capitol Times reporter. He also previously worked for the National Republican Congressional Committee.
Adams has had a long-lasting impact on Arizona, even on things that predate Ducey.
It was Adams, as House speaker, who pushed through legislation in 2010 to lower the corporate income tax rate from just below 6 percent to 4.9 percent over several years.
That deal also allowed some multi-state corporations to pay no corporate income taxes at all. And it altered how businesses are assessed for property tax purposes, further reducing their liability.
Adams argued at the time that the package would send a strong message to companies that Arizona is an attractive state in which to do business.
He said estimates of lost revenue were based on a “static analysis,” assuming that the number of businesses here remained the same. He predicted there actually would be higher tax collections as companies expand here.
The record, however, is far from clear.
In the 2015 fiscal year, corporate tax collections were $663 million. This year they are $361 million — versus the $702 million that legislative budget analysts figured that, everything else being equal, corporate collections would have reached this year.
Even Brewer, a Republican who signed off on the package at the time, said last year that the tax cuts were “a little bit too aggressive.”
“There’s another way to look at this,” Adams said Monday. “Overall state revenues are up from where they were,” he said, mainly due to increases in sales and individual income taxes. And the state is looking at a potential $1 billion surplus on its $10.4 billion spending plan.
The other side of the equation, though, is that state aid to public schools is not yet back to where it was before the recession on an inflation-adjusted per-student basis. But Adams said it is that surplus that allows the state to implement a planned 20 percent hike in teacher pay by 2020 and restore some cuts made in other funding.
Dollars and cents aside, Adams said the corporate tax cuts have gone a long way to diversifying the state’s economy.
Prior to the recession, one job out of every 11 in the state was in construction. So when the housing bubble burst, Arizona was hit harder than most other states.
Adams figures that anything that attracts more businesses — and more types of businesses —will “soften the blow for Arizona in future economic downturns.”
He acknowledged he leaves unresolved issues, notably how Arizona will deal with a shortage of water. That most immediately involves negotiating a “drought contingency plan” of who gives up water if there just isn’t enough coming from the Colorado River.
“There has to be shared pain and shared compromise,” Adams said.
But even that isn’t enough, he said, citing a need to have a longer-term plan for managing water.
“You want to make sure that you’re not selling your children or their children short,” he said, “because you’re taking care of a short-term political need.”