Ignoring the smoke signals

Can we vape our way out of the childcare crisis? ... Portals to other Agendas ... And our unexpected new intern.

Arizona’s lawmakers missed an opportunity to make a dent in the childcare crisis this year.

Well, kind of.

First Things First, the voter-created state agency that supports early development programs for children 5 and under, made its first attempt at running a bill this session.

The program is almost entirely funded by tobacco taxes — 80 cents on every pack of cigarettes, specifically. But people aren’t smoking cigarettes as much as they used to, and First Things First, or FTF, tried to get lawmakers to add vapes to the list of nicotine products subject to the tobacco tax.

HB2778 had a bipartisan group of sponsors, but like many bills at the Legislature, it died a quiet death when lawmakers refused to even give it a hearing.

Thousands of Arizona’s families are struggling to afford childcare, and FTF provides an avenue for parents to get state-funded help. But the program isn’t intended to subsidize childcare.

The bill would have put a 50% tax on vapes and “each nicotine product.” Cigarettes, cigars and chewing tobacco already have set tax rates, so the 50% increase would apply to things like nicotine pouches, which are now the second most used tobacco product among high school students.

That would have been a big bump in revenue for an agency that has partnerships across the state to support kids, including by providing scholarships that put a dent in Arizona’s growing affordable childcare crisis.

FTF's revenue has dropped by nearly 40% since 2008, the first year it started collecting tobacco taxes.

While FTF failed its first attempt at running legislation to make up some of those revenues, CEO Melinda Morrison Gulick told us the exercise “built a lot of support and understanding” of the problem at the Capitol.

But they knew that asking Republican lawmakers to approve a new tax would be a longshot.

“I think that there are legislators who have differences of opinion about childcare and whether it's welfare or whether it's an investment in the long-term success and our future workforce,” she said. “It's a tax conversation, and that's a tough one in Arizona.”

In Arizona, there are three main ways that low-income families can get help with childcare.

• There are childcare subsidies through the Department of Economic Security, which thousands of children are on a waitlist for after the pandemic-era federal funding lapsed and state lawmakers weren’t willing to invest enough state money to keep the subsidies going.

• There is the federal Head Start program, which is facing systemic hurdles amid the federal downsizing movement.

• And there are some scholarships through FTF’s Quality First program.

But when voters created FTF almost 20 years ago, it wasn’t meant to subsidize childcare — rather, it aimed to fund a variety of programs under the umbrella of children’s healthcare.

From the November 08, 2006, edition of the Arizona Daily Star.

The state swept money for the DES-provided childcare subsidies during the Great Recession. FTF stepped in to provide some funding for childcare scholarships in what was supposed to be an emergency measure, but they’re still doing so today.

FTF spent about $42.4 million on childcare scholarships last fiscal year using federal pandemic relief funds. Those scholarships go to high-quality early childcare providers that get funding and consultation from FTF’s Quality First program.

But since that federal funding stream ended, scholarships have dramatically decreased.

In an ideal world, Gulick said, families with low incomes would seek childcare through the service that applies to them — Head Start serves families at or below 100% of the federal poverty level, DES subsidies go to families at or below 165% of the poverty line, and FTF’s Quality First scholarships can go to families earning up to 300% of the federal poverty line.

But there’s a giant clog in the system. Unless they meet some dire circumstances criteria, no one can get the DES subsidies until Arizona’s lawmakers give the program more money. That means FTF is serving children who would otherwise qualify for a DES subsidy.

“Because all of the funding streams are limited, it's a puzzle,” Gulick said. “It's a conundrum for families, providers and the state.”

Are taxes the solution?

Gulick said the next step for FTF is asking the Legislature again next year to tax vapes to beef up the agency’s revenues.

So far this fiscal year, FTF says it has invested $43.5 million into Quality First Scholarships that created 3,300 childcare slots.

And localities like Pima County, Tempe, Phoenix and Flagstaff have partnerships with FTF to administer their own versions of childcare programs.

But Arizona doesn’t have a steady revenue stream to adequately fund childcare for those most in need of it. Many states don’t.

Elsewhere, states and cities are seeing promising results from voter-approved taxes that fund childcare.

• Voters in New Orleans approved a property tax increase in 2022 to fund childcare slots for low-income families. It added 1,000 childcare seats for children from low-income families in 2023.

• Also in 2023, voters in Anchorage, Alaska, approved a marijuana sales tax that has generated $5 million for accessible childcare.

• New Mexico voters approved a constitutional amendment in 2022 to invest land grant money in early childhood education. The state then jumped up in national rankings for preschool education.

Arizona’s lawmakers are currently on vacation, and there’s no news on negotiations for the state budget. But we do know lawmakers will likely use fiscal caution amid volatility in future revenues.

The GOP-controlled Legislature likely won’t allocate all the money DES needs to clear its waitlist, or grant Gov. Katie Hobbs the money she wants for a myriad of childcare initiatives.

But our lawmakers need to do something. And that won’t just require money, it will take guts.

“I wish the state would make a larger investment in childcare, and I think a dedicated revenue source would be ideal … but it's a balance of the other extreme needs in Arizona,” Gulick said. “Based on the developments at the federal level, and what may or may not happen with federal funding, it will require Arizona to have a very courageous conversation about what we want to fund as a state.”

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Behind the headlines about artificial intelligence taking over the world, the business model that holds up the whole thing is starting to falter.

A few high-profile court cases, several proposed laws and the sudden firing of a key official could make it a lot harder for tech billionaires to turn a profit — if they have to actually start paying for all the copyrighted material their AI systems are ingesting.

The all-you-can-eat buffet could be closing.

Artificial intelligence firms have a big appetite for data. They feed on books, music, print and anything else they can use as AI training data.

But that doesn’t sit well with the companies and people who create that material, particularly when they watch AI firms make huge amounts of cash, without sharing any of it.

AI firms claim the “Fair Use” doctrine allows them to use the material for free and without having to ask for permission. It’s the same doctrine that blessed things like Google Books’ search snippets.

But that arrangement is up in the air right now. And the sudden firing of a key player by the Trump administration just made the future for AI even more uncertain.

Check out this week’s edition of the A.I. Agenda to see what’s happening, and what the billionaire class has to say about it.

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All eyes were on the University of Arizona campus last spring when student protesters set up encampments as they rallied to support Palestine.

A Tucson lawmaker didn’t take kindly to those protests and now there’s a new state law banning encampments on campuses.

If there’s one thing the Trump administration is good at, it’s generating protests.

And Arizona’s GOP-led Legislature and Democratic governor just made it easier to crack down on the student protesters who have become a prime target of President Donald Trump.

At this point, you might be thinking the new law came from a Republican legislator trying to crack down on liberal universities.

Nope. It came from a Tucson Democrat.

And the messy, months-long process of getting the bill to Gov. Katie Hobbs’ desk split the Democratic caucus, freaked out some Republicans, and left students without a clear idea of what exactly they’re not allowed to do.

This week’s edition of the Education Agenda has the legislative backstory and breaks down the free speech implications and potential unintended consequences of criminalizing campus protests.

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Arizona is in the middle of high-stakes negotiations over the future of the Colorado River. So are six other states.

This week, we hopped to the other side of the negotiating table to look through the eyes of Coloradans.

When Arizona Gov. Katie Hobbs said in January that she wanted $3 million to pay for a legal battle over Colorado River water, officials in Colorado sat up and took notice.

Arizona’s announcement was all “posturing” and “saber rattling,” a lawyer told Northern Colorado’s KUNC. Arizona and the other Lower Basin states are “trying to make it very clear they are willing and open to litigate this issue because they think they have the higher hand.”

It was just one move in the decades-long chess game played by the seven states that use the Colorado River.

Dive into this week’s Water Agenda for a different perspective on the water wars, as the basin states gear up for another round of tough water dealmaking.

If you read to the bottom of yesterday’s edition, today’s laugh needs no explanation.

If you didn’t — basically, Republican operative Dan Coulson tweeted a snippet of our newsletter that was critical of Gov. Katie Hobbs, MAGA Twitter loved it, and we felt a little dirty.

And we warned our new MAGA readers to direct their disappointment over basically everything else in this newsletter to Coulson, our new “Director of MAGA Outreach.”

Yesterday, he updated his Twitter bio.

Kudos to Dan for playing along.

And for intuitively understanding that this is an unpaid position.

Dan’s gig will remain volunteer.
But this button will help us hire more reporters.