SB1402 Provides Targeted Tax Break at the Expense of All Others

The Free Enterprise Club consistently opposes legislation that provides special tax breaks for targeted businesses.  This session’s “special unicorn” is SB1402, informally known as the Grand Canyon University bill (GCU).

SB1402 would create a property tax carve out for nationally accredited institutions of higher education to be reclassified as a class six property, taxed at 5 percent of full cash value.  Namely, this would benefit Grand Canyon University, the main proponents behind the bill, and a handful of other private educational entities.

Though understandably lawmakers wish to help Grand Canyon University grow and thrive, this is the wrong approach.  Individual tax carve outs unfairly redistribute tax liabilities on other tax payers, and discourage improvements to the system as a whole.  In fact, the state’s impact alone is estimated at $2.6 million which goes to back filling K-12 funding and does not take into account every district’s cost that has a higher education institution.   There is no way to provide targeted property tax relief to GCU, University of Phoenix and other institutions without shifting those costs to every other tax payer.

Inevitably every session a new business comes along which lawmakers claim is unlike any other.  They insist that this business is so unique and provides such monumental benefits that they should have particular exemptions not granted uniformly across the field.  But this is poor public policy.  Every business in the eyes of government should be treated equally and fairly.  That is where lawmakers should spend their time and energy if they truly wish to help GCU, improving the exorbitant and disparate burden of commercial property taxes on all businesses.

Legislative Alert: SB1282 Dilutes Public Records Laws

Arizona’s public records laws are some of the best in the country for open and transparent government.  SB 1282 dilutes those laws, and hinders the public’s ability to access public records to which they are entitled.

Unfortunately, this bill is headed to the House floor for a vote.  It should be stopped.    

SB1282 allows the government to deny the public access to records they deem “unduly burdensome or harassing.”  This is overly broad and gives all the discretion to the government.  Nothing in this bill stops a records custodian from using this definition to justify a denial of any public records for any reason at all including work flow issues or other factors.    The only recourse for a citizen who may disagree with the burdensome or harassing claim is to take to the courts.  This of course puts a huge burden on the citizen and is yet another obstruction to their right to the access of public records.

SB1282 is unnecessary.  The law already allows for the government grounds to deny disclosure of public records in three areas:

  • The record is confidential by statute
  • The record involves the privacy interest of persons
  • Disclosure would be detrimental to the “best interests of the State”
This last standard has been tested by the courts – in some cases requests that are overly harassing or burdensome have been denied on the grounds that it is in the best interest of the state to do so.  It does require the government to show some harm to their agency in order to invoke it, which is proper.
In sum, this bill is anti-transparency, anti-open government, and unnecessary.  We urge you to contact your legislators and let them know they should VOTE NO on SB1282.

HB 2501 Streamlines Health Boards and Reduces Regulatory Overreach

State lawmakers are looking to build upon the successes of last session to increase efficiency and reign in regulatory overreach by taking on the multiple boards and commissions that regulate the health professions in the state.

HB2501 would make three primary improvements that will benefit both the licensed community and consumers:

  1. Saving Money by Relocating the Health Boards

Many boards spend thousands of dollars on renting space, such as the Board of Behavioral Health Examiners that spends $7,492 a month and the Board of Nursing that spends $24,405 a month. Under HB 2501, all of the health boards beginning in FY 2017 would be relocated to the Department of Health Services, which would save hundreds of thousands of dollars each year.

  1. Provide Oversight of Board Rules and Contracts

A recent Supreme Court case, North Carolina Board of Dental Examiners VS Federal Trade Commission, it was determined that industry boards autonomous from direct oversight did not have immunity from antitrust laws.  In the case of the North Carolina, the Dental Examiners Board was issuing cease and desist letters to mall kiosks distributing teeth whitening services on the grounds that their board regulated dental services in the state and teeth whitening fell under services only a licensed dental profession could administer.  To prevent continued regulatory overreach by the health boards, HB 2501 would give the AZ Department of Health Services Director the authority to reject Board rules if they are anticompetitive in nature.  This is a major victory for increased competition and consumer choice.

  1. Conduct ongoing studies to uncover more efficiencies and cost savings

In conjunction with the physical move, the Arizona Department of Health Services will continue to study the board’s consolidation efforts and make recommendations on additional ways to streamline operations and create continuity between the boards.  This ensures ongoing continued improvement as well as accountability to the regulated community.  For example, the Medical Board has an annual budget of $5.7 million but takes in almost $7 million in fees and services.  This is clearly an opportunity to examine the proper fee assessments and put money back into the pockets of the regulated community.

HB2501 has successfully passed out of the House and now awaits a committee hearing in the Senate.  This is one of the most aggressive efficiency bills of the session and would take a large step in reigning in industry boards that tend to overreach and put up barriers to their competition.


Key Vote Alert: SB 1487 Protects Businesses and Taxpayers by Requiring that Cities Follow the Law

A major policy reform is nearing the home stretch and, if passed, will greatly reduce government overreach and lawlessness by local jurisdictions. The measure is Senate Bill 1487, and deals with the problem of local cities and towns passing ordinances and regulations that violate state law.

This is a critically important issue for supporters of limited government since the most common instances where municipalities decide to willfully ignore the law is in cases involving economic freedom and property rights. The poster child for this abuse has been the City of Tempe, who over the last year has fought to impose a costly plastic bag ban and mandatory paid sick leave on businesses; even though both violate state law.

Of course, when an individual breaks the law, they are not only forced to comply but are also punished for the infraction, whether that is by jail, fine, or revocation of privilege.

Cities and towns have had no such accountability. The only remedy for a rogue city has been for an individual or organization willing to litigate them into compliance, which is a costly endeavor and fraught with risk.  Not to mention this option disenfranchises the most vulnerable and exposes the person or entity to retribution by the city.

SB 1487 ends this double standard and will ensure that municipalities follow the law by giving the Arizona Attorney General the authority to investigate a municipality, upon request by a state legislator, to determine if they are in violation of state statute or the constitution.  If it’s determined that a violation did occur and the municipality does not resolve the violation, the penalty for noncompliance is the forfeiture of their state shared revenue.

The bill passed the Senate and is awaiting a vote in the House for approval.  The significance of this bill can hardly be overstated.  Without a more immediate mechanism to enforce the statutes and laws passed by the legislature that keep cities and towns from steamrolling citizens and businesses, it will continue to happen.

Every pro free market reform that protects citizens from local government overreach depends on this bill. Some examples from this session include:

  •  HB 2478, which prohibits cities from requiring a business waive their rights as a condition of license approval
  • HB 2517, which prohibits local occupational licensing unless for strict public health and safety
  •   SB 1350, which stops cities from banning short term rentals and home sharing, such as is done through Airbnb or VRBO

Towns and cities should not be exempt from consequences when they break the law.  We urge every lawmaker to support SB 1487.

More Evidence Incentive-Based Economic Development is a Shell Game

More Evidence Incentive-Based Economic Development is a Shell Game

In the midst of ongoing discussions about the purpose and practices of the Arizona Commerce Authority, one of their heralded successes is facing a difficult contraction.  Silicon-based company Zenefits announced it will lay off 160 of their workers mostly within their Tempe facility, and their CEO stepped down.

Zenefits expanded operations into Arizona because the rapidly growing tech firm needed greater access to an affordable yet qualified workforce – Arizona fit that bill.

The Arizona Commerce Authority promised $1.5 million in cash and tax credits against future profits if Zenefits could deliver 1,300 new higher-wage jobs within three years.

Like all new, fast-paced, capital ventures – they’re risky investments and the company is experiencing significant growing pains.  The company announced last June they would hire 700 new employees to fulfill the remainder of their three year commitment by November 2015.  Now, just three months later, many of those very jobs are disappearing again.

Understandably, Zenefits is grappling with lightning speed expansion in the midst of a highly complicated and regulated field.  Less understandably, the Arizona Commerce Authority and fellow incentive champions continue to cling to the narrative that picking winners and losers is good public policy.

Special tax carve outs and cash giveaways to private companies are a gamble with tax payer dollars.  Such unpredictable and speculative practices are better relegated to the free market.  Not to mention such incentives create an uneven playing field where by the very incentives given to one business becomes a disadvantage to competitors or potential competitors.

Not to mention the majority of our businesses and jobs in Arizona are not subsidized.  The jobs created and subsequently rewarded by the ACA are a fraction of the total in the state.  And despite the fact that companies like Zenefits were likely to choose Arizona without special incentives, we still continue to dole them out, so that entities like the ACA can claim them as a win.