by admin | Feb 24, 2015 | Uncategorized
The taxpayers of the City of Phoenix – proud owners of a failing hotel, $1.5 billion in deficits over the next two years, and $3 billion in unfunded pension debt – are likely to see their sales tax nearly doubled to pay for $30 billion in transportation projects that are already losing money.
You read that right.
Phoenix’s current transportation tax – Transit 2000 – will expire in five years, and the Phoenix City Council is preparing to nearly double it – from .4% to .75% – to raise $30 billion for a hodgepodge of projects that the city neither needs nor can afford in the first place. What’s more, the Council is being asked to do away with any pretense of making the new taxes temporary or subject to review. They will simply make them permanent.
Keep in mind that Arizona still has one of the highest sales tax burdens in the nation, even after letting the 2010 sales tax hike expire.
However, the bulk of the new taxes would be spent on the further expansion and maintenance of light rail. In fact Phoenix mayor Greg Stanton has plans to triple the size of the system. As we approach the ten-year anniversary of breaking ground for light rail, it’s worth noting that it has never, ever operated in the black. Instead it’s operating losses amount to tens of millions each year, which the City of Phoenix has to absorb. For example, Phoenix spent roughly $22 million to operate light rail last year, but only recovered $8 million.
So – drowning in debt, facing over $1 billion in new deficits, and faced with the reality that taxpayers spent $1.4 billion to build a slow moving trolley that loses $14 million a year – the Phoenix City Council is poised to double your sales taxes to triple it. All while police and fire continue to be dangerously underfunded.
Don’t let them get away with it. We encourage all Phoenix residents to call their councilmember, write letters to the editor, and show up to the City Council for the debate over this irresponsible tax hike – and let your voice be heard.
by admin | Feb 5, 2015 | Uncategorized
Arizona is in a difficult budget situation. The projected deficit is close to a billion dollars, and revenue and growth projections remain anemic. In response to these financial difficulties, Governor Ducey has proposed a responsible, sound fiscal plan to balance our budget. There is still work to be done, but Ducey’s budget blueprint has given lawmakers a good place to start.
Then along comes a bill that is completely oblivious to all of this, proposing to spend billions of dollars the state doesn’t have. It’s OK, the legislator argues, it’s not really spending – it’s an “investment” that will create jobs and generate revenue for the state.
That bill is House Bill 2033, sponsored by Rep. Bob Robson. HB 2033 proposes to spend over $2 billion on public university research facilities over the next 30 years–$68 million in FY 2017-18 and $72.8 million per year for through FY 2047-48. Of course successful private universities like Grand Canyon University, which actually pay state income and property taxes while still keeping tuition low, won’t see a dime of it. So not only do we spend billions, but we pick winners and losers in the process.
Some lawmakers will never realize that you can’t spend your way out of fiscal crisis. More deficit spending only creates more debt, and the rate of return on all these investments the state couldn’t afford in the first place turn out to be far less than promised. It has happened over and over again, and is a big reason why Arizona is now on its second major budget crisis in less than five years.
Nevertheless, for those familiar with the failure of President Obama’s 2009 stimulus package, HB 2033 should feel like déjà vu. After all, “this is a jobs bill,” Robson claimed. No word on whether those jobs are “shovel-ready.”
If there is truly a need for capital improvements in higher education, they should have no trouble raising the funds from the private sector and alumni to pay for it. But to propose spending $2 billion of taxpayers’ money, right in the middle of a budget crisis, is simply unwise. Lawmakers need to reject this proposed “investment” and focus on the real issue, getting our fiscal house in order.
by admin | Feb 2, 2015 | Uncategorized
In Arizona, thanks to a slew of solar incentives and special tax breaks, the solar industry is bigger than ever. More astonishingly, the rooftop solar industry doesn’t even try to hide the fact that their entire business model is dependent on the staggering number of taxpayer handouts and loans being provided. SolarCity’s own annual report filed with the SEC bluntly stated: “Our business currently depends on the availability of (government) rebates, tax credits and other financial incentives.” In other words, the viability of their entire business model hinges on these massive taxpayer handouts.
As if the subsidies weren’t bad enough, several companies have figured out how to securitize these taxpayer giveaways by leasing the solar panels over a 20 or 30 year period (not unlike a mortgage) rather than selling them. Under this lease financing scheme, solar firms promise homeowners “free solar” and lower electric bills, seemingly guaranteeing a no risk investment. If this seems too good to be true, it means it probably is.
So what are solar companies not telling us about these lease agreements? Things like if the homeowner decides to move in the next 30 years, they may have trouble selling their home, since the solar lease can potentially cloud the title (in some instances the rooftop solar company has to approve the buyer). Additionally, solar firms have been known to omit hidden fees embedded in the lease, exaggerate the long term cost and energy savings and fail to disclose that homeowners are likely responsible for any reductions in the subsidies being provided.
With millions in corporate welfare at stake, these lease agreements deserve additional transparency and disclosure. Unfortunately, solar firms have little incentive to provide more information, and there is almost no regulatory oversight for these long term leases. Unlike utilities, rooftop solar is exempt from review by the Arizona Corporation Commission. They face little real scrutiny over their dubious marketing practices or what they are telling – and selling – unsuspecting homeowners.
It’s long past time that policymakers take a closer look at these heavily subsidized programs, which is why the Free Enterprise Club supports Sen. Debbie Lesko’s efforts to shine light on the rooftop solar leasing scheme. Sen. Lesko is proposing legislation that would implement minimum disclosure requirements for solar companies prior to leasing to prospective customers. In particular, they will be required to let homeowners know the amount of subsidies, credits, utility costs and projected savings that can be reasonably expected throughout the life of the lease. They will also have to disclose that any savings being promised is subject to change depending on future legislative or regulatory action.
Additional transparency of solar lease agreements will be good for consumers, taxpayers and ratepayers. If rooftop solar wants access to the subsidies that fuel their bottom line, then they should have no problem with minimum disclosure requirements to better inform prospective customers.
by admin | Jan 21, 2015 | Uncategorized
The 2015 session of the Arizona Legislature is officially underway. For taxpayer advocates like us, it’s the start of our busy season. Time to get to work supporting good ideas and defeating bad ideas, including – as is often the case – the same bad ideas that we defeated last year.
Last session, Sen. Carlyle Begay sponsored legislation that would have created a the office of Film and Media, a new state agency at a cost of over $600,000. The bill stalled in the Senate, but has been revived again this year as House Bill 2144.
Proponents of HB 2144 are claiming that the state needs a taxpayer funded advocate to promote the movie industry in Arizona. This of course is a very dubious reason to create a entirely new office, and even if it were a good idea, it is a job better left to the private sector, not taxpayers.
We also suspect that film promotion in Arizona is not the only purpose this office will serve. For years policymakers have talked to 20th Century Fox and other media interests, asking what it would take to get them to film here in Arizona. Their answer has always been the same: bring back the Hollywood tax credit, and we’ll consider it. As you may recall, this multi-million dollar taxpayer handout to Hollywood studios expired in 2010 (costing taxpayers millions), but advocates of this blatant corporate welfare have been trying to revive it ever since. They have failed to convince lawmakers on their own, so now it looks like they want to create a taxpayer-funded commission to assist them in their efforts.
These are no ordinary times. Gov. Ducey and Legislative leaders are preparing to tackle a massive budget deficit, notwithstanding the uncertainty of ongoing court cases that will decide Constitutional mandates over education and Medicaid funding. To add an entirely new government agency in the midst of this crisis, whose sole job will be to figure out how to direct more taxpayer money to the multi-billion dollar film industry, is simply ridiculous.
Hollywood studios already employ an army of high-priced lobbyists to seek out taxpayer subsidies, they don’t need Arizona taxpayers to pay for another one.
by admin | Jan 21, 2015 | Uncategorized
On Friday, Governor Doug Ducey released his budget plan that sends more money to the classroom, protects taxpayers and puts Arizona on the path to economic prosperity.
Specifically, Gov. Ducey’s budget implements a hiring freeze, consolidates agencies that often have overlapping roles, cuts bureaucracy across the board and ends the inflation tax that effects thousands of hardworking taxpayers every year. Just as importantly, it increases dollars to the classroom – while only cutting school administration expenses – so Arizona students receive the best education possible.
“For years, Arizona’s budget has been beset by accounting gimmicks and special interest loopholes that only added to our debt and has led to one budget crisis after another,” said AZ Free Enterprise Club President Scot Mussi. “Gov. Ducey showed genuine leadership by boldly proposing to immediately close the current budget deficit and produce a structurally balanced budget by FY 2017.”
Governor Ducey’s budget does more than just eliminate wasteful spending. It provides innovative reforms that will make government run more efficiently and effectively, while protecting vital services.
“By offering a true balanced budget and making sure more dollars reach the classroom, Gov. Ducey is leading the way towards making Arizona a model for economic growth and job creation,” said Mussi. “We can only hope the Legislature shows the same courage and leadership by passing this budget.”
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