Arizona Free Enterprise Club Statement on Governor Hobbs’ State of the State Address

Arizona Free Enterprise Club Statement on Governor Hobbs’ State of the State Address

PHOENIX, ARIZONA – Today, Arizona Governor Katie Hobbs delivered her State of the State Address to the Second Regular Session of the 56th Legislature. Scot Mussi, president of the Arizona Free Enterprise Club, issued the following comments in reaction to the speech from the second-year governor:

“Governor Hobbs’ second State of the State was much like her first: a telegraphed playbook to transform Arizona into a clone of California. From her desires to grow the size of state government, to support the continuation of an agency with a multi-million dollar slush fund picking winners and losers, and to persist in lying about Arizona’s historic school choice opportunities, Hobbs would reverse many of the policies and reforms that have positioned our state as the envy of much of the nation.

“Thankfully, for Arizonans, we have a majority in the House and Senate that are committed to preventing Hobbs from implementing those failed ideas. The Arizona Free Enterprise Club and conservative lawmakers will be on offense this legislative session, right-sizing government spending, putting good policy on the ballot in 2024 that Hobbs can’t veto, and holding bureaucratic agencies accountable.”

Read our recent piece about the truth of Arizona’s modest funding gap.

Read Senator Jake Hoffman’s statement on his efforts to repeal the Arizona Commerce Authority.

Read the Goldwater Institute’s recent article on Hobbs’ bizarre attack on ESA families.

Modest Funding Gap Provides Opportunity for Legislature to Right-Size Government Spending

Modest Funding Gap Provides Opportunity for Legislature to Right-Size Government Spending

After several years of inflated budgets propped up by trillions in unsustainable COVID cash flowing to the states from the federal government, Arizona lawmakers will be coming into the new year and the new legislative session facing a potential shortfall for the budget year in excess of $400 million. Naturally, the left and their sycophants in the media have for months been decrying this to be the result of 1) historic tax cuts enacted by Republicans in 2021 and 2) the successful universal expansion of school choice in 2022. This couldn’t be further from the truth, and there are three key facts that need to be remembered when discussing the state budget and a potential funding gap.

1. The Shortfall Is a Fraction of the Arizona Budget, Nothing Like California’s Crisis

The projected $400 million shortfall represents less than 5% of the total state budget, which spends $17.8 billion this year. Far from catastrophic. Compare this to our neighbor California, facing a $68 billion dollar deficit (nearly four times the size of our entire budget), which represents 22% of their $308 billion bloated budget – up from less than $200 billion only four years ago.

Opposite to our approach, California has continuously increased taxes, having one of the highest income tax burdens in the country. They also don’t provide choice to parents and families to make educational decisions themselves. Surely, if Arizona taking less of the people’s hard-earned money and providing ESAs to all families is the cause of our small funding gap, California, doing the exact opposite, should place them in tip top shape, right?

2. State Revenues Continue to Rise, but Spending Does Too

Contrary to the wishes of the tax happy left, this small budget shortfall is not due to the historic tax cuts passed in 2021 that benefit every Arizonan either. The state is collecting more from taxpayers than it did in 2019, yet the income tax rate has effectively been cut in half. Part of that is due to the taxation of online sales. Initially sold to be an $85 million hit on taxpayers, it continues to bring in hundreds of millions more. The other more inconvenient reason for the left is the thousands fleeing high tax states like California to relocate themselves, their families, and their businesses here.

ongoing revenue chart
Source: JLBC FY2020 Appropriations Report & JLBC October Budget Forecast

This “lack of money in the state coffers” argument is laughable with one quick look at the Ongoing Revenue chart. In summary, lawmakers enacted a budget in 2019 that expected just shy of $11 billion in ongoing revenue. In their best assessment, they expected that to grow to nearly $12 billion by FY22 (blue). But what we have experienced since then (orange) is exponential revenue growth – growth that is still continuing today. In fact, the most recent estimate from the nonpartisan Joint Legislative Budget Committee (JLBC) staff is still close to $18 billion in state revenue by 2026. We do not have a revenue problem, and we never did. Rather, we have had a spending problem for years.

ongoing spending chart

3. School Choice Not to Blame, and Government Schools Are at Record Levels of Funding

Unsurprisingly, the teachers’ unions, Democrats, and media continue their scare tactics, arguing that the massive increase in families taking advantage of their right to send their kids to the schools of their choice, is bankrupting the state and government schools. It’s no surprise that neither are true.

As the Goldwater Institute has made clear, increased use of ESAs does not take from district schools. In fact, district schools are receiving $14,673 per student, an amount never reached before, which has required the legislature to override the constitutional spending limit not once, not twice, but three times, allowing schools to spend billions in excess of the cap.

That ESAs are to blame for the shortfall is also easily debunked by simply looking at JLBC’s presentation to the Finance Advisory Committee in October. In the budget approved by the legislature and the Governor, ESA expenditures were projected to be $625 million. The actual amount is $665 million, not very far off at all. In other words, the projections made by lawmakers in July were accurate and fully budgeted for.

Budgeting Guidelines to Avoid Fiscal Failures

The big picture is that states across the country are seeing slowdowns in revenue growth and potential shortfalls, especially in personal income tax collections. That includes states that have reduced rates (like us), and those that have hiked theirs (like California). But unlike many of those high tax states, Arizona is in a good position.

As long as the legislature: 1) doesn’t allow Hobbs to use any budget gimmicks like rollovers, 2) doesn’t touch the rainy-day fund, and 3) uses this as an opportunity to right size government spending, we will be just fine.

The good news is that based on the Senate Majority Plan released in December, they are committed to doing just this.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.

The Corporation Commission’s Decision to Roll Back EV Subsidies Is a Big Win for Ratepayers

The Corporation Commission’s Decision to Roll Back EV Subsidies Is a Big Win for Ratepayers

If someone wants to own an electric vehicle (EV), it is perfectly within their right to do so. That’s what it means to have freedom. But EV owners should be the ones to bear the burden of any costs associated with the necessary infrastructure improvements. And they should absolutely be responsible for paying for any excessive demand placed on the grid.

But that’s not the way the left sees it.

As part of its Green New Deal dream, the left has been pushing an agenda that significantly increases the amount of EVs on the road despite slowing demand from consumers and companies like Ford losing billions on them just this year. And Arizona utilities have fallen right in line, planning for 1 million EVs by 2030 while APS alone plans to have a 100% “carbon free” vehicle fleet as part of its commitment to go “Net Zero” by 2050.

So, how exactly was APS planning to do this? According to the Transportation Electrification Plan it submitted to the Arizona Corporation Commission, APS wants to force all ratepayers—including non-EV owners—to subsidize the costs associated with such an absurd goal. In the plan itself, APS asked for a budget of $5 million for its “Take Charge AZ” initiative that funds new EV chargers for private businesses along with an additional $4 million in subsidies for EV owners on the backs of other ratepayers.

This is not only unreasonable, but it’s unjust.

EVs are already highly subsidized. A recent study from the Texas Public Policy Foundation (TPPF) conservatively estimates that EVs receive nearly $50,000 in subsidies over 10 years from direct tax credits from federal and state governments, avoided gas taxes, and regulatory mandates. This unfairly socializes the costs of the demand EVs place on the grid to all ratepayers. On top of that, TPPF estimates that the costs associated with upgrading the grid to serve the EV electricity demand add up to $11,883 per EV over 10 years! And once again, this cost is incurred by all ratepayers. The last thing EV owners should be getting is more ratepayer subsidies!

That’s why the Arizona Free Enterprise Club helped lead the charge to ask the Arizona Corporation Commission to oppose these unfair EV subsidies with around 340 comments submitted against APS’s plan. And Commissioners Kevin Thompson and Jim O’Connor heard us loud and clear. Thompson authored an amendment that rejected APS’s request to use up to $5 million in ratepayer funds to develop and install EV charging infrastructure as part of its “Take Charge AZ” program. And O’Connor amended the plan to ensure that any EV rebates offered by APS are done so at the expense of shareholders not ratepayers.

This is a big win for ratepayers, the overwhelming majority of whom do not own an EV or use EV charging stations and therefore shouldn’t be faced with such a financial burden. But while it is an important win, it once again highlights the need to rid ourselves of radical ESG commitments entirely. This program would have cost ratepayers $5 million, but their ESG Net Zero commitments would cost ratepayers $6 billion. Now, it’s time for the Corporation Commission to finish the job by putting an end to radical ESG plans for Arizona’s utilities once and for all.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.

Corporation Commission Should Reject Utility-Proposed ESG Net Zero Resource Plans

Corporation Commission Should Reject Utility-Proposed ESG Net Zero Resource Plans

A History of Harmful Mandates

Arizonans have faced repeated attempts over the last six years by various interest groups to impose costly Green New Deal energy mandates on utility ratepayers. In 2018, liberal billionaire Tom Steyer bankrolled a statewide ballot measure to require utilities to obtain 50% of their energy from renewable sources by 2030. Voters realized the danger of this California-style energy plan and rejected it by a 2 to 1 margin.

Immediately after the Steyer initiative failed at the ballot, the Arizona Corporation Commission began considering their own green energy mandate to completely ban fossil fuel generation in Arizona by 2050. The Commission’s plan was even more radical than the energy initiative, and this time the mandate was being pushed by our regulated utilities, not far left radicals. This caught most observers by surprise—the utilities were among the opponents of the Steyer initiative, and now they were cheerleading energy mandates.

Why the change of heart by our monopoly utility providers? The reason is simple—they knew that if the Commission adopted official policy requiring Green New Deal mandates, they would be guaranteed full cost recovery from their captive ratepayers. After fierce opposition from ratepayers and organizations like the Free Enterprise Club, this proposed mandate was rejected by the Commission in early 2022.

Unfortunately, this victory for ratepayers was short lived. Almost immediately after the Commission voted to reject costly energy mandates, the utilities announced that they would be implementing their clean energy agenda anyway, irrespective of what their captive ratepayers thought about it. This didn’t come as a total surprise, considering these utilities have gone all-in on Environmental, Social, and Governance (ESG) and the accompanying “Net Zero” commitments to ban fossil fuels in their SEC filings to shareholders, which our organization began advocating against at the Commission earlier this year.

We told the Commission that if the utilities are allowed to operate under ESG, every downstream policy decision would be shaped by it—ultimately resulting in massive ESG rate hikes for Arizona ratepayers. Based on the energy resource plans submitted by the utilities last month, it appears our predictions have been proven correct.

ESG Resource Plans

Every three years, the major monopoly utilities (APS, TEP, and UNS) are required to submit an Integrated Resource Plan (resource plan) to the Commission. These resource plans must project the expected load (demand from customers) over the next fifteen years and then outline how the utility plans to meet it – whether that is with coal, nuclear, natural gas, solar, wind, or other sources.

Unsurprisingly, the submitted plans are ESG plans through and through with radical Net Zero commitments that completely retire coal generation, add very little new natural gas, and instead rely almost entirely on unreliable and costly solar, wind, and battery storage. In TEP’s submitted plan, they begin by outlining their commitment to going Net Zero by 2050 and outline a plan for a ratepayer-funded “Net Zero Hero” campaign to push Arizonans to use less energy. The APS plan is the same, because they both begin with the same primary goal: going “green.”

Renewable Mandates Cost Ratepayers Billions

One problem (among many) is that, if approved by the Commission, these plans will cost Arizona ratepayers billions. The Commission knows this. The 2006 15% renewable mandate has cost ratepayers over $1 billion to date and their own 2021 study estimated going Net Zero by 2050 would cost ratepayers $6 billion. The utilities know this too. In 2018, they submitted ballot arguments opposing Prop 127 arguing that going renewable would cost the average ratepayer $1,250 annually.

Even more recently, the Club published a paper authored by economist Stephen Moore, finding that ratepayers in states with “renewable” energy mandates (like the goals our utilities have voluntarily committed themselves to) paid 44% more for electricity last year than those who live in states without any mandates. Further, going “Net Zero” by 2050 would increase utility costs by 78% – nearly doubling utility bills for Arizonans.

It’s clear that climate commitments cost billions, and that’s why the federal government, on behalf of the green energy lobby, is pouring trillions of dollars in tax credits to subsidize it – on their own they cannot compete. Even with those subsidies, going “green” will increase costs of electricity and result in blackouts.

The Plans are Irredeemably Wedded to ESG

Why would the utilities choose this path? Simple: in order to maintain a good ESG score with international banks and investors who have no interest in the reliability of Arizona’s grid, they have to. In fact, even the modeling software they use to craft their plans is now owned by Blackstone and Vista Equity Partners, two of the largest private equity firms who are at the tip of the spear pushing ESG. Even worse, the parent companies of our utilities have tied executive compensation to meeting “renewable” energy goals. In other words, the profits of out of state executives substantially increase if the utilities go Net Zero.

These plans will determine the direction of Arizona’s energy future – whether we follow the path of California with sky high rates and rolling blackouts, or we ensure affordable, reliable, and plentiful energy into the future. These ESG plans push us down the former, and that’s why the Commission must reject them outright to protect ratepayers and ensure just and reasonable rates.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.

Arizona’s Voter Rolls Need a Massive Clean Up

Arizona’s Voter Rolls Need a Massive Clean Up

We’re less than a year away from our next election, and if Arizona Secretary of State Adrian Fontes is serious about doing his job, his primary focus should be on ensuring a process where it is easy to vote and hard to cheat. Instead, Fontes has been attempting to implement an Elections Procedures Manual (EPM) that is ripe with unlawful provisions all while ignoring a giant (and growing) elephant in the room.

In its last two quarterly reports to the Arizona state legislature, the Secretary of State’s office reported that over 78,000 individuals have been identified on our state’s voter rolls as noncitizens or nonresidents. This number includes:

    • Over 53,200 individuals who were reported to have been issued a driver’s license or the equivalent of an Arizona nonoperating license ID in another state.
    • Over 1,300 individuals who admitted to not being a U.S. citizen on a jury questionnaire.
    • Over 23,600 individuals who admitted to not being a resident of a county on a jury questionnaire.

These numbers should be great cause for alarm—especially when you consider how close some of our state’s races were in 2022—and these individuals should be immediately removed from our state’s voter rolls. So, what did Fontes do in response to this news? Nothing. That’s right. The Secretary of State’s office simply disclosed that a process for sending notices to these individuals, placing their voter registrations on inactive status, or canceling their voter registrations was “in development.”

How convenient.

But Fontes can’t hide for long. The fact is that these voter roll issues came to light because of two bills backed by the Free Enterprise Club and signed into law by then-Governor Ducey last year: HB 2492 and HB 2243. HB 2492 is a commonsense law that cracks down on state voter registration applications that do not include proof of citizenship. HB 2243 ensures regular voter list maintenance and helped uncover these most recent issues due to provisions in the bill that:

    • Require the Arizona Department of Transportation (ADOT) to furnish a list of people who have been issued a driver’s license in another state to the Secretary of State.
    • Direct the Secretary of State to report the number from ADOT (above) to the state legislature at the end of each quarter.
    • Direct the Secretary of State to report to the state legislature at the end of each quarter the number of people who have stated on a jury questionnaire that they are not U.S. citizens or not residents of the county.

With these provisions in mind, it’s clear that the number of noncitizens and nonresidents on our state’s voter rolls will continue to grow after each quarterly report is provided. That’s why it is essential to address these issues immediately. But the Left has proven time and time again that they will fight against every legitimate election reform that comes from conservatives. So, the Biden administration and a consortium of liberal organizations filed a lawsuit against HB 2492 and HB 2243. They are terrified of these commonsense laws and want to prevent them from taking effect by wrapping them up in litigation. It’s just another example of how the Left hates any form of true election integrity. And they will do whatever it takes to prevent it—including wasting time and your taxpayer dollars in court.

Help Protect Freedom in Arizona by Joining Our Grassroots Network

Arizona needs to have a unified voice promoting economic freedom and prosperity, and the Free Enterprise Club is committed to making that happen. But we can’t do it alone. We need YOU!

Join our FREE Grassroots Action List to stay up to date on the latest battles against big government and how YOU can help influence crucial bills at the Arizona State Legislature.