Arizona Covid19 Update: State Budget and Executive Orders

by | Mar 26, 2020 | Misc, News and Updates

Amid the chaos of the Covid19 pandemic, Arizona lawmakers have proceeded with conducting the state’s business.  Monday March 23rd, the legislature officially passed an $11.8 Billion budget as well as a targeted Coronavirus relief package.  They then adjourned until April 13th or until the President of the Senate and Speaker of the House call them back to reconvene.

The “skinny budget” that passed was a simple baseline budget with a small amount of growth baked into the formulas in order to keep agencies operational.  There were no ornaments on this Christmas tree.

In fact, though it seems like everyday a new bit of disheartening news breaks, the state’s unusually trim budget is definitely a silver lining.  This is likely the most conservative budget passed by the legislature in a decade.  Considering all the big government bills, special interest tax credit programs, and local pork projects that were moving through the system and were likely to be packed into the budget – passing a skinny budget was a win for taxpayers.

In addition to finalizing the budget, lawmakers also passed two bills to address specific issues with the Coronavirus – closure of schools and unemployment benefits.  The bill related to public school closures included provisions to not require schools to make up for normally required days, extending state-wide assessment deadlines and requiring districts to continue to pay their employees through the crisis.  The bill for unemployment benefits was an emergency measure that allowed the state to establish alternative unemployment insurance benefits for people specifically impacted by COVID19.

The budget and these bills now sit on the Governor’s desk and await his signature.

Meanwhile, the executive branch has been coordinating with the Department of Health on policies to curb the impacts of COVID-19.   Here are some of the steps their administration has taken sequentially:

  • March 11th – Governor issued Executive order declaring a State of Emergency.  The order allowed ADHS to waive licensing requirements for healthcare officials, allowed the state to access emergency funds and gave the state emergency procurement authority.  It also required insurance providers to cover out of network providers for tests and treatment of COVID-19.
  • March 15th – In conjunction with Kathy Hoffman the Superintendent of Public Instruction, ordered the closure of all schools.
  • March 17th – Issued new guidelines for restaurants, child care providers and nursing homes for social distancing and recommended gatherings of more than 10 people be cancelled or delayed.
  • March 19th – Activated the National Guard to assist grocery stores and food banks.
  • March 19th – Issued three Executive Orders: 1. Delaying requirements to renew drivers licenses and permits by 6 months (September 1, 2020); 2. Required the closure of bars, movie theaters and gyms.  The Order limited the operations of restaurants as well as gave them the ability to deliver alcohol off premises; 3. Required the delay of elective surgeries to conserve personal protective medical equipment.
  • March 20th – Executive Order expanding access to unemployment benefits to individuals impacted by COVID-19.  The Governor’s office also extended the filing deadline for state income taxes to July 15th, mirroring the extension at the federal level.
  • March 20th – Extended the closure of all schools by another 2 weeks; through April 10th.
  • March 23rd – Executive Order issued to preempt cities and towns ability to supersede the Governor’s emergency protocols including closures of businesses.  He also defined which entities and businesses and government services would be considered “essential.”
  • March 24th – Exempted Certified Registered Nurse Anesthetists (CRNAs) from federal regulations requiring them to be supervised by a physician.  This has been an issue debated at the legislature for the past several years.
  • March 24th – Executive Order delaying evictions for renters specifically impacted by COVID-19.
  • March 25th – Expanded telemedicine services and prohibited regulatory boards from requiring in-person examinations prior to the issuance of prescriptions.

Many of the executive orders issued represent vast deregulatory strides.  Issues that have been highly contested for years such as expansion of telemedicine, allowing prescriptions to be issued without an in-person examination, and the waiving of licensure for medical professionals outside of the state are being swiftly implemented out of necessity.  Despite the unfortunate circumstances that have precipitated these changes, they are a benefit to the state and to Arizonans.  These regulatory roll backs and a lean state budget are a few silver linings for which we can all be grateful.

Senator Kyrsten Sinema Pushes for Liberal Wish List in Coronavirus Relief Package

by | Mar 24, 2020 | Misc, News and Updates

Over the weekend Republicans and Democrats in Washington were working toward an agreement on a Coronavirus relief package to assist businesses and employees being hammered by the economic shutdown. A bipartisan deal was close until at the last second Democrats moved to block the legislation, followed by an announcement by House Speaker Nancy Pelosi that she would be drafting her own package.

The reason for the opposition? Democrats are trying to use the bill to pass their wish list of radical reforms! Some of the demands from democrats include:

  • Mandated Climate Change Studies
  • Increased fuel emission standards for airlines
  • Diversity reporting for corporate boards
  • Expanded collective bargaining power for unions
  • Same day voter registration
  • All mail-in elections
  • Elimination of all debt at the post office
  • Retirement plans for community newspaper employees
  • Study on all climate change mitigation efforts by all businesses benefiting from the legislation

Looking at this absurd list of demands from Pelosi and Schumer brings clarity to what House Majority Whip Rep. James Clybern meant when he said that the Coronavirus crisis, “is a tremendous opportunity to restructure things to fit our vision.”

They don’t care that none of these items help patients, hospitals or the regular person currently sitting at home waiting for this to end. They see an opportunity to exploit the process and will try to bully Trump and Republicans into accepting their demands.

Make no mistake, every democrat sees this as a political opportunity to implement the Bernie Sanders plan, including Senator Kyrsten Sinema. Earlier this week she joined the democrats in blocking the Coronavirus relief package and then tried to spin it to be about providing enough help to small business and the health care community.  How exactly does eliminating the debt at the Post Office and mandated diversity on corporate boards keep small businesses open?  How does implementing the Green New Deal help hospitals fight Coronavirus?

It was a shameful display and exposed every Democrat in Washington. They may talk about the need to fight the current crisis, but when it came time to act it turns out that expanding union power clout is more important to them. Even Sen. Sinema was seduced by this power grab and went along.

Republicans have rightfully excoriated Democrats over their antics, and so far have not given in to their demands. They must hold firm—the public will understand why they are rejecting the liberal wish list and will hold them accountable. Not even the compliant media will be able to save them—although they will try.

HB 2409 Would Exempt Wealthy Investors from Paying Income and Capital Gains Tax

by | Mar 11, 2020 | Corporate Welfare, News and Updates

As usual, bad ideas at the legislature just don’t seem to die. Lawmakers are considering legislation to expand the “Angel Investment” Tax Credit Program, a scheme that would dole out millions to wealthy investors to subsidize their risky venture capital investments in Arizona. Even worse, these same investors and businesses will also be exempt from paying any capital gains tax to the state.

Under the bill, employees at the Arizona Commerce Authority will select “qualified” investors (I.E. politically connected millionaires with relationships with the Arizona Commerce Authority) for a generous tax credit to hedge their potential losses in risky new start-up companies.  And if the business venture does pan out, the investor can then sell and pay zero to the state in capital gains. Great deal for them, a bad deal for every other taxpayer in the state.

The argument made in defense of the program is that Arizona needs the tax credit to attract more venture capital to Arizona, otherwise good ideas won’t locate here.  This of course is not true.  Good business ideas will attract capital because investors stand to gain millions of dollars in profit to do so.

And if a business is unable to attract the start-up capital it needs without the credit, it means the venture is extremely risky and should be avoided.  After all, we don’t stand to benefit monetarily from the businesses’ success, why should we therefore shoulder the losses of its failures?  And if a business was to attract the necessary start-up capital regardless of the tax credit, why are taxpayers subsidizing a business activity which would have occurred anyway?

Venture capital investing is inherently risky.  Successful speculations have the potential to enrich their investors immensely.  The Arizona Commerce Authority is not better equipped than the free market to facilitate these types of transactions or properly gauge risk.

Taxpayers should not be in the business of subsidizing risky venture capital investments by wealthy investors that stand to reap windfall tax benefits. It’s a program that picks winners and losers among taxpayers, among venture capital investors, and among aspiring entrepreneurs.

Soak the Rich Income Tax Ballot Initiative is Back

by | Mar 3, 2020 | News and Updates, Tax

In an attempt to capitalize on the Red4ED strikes in 2018, education advocates and teacher unions organized efforts to put a $700 Million income tax increase on the ballot.

Dubbed the “InvestInEd” measure, the initiative purported to target this massive tax hike on the only the wealthiest of Arizonans. Ultimately proponent’s efforts were tanked when the Arizona Supreme Court ruled the ballot language was misleading and confusing.  

But they are back.  And this time they have redrafted their measure to try to head off the arguments used in 2018 to defeat the proposal. 

Instead of nearly doubling the tax rate at the top of Arizona’s income tax brackets, the new measure imposes a 3.5 percent surcharge on taxable income above $250,000 for a single person or $500,000 for married persons. The surcharge would create a new top rate of 9 percent, giving Arizona one of the highest income tax rates in the nation. And this won’t be a tax just on the wealthy—small businesses that file as LLC and S-Corps would be affected by this measure as well.

Proponents estimate $940 Million to be generated from the initiative, making it the largest income tax increase in State history. That of course assumes that the measure generates as much revenue as proponents anticipate.  The truth is, their figures are not derived from a dynamic model that takes into account market and behavior changes as a result of the new tax scheme. The reality is that investors, job creators and more affluent Arizona taxpayers won’t stick around long enough to pay this ridiculous surcharge.  They will find a way to not pay it.

Luckily for Arizona’s economy and future, InvestInEd proponents face much stiffer political headwinds than they had in 2018.  Far from the sea of red storming the capitol two years ago which then fueled the grassroots and volunteer efforts for InvestInEd 1.0, this year’s proposal was launched with tepid participation of around 100 people. And major political figures, such as Governor Doug Ducey, remain staunchly opposed.

It also doesn’t help that recent K-12 funding increases have undermined any serious discussion on the need of a tax increase. Far from the teacher pay narratives spun by the unions, Arizona actually ranks 16th in the country with the average teacher making over $55,000 a year.  The salary increases are due to the legislature and Governor Ducey pumping over $1Billion in new dollars into the K-12 system. 

Furthermore, the state does not need to raise additional taxes to continue to invest in education.  Arizona has an over $1Billion surplus (as they did in 2019) and have in fact already raised several taxes.  Given the tremendous gains our K-12 system is making in academic benchmarks, Arizona citizens should be more than skeptical of proposals to hike taxes at this point.

Without total synergy among the education crowd AND a generous injection of National Education Association dollars to support the 2020 InvestInEd proposal, prospects for it qualifying for the ballot, let alone passing, are anything but certain. 

APS Joins Forces with Tom Steyer to roll out Arizona Green New Deal

by | Feb 26, 2020 | Free Market, News and Updates

In 2018 Arizona Public Service spent over $30 million dollars fighting liberal billionaire (and Democrat Presidential Candidate) Tom Steyer and his effort to impose California-style green energy mandates on Arizona ratepayers.

They weren’t the only ones fighting against this radical measure. Organizations and individuals from around the state banded together to fight Prop 127 and the permanent economic harm it would inflict on homeowners and business owners.

After learning about how Steyer’s renewable energy plan would lead to skyrocketing utility bills, voters overwhelmingly rejected Proposition 127 by a 2 to 1 margin (32-68 percent). The message was clear: RATEPAYERS DO NOT WANT ENERGY MANDATES.

Fewer than 18 months later it appears that both Steyer and APS have decided to ignore the will of the voters. Late last month APS announced they are rolling out, with full support of the environmental left and Tom Steyer, the “Arizona Green New Deal”. Under their proposal, APS will shift to 100 percent carbon free generation by 2050, regardless of cost, reliability or whether their customers support the concept.

Just to explain how radical this plan is, the Arizona Green New Deal is more extreme than the 25 percent renewable energy mandate Steyer pitched to voters in 2018. Only this time voters won’t get an opportunity to reject the deal since APS can implement it unilaterally and their monopoly rate base has nowhere else to go.

APS will attempt to explain their flip flop by saying that this is only “aspirational” and that it helps protect and promote nuclear power in Arizona. This is utter nonsense. Make no mistake: unless this plan is stopped it will be adopted by the Arizona Corporation Commission and will become a mandate.

And if the Palo Verde Generating Station is really under threat from the likes of Tom Steyer or other anti-nuclear environmentalists, then the better approach is to pass and promote laws to preserve the energy source. The fix should NEVER BE to saddle their captive ratepayers with all the risk of their Green New Deal, especially given the lousy track record of government selecting which companies/industries in the renewable energy industry to support.

While ratepayers will be saddled with no options and escalating utility bills, APS will be immune from the negative impacts. As a regulated corporate utility, they are constitutionally guaranteed a rate of return, which will be provided by the Arizona Corporation Commission in generous profitable increments over the next 30 years.

If this is the path that existing monopoly utility providers want to pursue, then ratepayers deserve the right to opt out. For years there has been discussions on enacting utility competition in Arizona and giving customers the option to choose their own energy provider. Now is the time to press forward on this issue. If APS wants to impose higher costs through their Green New Deal, then they should be required to compete with other utilities offering alternative plans. 

Additionally, ratepayers need to have legal protections to ensure that cheap, reliable energy takes precedent over unpopular partisan politics. Since the current structure is not putting ratepayers first, systemic reforms are necessary.

The Club urges both the Corporation Commission and the Legislature to honor the will of the voters and take action against the Arizona Green New Deal. Don’t let bullies like Tom Steyer dictate energy policy in our state.