by admin | Jun 27, 2017 | News and Updates
As reported by the Club last year, Pinal County officials began turning the political wheels to send a $640 million-dollar tax increase to voters to fund a wide array of transportation projects throughout the region. This new 20-year ½ cent transportation excise tax would be in addition to the existing ½ cent tax for transportation that is set to expire in 2025.
After unveiling the plan, the effort quickly spurred opposition from retailers, home builders, auto dealers and multiple taxpayer watchdog groups. However, instead of taking this as a sign that the community wouldn’t accept their proposal, Pinal officials developed a new plan to try to buy-off their political opposition.
Added to the plan was a special carve-out for purchases over $10,000 from paying the new incremental tax amount, language specifically designed to eliminate opposition from certain businesses. Only one problem—special sales tax carve-outs are illegal. They attempted to remedy this issue last session with House Bill 2156, but fortunately for taxpayers the legislation was quickly killed by lawmakers and the authority to provide the exemption was not granted.
End of the story? Not quite.
The proponents of the tax hike are moving forward anyway, and have included the carve-out in the transportation plan. Despite their public acknowledgement that this can’t be done, Pinal officials are now citing a Legislative Council opinion to defend their actions. Such an opinion is not legally binding and is heavily questioned by attorneys and tax policy experts. If pursued by the County, it is very likely that this power grab will be challenged in court.
It is pretty clear at this point that the various special interests looking to benefit from the tax hike will do whatever it takes to get it passed. With the vote scheduled for November, Pinal taxpayers should expect a well-funded, glitzy campaign that won’t discuss the insider deal making and highly questionable legal maneuvers that made it all possible.
by admin | Jun 22, 2017 | News and Updates
As predictable as the sun rising in the East, the usual suspects are again pushing the same rejected proposals to improve Arizona’s education system. Last weekend, several establishment members of the business community published an op-ed, urging the political class to rally around a billion-dollar sales tax increase to fund a cornucopia of various education proposals. The tax increase would be included with the extension of Proposition 301, the 6/10th of a cent sales tax set to expire in 2021.
If this idea sounds familiar, it’s because a similar tax hike to fund education was proposed in 2012, only to be voted down in a landslide. This plan is not much different—the massive tax increase would allegedly go to fund higher teacher pay, all day kindergarten and building renewal and construction.
And no tax hike proposal would be complete without a little crony capitalism sprinkled in; $25Million per year is included to fund job training for specific industries, likely to curry favor with financial backers of the plan.
Arguments in favor of the tax increase haven’t changed much over the years either. Voters have heard it all before, so they shouldn’t be surprised when these new promises likely go unfulfilled. For proof, look no further than the current Prop 301 tax, which was sold as the ‘silver bullet’ needed to fix our underfunded education system.
Instead, 18 years after its inception the state Auditor General has determined that only 53 cents of every dollar is being spent in the classroom, a record low. Rather than talking about a new tax, perhaps we should take a closer look at how existing dollars are being spent.
Also ignored by advocates of the tax increase have been the strides made in recent years to increase funding for K-12. Due to the passage of Prop 123 and action by our legislature and Governor, over $500 million in new funding has been allocated to K-12 in FY 2018. This is money above and beyond spending increases to deal with inflation, and includes dollars specifically earmarked for teacher pay raises and new building construction.
None of this probably matters to the establishment asking for the tax hike, but it does matter to hardworking taxpayers and small business owners that will be forced to pay for it. Now is not the time to saddle Arizona’s economy with a billion-dollar tax increase that is poorly conceived and unnecessary.
Rather, when it comes to education the focus should remain on how best to improve outcomes and choice, reward achievement and reform our broken school funding formulas. Focusing on these areas of concern will do a lot more good for our students than any tax increase pushed by the establishment.
by admin | Jun 15, 2017 | News and Updates
Free Enterprise Club Announces Top Legislative Performers of 2017
The Arizona Free Enterprise Club today released highlights from our 2017 Legislative Scorecard, featuring the top performers of the 2017 Legislative Session. In preparing the scorecard, the Club conducted a thorough review of all legislative action and key votes taken by lawmakers this session.
Overall there were 9 House Members and 7 Senators that scored an A+ on the Club’s report card for having a perfect voting record. Legislators that received a perfect score on the Club’s 2017 report card included:
House of Representatives
- Eddie Farnsworth (District 12)
- Mark Finchem (District 11)
- Travis Grantham (District 12)
- Anthony Kern (District 20)
- Javan Mesnard (District 17)
- Paul Mosley (District 5)
- Jill Norgaard (District 18)
- Kevin Payne (District 21)
- Maria Syms (District 28)
State Senate
- Sylvia Allen (District 6)
- Judy Burges (District 22)
- Gail Griffin (District 14)
- Debbie Lesko (District 21)
- Steve Montenegro (District 13)
- Warren Petersen (District 12)
- Steve Smith (District 11)
“Taxpayers are fortunate that Arizona has a great group of lawmakers dedicated to pro-growth, free market principles,” Club President Scot Mussi said. “These individuals deserve special distinction as it is not easy taking on the countless special interests and big spenders that dominate the political scene at the Capitol.”
To view the Club’s House Scorecard, Click Here.
To view the Club’s Senate Scorecard, Click Here.
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The Arizona Free Enterprise Club is a 501(C)(4) policy and advocacy group that is not affiliated with any other organization. For more information please visit www.azfree.org
by admin | Jun 8, 2017 | News and Updates
Among the frustrations with our health care industry, reducing drug prescription costs is an issue that seems to unify all Americans.
Unfortunately, politicians in Washington seemed fixated on solutions that provide short term relief in exchange for long term pain. One such solution currently being debated in Congress is legislation to allow for the importation of cheap prescription drugs from Canada and other nations that have adopted price controls.
It is easy to see the political allure of “cheap drugs,” but what is often ignored by advocates of market distorting price controls is the long-term impact such policies will have on medical innovation and access.
A rarely discussed fact is that more than half of all global pharmaceutical/biotech research occurs in the United States. And make no mistake, this research isn’t cheap. It costs on average over $2.5 Billion and takes 10-12 years to develop a new drug, conduct clinical trials, and navigate the byzantine FDA approval process. Billions more is spent on drug research and testing that never crosses the finish line.
By contrast, countries with price controls have all but eliminated any incentive to pursue new innovations and research, leaving the task of investing in new life saving drugs to the US. The harsh reality is that most of the world is reaping the benefits of new drugs for which Americans are paying. Though this isn’t fair, it would be tragic if we traded away the next generation of life-saving medicine so that we can have cheap drugs today.
The good news is there are other alternatives for reform. If the goal is to reduce drug costs without stifling innovation, then reforming the Food and Drug Administration (FDA) approval process should be the place to start.
A perfect example of needed reform is the widely popular Right-to-Try Law. For the last few years, the Goldwater Institute has led a national effort that would allow terminally ill patients to take advantage of new drugs that passed the first phase of clinical testing. This proposal has been approved in 39 states with broad bipartisan support, yet this common sense reform is still being stonewalled by the FDA.
If Congress is truly concerned about high drug prices, identifying ways to promote innovation and eliminating FDA red tape would be a good place to start. Lawmakers in Washington should abandon the drug importation scheme and pursue real reforms that save money without sacrificing innovation, access, or the quality of our medical care.
by admin | Jun 6, 2017 | News and Updates
Over the past 15 years, many states across the country have reduced or abolished tax incentive programs aimed at luring Hollywood films, TV shows, and productions to their communities. Turning the faucet off on these programs became a trend after a slew of damning reports and studies demonstrated the high costs per job and highly suspect returns.
But many lawmakers have stars in their eyes again, seduced by the idea of rubbing elbows with celebrities coming to shoot films in their communities. In fact, several states in the last two years have reinstated, renewed, or expanded their film subsidy programs.
Governor Kasich of Ohio signed a bill into law just last year that doubled the credits available under their program – expanding their film subsidies to $40 million a year and removing the dollar figure cap on reimbursements to a 30 percent of all production costs.
Without scrutiny or examination, Hawaii put their program on autopilot for almost another decade – extending their program until 2026 with a $35 million cap per year. Advocates criticized the small island State for its frugalness, insisting the cap should be not lower than $50 million a year, even though the State’s program allows production companies to carry forward the rebates if the cap has been reached.
Maryland has swooned in the face of popular programs like “House of Cards” and “Veep,” shelling out $62.5 million in credits between 2012 – 2016. Dazzled by the glamour of Kevin Spacey in their State, they extended their program after the shows threatened to jump across the Potomac River if the credits expired. This is even after the Maryland Department of Legislative Services deemed the credit program was not worth the cost and recommended the legislature sunset the program in 2016.
And of course, there is California. The home of Hollywood has no shame when it comes to enriching star-studded celebrities in their own backyard. The state recently more than tripled their tax credit budget to $330 million a year. The fact that lawmakers in Sacramento are willing to spend money to keep Hollywood in Hollywood should be a red flag that this is a subsidy game that can’t be won.
There are states, however, that have seen through the ruse. Alaska and Michigan repealed their programs in 2015, and New Jersey allowed their funding to lapse. Alabama recently introduced a bill to abolish their six-year-old entertainment industry incentive program. This came after their Department of Revenue contracted with an independent firm to review the program. The study returned a scathing assessment. They found that Alabama had awarded $26.8 million for 37 productions – at a cost of $55,874 per direct full-time-equivalent job. The study was unable to determine how many of the actual productions were a direct inducement by the incentive program.
Massachusetts too is looking to peel back subsides for the rich and famous by reducing their $80 million program by $14-15 million. An independent study in the State found only 13 cents per dollar was generated in revenue from 2006 to 2011. Last year, the Department of Revenue demonstrated the State spent $106,099 per net full-time-equivalent job cost with an average salary of $20,585. As lawmakers in Massachusetts struggle to close a $462 million budget gap, some politicians are proposing new taxes on services such as short-term rentals. Citizens should be outraged at the idea that average home owners trying to earn a few extra dollars from their investment should be shouldering the burden of the State’s fiscal imprudence, while celebrities fly in and receive the red-carpet tax treatment.
Louisiana, which was the first State to adopt a film tax credit program in 1992, is looking to curtail its subsidies to Hollywood filmmakers by adopting more accountability measures to benefit the locals. Their economic development office concluded the program between 2011- 2012 cost taxpayers $231 million in credits for a billion dollars in spending over a decade. The Louisiana Budget Project called the State’s return “a flop,” concluding each job created had cost $60,000. Their proposed changes would require the tax credits be repaid if the film makes a profit and kicks back 10 percent of the production company’s profits to the State up and above the credit amount.
The more star-struck States that fall over themselves to lure film producers, the faster the race to the bottom. The Center on Budget and Policy Priorities produced an in-depth study in 2010, comparing the different states’ programs. The author Robert Tannenwald rightly concluded, “Some residents benefit from these subsidies, but most end up paying for them in the form of fewer services – such as education, healthcare, and police and fire protection – or higher taxes elsewhere. The benefits to the few are highly visible; the costs to the majority are hidden because they are spread so widely and detached from the subsidies.”
Except for studies commissioned and published by the film industry, the consensus among budget departments, economists, and researchers is clear: movie tax credits are a bad deal for taxpayers. Arizona would be foolish to think competing with CA and NY in a film subsidy arms race would pay dividends. But with the program’s recent comeback popularity – AZ legislators should be on guard. It is only a matter of time before they are being courted again by dubious proposals.
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