Every time the Republican-controlled legislature considers cutting taxes, the biggest obstacle is the taxpayer-funded lobbyists representing cities, towns, and counties. They come down to the legislature year after year accusing lawmakers of “defunding” local government. And, of course, it is always police, fire, and public safety on the chopping block and never DEI programs, art projects, or other unessential and unnecessary spending projects.
The problem with this narrative is that it is completely false. Cities and towns are flush with cash and have actually received enormous windfalls, not cuts, from the legislature. The result has been hundreds of millions in new revenue for the cities in just the last 6 years. Most of it from two sources—online sales and enhanced state shared revenue.
Online Sales Tax Windfall
In 2019, the legislature passed legislation responding to the Wayfair decision, allowing the state and local governments to tax online sales from sellers outside of this state. At the time, it was sold as a “meager” $85-million-a-year tax increase. But now, five years since the legislation was enshrined into law, taxpayers are doling out over one billion dollars in total collections each year to state and local government.
The most recent full fiscal year shows that cities alone collected $250 million directly from taxing online sales in FY24. They pocketed an additional $70 million in shared revenues from the state’s collections, resulting in a net increase of $320 million in revenue that they did not have five years ago.
Income Tax Windfall
If that wasn’t enough, in 2022 the legislature passed landmark tax cuts benefiting every tax-paying Arizonan, consolidating our previous four bracket income tax rates into one, single bracket of 2.5%. At the time, the cities claimed it would bankrupt them. Why? Because cities and towns receive 15% of state income tax collections, known as Urban Revenue Sharing (URS). So, the legislature increased that to 18% to hold cities “harmless.”
The cities like to claim that the 18% has barely held them harmless, going as far as claiming that they think they still lost a little revenue in the deal. But, five years ago, URS totaled $750 million. Last year? $1.5 billion. In other words, the share of income tax cities receive has doubled in the course of just five years. How many Arizona residents have seen their income double in just five years?
This increase was not anticipated. The Arizona budget five years ago projected that cities and towns would be receiving roughly $900 million by now, not nearly a billion and a half. This means they are reaping a windfall compared to what was anticipated in the amount of $600 million. Not only were they completely held “harmless,” they have far outpaced expected revenue growth.
That’s $320 million from taxing online sales and a $600 million windfall from income tax collections, for a total windfall of $920 million.
Municipal Budgets Are Out of Control
As city revenues from the state have exploded, so has the size of their budgets. If the state had defunded the cities, we would expect to see budget cuts. Yet year after year, municipalities have seen their budgets grow bigger and bigger.
Just take a look at the city of Phoenix. In 2019, Phoenix had a General Fund budget of $1.39 billion. Five years later, their budget has nearly doubled to a whopping $2.13 billion! It’s obvious that no amount of revenue can satiate their appetite to spend, evident by their current attempt to impose another tax increase on their already overtaxed residents to avoid any sort of fiscal sanity.
And yet, they continue the same talking point and continue to send their lobbyists down to the capitol to block commonsense taxpayer protections, all on the taxpayers’ dime.
This year they are opposing Senate President Peterson’s bill (SB1013) that would require cities, towns, and counties to obtain a 2/3 majority before raising taxes and fees, a policy that applies to the legislature, and now to the people, who must get to a 60% vote threshold on the ballot to raise taxes after the passage of Prop 132 in 2022. Though the cities might bank on a veto from Katie Hobbs, President Petersen has also introduced his bill as a referral to the ballot, SCR1008.
The cities should be careful in their opposition. If Hobbs vetoes the bill, the voters will likely support it on the ballot, putting the protection behind the Voter Protection Act, which means they won’t be able to change it in the future without going back to the ballot.
Instead of spreading misinformation about being “defunded,” the cities should tackle their own bloated budgets.
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PHOENIX, ARIZONA – Tonight, voters in the City of Tucson rejected the Safe & Vibrant City ballot measure. This proposition would have increased sales taxes by a half-cent, accumulating approximately $80 million in revenue over each of the next ten years. Scot Mussi, President of the Arizona Free Enterprise Club, released the following statement:
“Voters from all sides of the political aisle made the correct decision in Tucson today. This tax increase was another failed attempt by Tucson’s radical leaders to take more tax dollars from hard-working men and women to fund an insatiable leftist agenda. We have seen over the years how Tucson officials have embraced globalist environmental, energy, and social justice propaganda and policies to steer their municipality – and even our state – into that camp. Tonight, Tucson voters rejected these efforts, rightly deciding to keep their tax dollars for themselves.”
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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!
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If the Hobbs administration has proven itself to be uniquely skilled at anything over the past two years, it’s incompetence and negligence. But now, Arizona’s governor has taken the next step toward outright fraud.
As a part of her recent budget proposal, Hobbs has asked for a supplemental appropriation to the Arizona Department of Economic Security (DES) to cover a shortfall in the Division of Developmental Disabilities (DDD). Without the additional funding, the DDD could run out of money by May, affecting many people under a program that provides services to Arizonans with disabilities.
The problem stems from a COVID-era program funded entirely by the federal government that would pay parents who operate as caregivers for their children with disabilities—the Parents as Paid Caregivers program. The program was intended to be temporary, but Hobbs received approval from the federal government in February 2024 to make it permanent.
That approval came with a catch. Beginning on April 1, the State of Arizona would have to cover 32% of the costs, which Hobbs attempted to get funding for in last year’s budget. Her proposal was not approved by the legislature, which she mutually agreed to as part of the budget process. But she continued funding the program anyway—likely believing that she would be able to flip the legislature in November’s election or bully lawmakers into giving her the money. She failed on both counts and now has created a shortfall in the DDD program that has exceeded $100 million!
This wasn’t a mistake or some sort of accounting error. Hobbs knew the Parents as Paid Caregivers program was not authorized or funded by the legislature. Yet she stole millions from our state’s general fund to pay for this COVID-era program. There is no other way to describe it—this is blatant fraud by our chief executive, and it’s another piece in a clear pattern of corruption from her administration.
In June of 2024, an eye-opening report was released uncovering an alleged pay-to-play scheme between Hobbs and an Arizona group home that is still being investigated. According to the report, Sunshine Residential Homes donated approximately $400,000 toward the Arizona Democratic party, Hobbs’ gubernatorial campaign, and her inaugural fund. And what did the group home receive in return? A nearly 60 percent rate increase during a time when the Arizona Department of Child Safety cut loose 16 providers!
Speaking of her inaugural fund, Hobbs kicked off her reign as governor with a healthy dose of corruption when she collected $1.5 million in donations to cover an inauguration event that cost less than $210,000. That left her with a bunch of leftover money—much of which she used to try to flip control of the Arizona legislature (another Hobbs failure).
And if all this is not enough to show a clear pattern of fraud and corruption, Hobbs has also been providing sweetheart contracts for family members of her administration. This past November it was discovered that Hobbs approved $700,000 to be spent on a new state logo. Yes. $700,000 on a new state logo…because that’s exactly how the people of Arizona wanted to spend their money after four years of Bidenflation.
But it’s not even the money spent that’s the worst part. The $700,000 contract for this new logo was given to Urias Communications, owned by the brother of the now-former Office of Tourism Director Lisa Urias.
We have seen enough. It’s time to hold Katie Hobbs’ feet to the fire.
While there are several ongoing criminal investigations transpiring against the Hobbs administration by AG Mayes and Maricopa County Attorney Rachel Mitchell, the moment has come for the Arizona legislature to consider all options against the governor for this unprecedented scandal. And with that, impeachment should not be off the table.
Hobbs diverted millions for an unauthorized program that has blown a hole in our state’s budget. And her response is to blame lawmakers and publish social media rants blaming everyone but herself for the theft. This would be like someone getting caught for embezzling funds from a pension fund and then telling people that not only are they not responsible but that the plan administrators need to backfill those losses.
It’s ridiculous—just like the last two years of Katie Hobbs.
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We always knew it would be costly, and experience has proven that true. But now, in a newly released report published by the Arizona Free Enterprise Club and the AZ Liberty Network, the cost for Arizona’s largest utility to go “Net Zero” was found to be even more expensive than expected coming with a massive price tag of at least $42.7 billion by 2038.
History of the Green New Deal in Arizona
The “green” agenda is not new to Arizona. In 2006, then Chairman of the Corporation Commission Kris Mayes pushed through the first mandates in Arizona, requiring our utilities to get 15% of their energy generation from “renewables” by 2025. Those rules alone have already cost ratepayers $2.3 billion. In 2018, an out-of-state billionaire funded a proposition on the ballot that would have required utilities to obtain 50% renewable generation by 2035. That measure went down in flames, being rejected by a 2-1 vote.
And these aren’t just public statements. The utilities have committed to going “Net Zero” in SEC filings to their shareholders, and they even compensate their top executives (page 68) based on how much “clean” energy they build in our state. Unsurprisingly, these commitments completely shape their resource plans.
Net Zero Resource Plans
Utilities are required to submit resource plans to the Commission every three years. These plans are supposed to project future demand in their territories and then evaluate several different portfolios of generation to meet that demand. This should be a technology agnostic process that selects the most affordable and reliable power generation for their ratepayers. Instead, it is guided every step of the way by their voluntary Net Zero goals.
The Commission is supposed to conduct their own independent analysis of these plans before approving them. Last year, after claiming they could not find someone to do an analysis, they voted to skip doing one altogether and charged ahead, approving the IRP without any idea as to the cost to ratepayers. Fortunately, we did find the expertise to do a cost and reliability analysis.
What the report found is shocking, yet not surprising. APS’ net zero commitments require a massive overbuilding of the grid, will eventually subvert the reliability of generation, and will cost ratepayers billions.
Overbuilding
With APS shutting down remaining reliable sources of power like the Four Corners coal plant by 2031, and building out almost exclusively wind, solar, and battery storage, the utilities plan to massively “overbuild” in order to meet future demand. This means nearly tripling the generation capacity currently on the grid to meet a 60% increase in demand over the next 15 years. Why? Because solar and wind are intermittent and unreliable, which means they must build far more than would be needed if they used reliable fossil fuel resources. Not only does building more cost more on its own, but it also increases shareholder profits as utilities are guaranteed a return on equity on every dollar they spend on new capital buildings. So, the more they spend, the more they profit, and the higher the costs are for ratepayers.
Sky High Rates
Given the amount of overbuilding, the cost of this Net Zero plan would be at least $42.7 billion by 2038, equating to an average $100 monthly electricity bill increase for Arizona families, and a $454 per month increase for businesses. Even worse, at this cost, the Net Zero resource plan presents serious reliability concerns.
California-Style Blackouts
Massively overbuilding “green” generation does not improve reliability. The report found that by 2038, APS could experience an up to 3,701 MW capacity shortfall in the middle of the summer late at night as Arizonans turn on their A/Cs to cool their homes. This shortfall represents 33% of the total demand in their territory, meaning hundreds of thousands of Arizona families and businesses would experience blackouts.
True Least Cost Portfolio Would Have Saved Billions
Despite the requirement to do so, the utilities did not evaluate a truly “technology agnostic” portfolio, but our report did. The findings are unsurprising. Instead of overbuilding by over relying on intermittent and unreliable sources, APS could have prioritized reliable, dispatchable power to meet future demand. By keeping Four Corners online and building new natural gas capacity, APS could reliably meet demand with no risk of blackouts by building just half the capacity APS would in their Net Zero plan at a cost of $20.8 billion, or a $21.9 billion savings for ratepayers.
Net Zero Costs Ratepayers, Rewards Shareholders
Because of this lower-cost plan, utility profits would be around $4 billion, instead of the more than $16 billion in profits the utility would make from ratepayers under their Net Zero plan. In other words, Net Zero is costly for ratepayers, but very profitable for shareholders.
Arizona Must Shut Down Net Zero
President Trump was right to declare an energy emergency on day one of his new administration. As utilities around the country continue to retire reliable power plants and replace them with unreliable wind and solar, not only are they driving rates through the roof, but they are also creating a dire reliability crisis that would plunge Arizona into energy poverty. The time to act is now. Arizona lawmakers and the Corporation Commission should draft off the Trump administration’s priority of unleashing American energy and protect ratepayers from these dangerous Net Zero Plans.
That’s why the Arizona Free Enterprise Club has spearheaded several pieces of legislation this year, including HB2527 which would prohibit utilities from retiring reliable sources of power unless they are replaced with equally reliable power, and HB2788, which would require the Commission to actually obtain a third-party analysis of the plans submitted by utilities before approving them in the future.
As this cost analysis shows, Net Zero means higher rates for Arizonans and California-style blackouts. If these plans aren’t shut down immediately, just as Germany experienced, there will be a point of no return. Arizona ratepayers will be left powerless and stuck with the bill.
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PHOENIX, ARIZONA –Today, the Arizona Free Enterprise Club and AZ Liberty Network released a comprehensive analysis of the APS ’Net Zero’ resource plan approved by the Arizona Corporation Commission in 2024.
The independent analysis found that the APS ‘Net Zero’ Preferred Plan, built around their publicly stated goal of shutting down all reliable fossil fuel power generation over the next 25 years, would cost Arizona ratepayers over $40 billion dollars and likely result in blackouts by 2038.
Some of the key findings from the report include the following:
The APS Net Zero plan would increase monthly utility bills for residential customers by nearly $100 per month, with commercial customers seeing an increase of $454 per month.
The APS plan would also result in serious reliability concerns due to the overreliance on intermittent power sources. By 2038, the APS service territory could face a capacity shortfall as high as 3,701 MW. This represents 33% of the total customer demand, potentially exposing hundreds of thousands of homes and businesses to rolling blackouts and power outages.
APS currently meets their 8.1 GW of energy demand with 10 GW of capacity, largely from reliable sources of energy including coal, nuclear, and natural gas. To meet future energy demand under their plan relying on intermittent wind, solar, and battery storage, APS will need to overbuild the grid by nearly tripling capacity to 27 GW.
An alternative True Least Cost (TLC) scenario modeled in the report shows that a plan built around reliable dispatchable power as opposed to intermittent wind, solar, and battery storage would save ratepayers over $20 billion dollars.
Though the Arizona Corporation Commission has a policy requiring an independent cost analysis before approving a resource plan by a utility, the Commission voted to waive this requirement during their most recent IRP process.
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.
PHOENIX, ARIZONA – Today, in another outrageous and unprecedented ruling, a panel for the United States Court of Appeals for the Ninth Circuit enjoined enforcement of commonsense legislation spearheaded by the Arizona Free Enterprise Club that required proof of citizenship to vote in state elections. The action by the appeals court comes after the Supreme Court of the United States ordered immediate provision of this Arizona law, stopping those trying to register to vote from using the state form if they did not give proof of citizenship.
“It’s clear this circuit court panel is motivated by radical ideology, and not the impartial judgment of the law,” said Scot Mussi, President of the Arizona Free Enterprise Club. “After months of legal wrangling over this law, and clear guidance from the nation’s high court, the Ninth Circuit still wrongly believes that it is the final arbiter of the U.S. Constitution and our laws. This ruling will continue to sow doubt into our system of government and will cost much more in taxpayer dollars thanks to the emergency appeal that will be again filed at the U.S. Supreme Court.”
Mussi added, “The Arizona Free Enterprise Club will do whatever it takes to stand in defense of this law. We are hopeful that the U.S. Supreme Court will deliver a swift and final rebuke of the Ninth Circuit in this matter once an emergency appeal is docketed.”
The case at hand involves a challenge to HB 2492, which was authored by the Arizona Free Enterprise Club (AZFEC) and passed by the Arizona Legislature in 2022 to stop non-U.S. citizens from registering to vote and casting ballots in our state. Previously, a panel on the U.S. Court of Appeals for the Ninth Circuit allowed Arizona officials to reject state voter registration forms without proof of citizenship, which was part of the intent and purpose of the law in question. Yet, another panel on the same appeals court inexplicably overturned this order, vacating enforcement of the law concerning state voter registration forms, leading to an emergency appeal to the U.S. Supreme Court. The U.S. Supreme Court quickly overruled the Ninth Circuit’s order, allowing the provision on proof of citizenship for state voters to go into effect. This was the last court action in this case until today’s surprising decision by the Ninth Circuit.
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.
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