Reforming the Arizona Commerce Authority: Lawmakers Should Resolve Constitutionality Problems First

Reforming the Arizona Commerce Authority: Lawmakers Should Resolve Constitutionality Problems First

There are plenty of problems with the Arizona Commerce Authority. Since its inception in 2011, criticisms were raised concerning its freewheeling powers to dole out taxpayer money with practically no legislative oversight and broad exemptions from important guardrails such as the prohibition of using outside counsel (rather than the Attorney General’s office.) These issues have resurfaced over the years in critical Auditor General reports that have highlighted the insufficient reporting and record keeping for the administration of grants and awards provided by the agency to private businesses. This led to a mere 2-year extension of the agency in 2016, and a controversial reauthorization in 2018 when Republicans and Democrats alike banged the table for reforms. And most recently, the agency has come under fire by the Attorney General herself, for unconstitutional gifts in the way of wining and dining and Super Bowl tickets for CEOs.

Despite consistent criticism across the aisle and over the years, the ACA has evaded any real substantial reforms. That could very well change this year.

There now seems to be bipartisan interest in reining in an unaccountable agency with a $226M budget and a multi-million-dollar slush fund. Additionally, Republicans are unhappy that the ACA has been utilized by Governor Hobbs to pursue radical goals on abortion, water, and social equity…(digital equity plan). Democrats, on the other hand, must straddle support for a Hobbs-regime that is at cross purposes with purported opposition to corporatism and degradation of tax revenues that could be used elsewhere.

So, the question isn’t whether the ACA will be reformed this session, but which reforms will ultimately be adopted.

Among the reforms being considered, by far the most important and inarguable is a statutory “test” on the Gift Clause. Arizona’s constitution includes a protection for taxpayers from the “depletion of the public treasury or inflation of public debt by engag[ing] in non-public enterprises or by giving advantages to special interests.” This critical protection called the Gift Clause has been litigated over the years, yet arguably, the most important ruling occurred in 2021, well after the ACA was formed. The Schires Decision put forth a two-part test to clarify when an expenditure tripped the line into a Gift Clause violation. First, an expenditure must serve a public purpose, admittedly a low and subjective bar, according to the court. And secondly, the “the value to be received by the public is far exceeded by the consideration being paid by the public.” Schires clarified that, “relevant ‘consideration’ consists of direct benefits that are ‘bargained for as part of the contracting party’s promised performance’ and does not include ‘anticipated indirect benefits.’”

In other words, the customary “economic impact” metrics used by the Commerce Authority are not relevant factors to satisfy consideration, including tax revenues generated by the private business, as the court argued calculating such factors would “eviscerate the Gift Clause” altogether. Instead, the ACA must receive a “bargained-for benefit as part of the private party’s performance, and the payment of public funds must not be grossly disproportionate to the fair market value of that benefit.”

The Arizona Commerce Authority is in blatant violation of the Gift Clause and most urgently needs reform to ensure its compliance going forward. The bill that passed out of Senate Government on March 21 includes just that, codifying the Schires test in statute and obligating the ACA to analyze all grants and loans accordingly. A failure to adopt this obvious reform this session would be total neglect by the legislature, it would invite litigation of nearly all the Authority’s programs and leave the decimation of the Authority to the courts.  

Additionally, the bill reformed all current refundable tax credits (Qualified Facilities, Research and Development, and Film tax credits) administered by the Authority by making them non-refundable. This would ensure these programs comply with the Gift Clause as the refundable portion of the credit is, strictly speaking, a subsidy, for which statute currently does not require bargained-for benefits to receive.

Aside from these two most critical reforms to simply ensure the agency is constitutional, the legislature should prioritize making the agency more transparent in its reporting by defining its terms of performance, give small businesses and taxpayers a voice in its administration by diversifying the board of directors, and eliminate exemptions that make the agency less accountable, including allowing them to have their own in house counsel and permitting them to compete with the private industries. Moreover, the Authority could provide invaluable information to policymakers and businesses alike if they were required to focus their resources on monitoring the tax and regulatory environment, especially locally, as often those are the most important factors considered by businesses for location and relocation.

With no shortage of legal and functional problems at the Arizona Commerce Authority, lawmakers should seize on the opportunity to pass long-overdue reforms this year.

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Arizona Free Enterprise Club President Files Lawsuit to Force Cleanup of State’s Voter Rolls

Arizona Free Enterprise Club President Files Lawsuit to Force Cleanup of State’s Voter Rolls

PHOENIX, ARIZONA – Late last week, Scot Mussi, the President of the Arizona Free Enterprise Club, filed a lawsuit in the U.S. District Court for the District of Arizona over the State’s failure to comply with Section 8 of the National Voter Registration Act (NVRA), which requires states to “conduct a general program that makes a reasonable effort to remove the names of ineligible voters from the officials lists of eligible voters by reason of … (A) the death of the registrant; or (B) a change in the residence of the registrant” to maintain accurate voter-registration records in a uniform manner across the state.

“Election integrity is a serious issue in our nation,” said Mussi. “Ensuring that Arizonans can have faith in the integrity of our election system and representative government starts with clean voter rolls that leave no doubts about who is able to cast a ballot. That’s why we sent a prelitigation notice to Secretary Fontes last August highlighting the artificially high voter registration rates. Unfortunately, most Arizona counties continue to have voter registration rates far exceeding the national average. We hope that the court compels Secretary Fontes to comply with his obligations under the NVRA to clean up Arizona’s voter rolls.”

Joining Mussi as Plaintiffs in this challenge are the Chair of the Republican Party of Arizona, Gina Swoboda, and Steven Gaynor.

In their lawsuit, the Plaintiffs argue that Arizona Secretary of State Adrian Fontes has failed to perform his mandatory list maintenance duty under the NVRA. For example, the most recent voter registration and census data show that up to four Arizona counties – Apache, La Paz, Navajo, and Santa Cruz – have more registered voters than eligible citizens. The remaining counties across the state have implausibly high voter registration rates that far exceed the average national and statewide voter-registration rates in recent years. Consistent with these artificially high registration rates, the complaint alleges that Arizona has at least 500,000 registered voters on the rolls who should have otherwise been removed because they are deceased or no longer reside in Arizona.

The Plaintiffs ask the federal court to find that Secretary Fontes is in violation of Section 8 of the NVRA, and to require the Secretary to fully comply with any existing procedures Arizona has in place to ensure ineligible voters are identified and removed from the rolls.

Read the complaint here.

It’s Time to Hold AG Kris Mayes Accountable for Abusing the Power of Her Office

It’s Time to Hold AG Kris Mayes Accountable for Abusing the Power of Her Office

Nobody likes a bully, and yet some people relish playing such a role. Here in Arizona, perhaps no person has taken on that persona quite like Kris Mayes. When she began her political career with the Arizona Corporation Commission, Mayes quickly gained a reputation for bullying other people around, but since becoming Arizona’s Attorney General (AG) in January 2023, she has taken it to a whole other level.

Within months of occupying the AG office, Mayes began using her post to target and investigate the very people and entities she is constitutionally obligated to defend. First in her crosshairs was the Arizona Department of Water Resources (ADWR), a state agency she is legally obligated to represent and provide legal advice to. But because she wants to score political points with her radical environmental allies, she decided to threaten legal action against ADWR unless they provide her with documentation showing that the agency is in compliance with its water management responsibilities.

Mayes then turned around a few weeks later and went after the Empowerment Scholarship Account (ESA) program at the Department of Education. In a public tirade, she falsely claimed that the budget agreement that protected universal school choice would bankrupt the state, despite the expenditure data showing that the ESA program actually saves the state money. When that didn’t stop the Republican budget bill from being signed by Governor Hobbs, Mayes doubled down on her ESA assault by threatening legal action against her own client, the Arizona Department of Education, over the program.

And now that she has had more time to get comfortable in office, Mayes is discovering new and creative ways to abuse her power, including collusion and the usage of dirty tactics to target political opponents.

Mayes Colluded with Cochise County Attorney to Pursue Indictments Over the Election Certification

Last year, the State Bar began investigating Cochise County Attorney Brian McIntyre for a possible violation of attorney-client privilege with his clients the Cochise County Board of Supervisors. And it proved to be quite revealing.

According to a letter recently submitted as evidence to the State Bar, McIntyre appears to have colluded with Secretary of State Adrian Fontes and AG Mayes against Cochise County Supervisors Peggy Judd and Tom Crosby. In the letter, McIntyre asked Mayes to retract an opinion set by her predecessor, Mark Brnovich, on expanded hand counts. But this request was made while McIntyre’s clients were actively appealing to be able to complete those hand counts. That’s a big no-no.

But did Kris Mayes stop him? No. Several months later, Mayes withdrew Brnovich’s opinion as requested by McIntyre. And then, in November of last year, she secured indictments against Judd and Crosby for delaying certification of the 2022 elections results—charging them with felonies for election interference and conspiracy. That’s an outrageous abuse of power, but Mayes’ overreach didn’t stop there.

Mayes Used Dirty Tactics to Secure Indictments Against Alternative Slate of Electors

Last month, an Arizona grand jury indicted a slate of alternate electors for the 2020 election and hit them with charges of conspiracy, fraud, and forgery. But according to a new report from Politico, these indictments were unprecedented and “unusually aggressive.”

And who do you think was leading the probe? Kris Mayes.

One witness described the questioning as “intense” and having “exceeded the limited scope that prosecutors had publicly acknowledged.” On top of that, some of those indicted were promised by prosecutors that they were not the subject of the investigation nor any charges.

But that proved to be a lie. Just ask one of President Trump’s lawyers, Jenna Ellis, for example. According to the report, Mayes’ prosecutors asked Ellis to appear for a “free-talk interview.” And a prosecutor in Mayes’ office even indicated in a letter that Ellis was not the target of the State’s investigation. But after a follow-up letter to arrange an interview reiterated as much, Ellis was indicted just four days later. And the same thing happened to another of Trump’s attorneys, Christina Bobb.

That’s low…and dirty. And you would think that our own corporate media, like the Arizona Republic, would be on top of such a revealing news story, but no. The Republic is so infatuated with Mayes that it would rather write glowing puff pieces about her while national news outlets and other alternative media blow the whistle on such government overreach.

The reality is that all of this should be more than enough to conduct a deep dive into the actions of AG Kris Mayes. And while the legislature may have started an investigation into her prosecutorial conduct, our court system and the Bar Association need to hold her accountable as well. All of this stinks, and if our legal system is really concerned about setting precedent and protecting norms, then these types of actions by a prosecutor need to be stopped.

Let’s start with Kris Mayes.

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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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Ballot Measure Gives Secretary of State Total Power to Select Candidates That Appear on the Ballot

Ballot Measure Gives Secretary of State Total Power to Select Candidates That Appear on the Ballot

Who thinks it is a good idea to let voters decide which candidates appear on the general election ballot? Probably everyone. How about letting just one politician decide instead? You would hope that question is rhetorical, and the answer is no one. But right now, out-of-state special interests are spending millions of dollars to put their so-called “Make Elections Fair” measure on the ballot that would do just that. 

The groups pushing these ideas are trying to trick voters into signing their petitions and supporting their poorly written constitutional amendment, arguing it will lead to less partisanship and more centrist candidates on the general election ballot. But hidden in the measure is a provision that lets just one politician, the Secretary of State, decide how many candidates move from the primary to the general election. 

And it isn’t limited to just some elections. Under the measure, the Secretary of State would have the power to decide for every single election on the ballot, including his own! The Secretary of State could go up and down the ballot, selecting just two candidates for the general election in one race, then select three, four, or five in another when only one candidate can win in the general.

It gets even more confusing when two candidates can win the general election for two seats (like for the State House). The Secretary of State can select four candidates for one race, but seven in another, picking and choosing all the way up and down the ballot for every single race however many candidates would most benefit his own political party. 

How about his own race? If it is better for him to go head-to-head with just one opponent, he can unilaterally declare that just two candidates will be on the ballot. But if it is better to “crowd the field,” he can let five candidates show up on your ballot to have his opponents fight with each other while he sneaks his way to victory. 

This new candidate selection scheme would be in addition to the fact that their measure will result in some races where candidates from only one political party appear on the general election ballot, depriving many voters of any choice at all.  If this sounds familiar, it’s because California uses this exact same system to select its candidates. That’s right. The proponents are trying to fix Arizona’s election system by bringing in ideas from San Francisco.

When the legislature writes election laws, their bills have to pass through two legislative chambers consisting of 90 different lawmakers elected from every corner of Arizona. There are committee hearings, public testimony, amendments, recorded votes, and then the Governor has to approve it too. 

But according to the proponents of this measure, what is “fair” is removing all those checks and balances and just consolidating all power into the hands of one politician so he can install a confusing system no one wants. 

California politicians like to pick their opponents. In Arizona, we like to let the voters make that choice. Placing all power in the hands of one politician isn’t fair, it won’t lead to more centrist candidates, and for a group that purports to support and defend “democracy,” this is one of the most undemocratic measures ever written.   

But the drafters of this measure likely don’t care. Their goal is to buy their way onto the ballot, then hope voters won’t discover all the easter eggs they hid in the initiative. No question that this is a very cynical strategy that speaks volumes about their low opinion of voters, but given that they thought it was a good idea to give one politician the power to pick their own opponents, it shouldn’t come as a surprise. 

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As Democrats Panic Over the ‘Secure the Border Act,’ Republicans Should Keep Their Foot on the Gas

As Democrats Panic Over the ‘Secure the Border Act,’ Republicans Should Keep Their Foot on the Gas

Illegal immigration is the number one issue heading into November’s election, and Democrats have no one to thank but themselves. Over the past three years, the left has single-handedly created an open-border disaster under the neglectful policies of a Biden administration that has completely abandoned its constitutional duty to protect each state from invasion. As ground zero for the current border crisis, the people of Arizona know this all too well.

A surge in illegal immigrants in the Tucson Border Sector along with a dramatic rise in the number of “gotaways” has left our state on edge. Meanwhile, cartel violence has increased near southern Arizona communities, and we’ve even seen a report revealing that thousands of “special interest aliens” from mostly Middle Eastern countries have been apprehended while crossing the border illegally in the past two years. And that’s just barely scratching the surface of the catastrophe that has become our border.

You would think that the governor of a state facing a daily invasion would do something, but Katie Hobbs has proven time and time again that she would rather ignore the problem and hope it goes away. So, after Hobbs vetoed the Arizona Border Invasion Act (SB 1231), which would have significantly enhanced our state’s border security, Republican legislators decided it was time to allow voters to take matters into their own hands through the Secure the Border Act (HCR 2060). And the response from Democrats has been telling.

Immediately after the Senate announced they planned to put a border security measure on the ballot and had a hearing to discuss the issue, Democrats and the corporate media began freaking out. Hobbs responded by putting out a press release begging the business community to rescue her and Democrats from having the Secure the Border Act on the ballot. Most business groups responded to her cry for help by essentially telling Hobbs to leave them out of it.

Other liberal organizations vented their frustration to their supporters, upset that the Republicans would have the audacity to “change the subject” from abortion to immigration. And of course, our local legacy media joined in on the freakout parade with a conveyor belt of poorly written opinion pieces attempting to tear down HCR 2060.

What does that tell you?

The left is not even pretending to hide the fact that they are more upset about how the Secure the Border Act hurts their chances in November than the actual damage being caused by the open border. Democrats created this problem, and now they are angry that Republicans are trying to do something about it and (gasp) even go so far as to make it a campaign issue?

Ridiculous.

Voters in Arizona deserve an opportunity to enact solutions to help solve our border crisis, which is why the legislature should stay focused on this issue with their foot pressed firmly on the gas.   

And if this is about election prospects in November, the Democrats have no one to blame but themselves. Their radical woke agenda has led to a freefall in Democrat voter registrations. Immigration and the economy remain the top issues for voters. And Biden and Hobbs remain the two most unpopular politicians in Arizona.

Now, the ball is in the Republicans’ court. They can spend the next six months playing the left’s game of talking about abortion and fighting among themselves (the dream scenario for Democrats), or they can unite and focus on the issues that most voters care about. The choice is up to them.

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.

Pro-Growth Tax Reform Is Driving Arizona’s Bright Economic Outlook

Pro-Growth Tax Reform Is Driving Arizona’s Bright Economic Outlook

A strong economy is a key piece of the foundation for any society. But while the Biden administration has been busy doing anything it can to destroy the economic climate in America over the past four years, Arizona is set up for success—not just for today, but for decades to come.

Last month, the American Legislative Exchange Council (ALEC) released its latest “Rich States, Poor States” report, and the Grand Canyon State received the number three ranking for economic outlook among all 50 states. Such a high rank is impressive enough on its own, but when you consider that our state was ranked 13 back in 2021, Arizona’s dramatic rise up the chart especially shines. So, how did we get here?

Pro-Growth Policies Have Led the Way

Arizona’s high ranking is a direct result of significant pro-growth income and property tax reform that have supercharged our economy. In just the last decade, we have cut taxes on capital gains and drastically reduced the property tax burden on small businesses. Then, in July 2021, the Free Enterprise Club helped lead the charge as the Republican-led legislature passed a 2.5% flat tax, delivering historic tax cuts for every single Arizona taxpayer. And if that wasn’t enough, Republicans also included tax relief for Arizona’s families in last year’s state budget to help with the growing cost of gas, groceries, housing, and energy under the Biden administration.

Each of these pro-growth policies have set up Arizona as a leader in the country with many other states looking to mirror these reforms, but if the left had gotten its way, we never would have been here.

Stopping the Left’s Push to Double Arizona’s Income Tax

For five years, the left fought to give our state one of the highest income tax rates in the country. And after an ugly campaign where Red4Ed deceived voters and spent more than $23 million, Prop 208 barely passed in Arizona with only 51% of the vote—doubling our income tax. But in a case that the Free Enterprise Club joined as a plaintiff, the Arizona Supreme Court struck down the unconstitutional tax hike. Then, a superior court judge put the final nail in the coffin of Prop 208 when he ruled that the money raised from the tax would exceed the constitutional spending limit for education. But the battle was far from over.

Red4Ed immediately set its sights on Arizona’s historic flat tax, spending over $5 million to hire an army of paid circulators to put a referendum on the ballot to block the tax cuts from going into effect. But after the referendum was submitted, the Free Enterprise Club filed a lawsuit, challenging the constitutionality of the ballot referral because it did not comply with the “support and maintenance” clause in our state’s Constitution.

Once again, we defeated the teachers’ union when the Arizona Supreme Court ruled against the referendum and issued another big win for taxpayers. But we knew these rulings wouldn’t stop the left from trying to jack up taxes at a later date.

Protecting Taxpayers from Future Increases

It’s clear that the left has an insatiable desire to take more of your hard-earned money and put it into their coffers. In the case of Prop 208, they were able to do that by winning only 51% of the vote (until the court system killed it). But allowing 51% of the population (who may not have to pay a tax increase) to vote to tax the other 49% is wrong. That’s why the Club also led the charge on Prop 132, a constitutional amendment that requires a 60% majority vote of the people on any ballot measure that seeks to raise taxes.

The ballot initiative passed in 2022, ensuring that if the people of Arizona are asked to part with more of their paycheck, it will require a broad agreement from every part of the state.

Now, it is critical to keep all these reforms in place. Slashing income taxes and increasing the approval threshold for future tax hikes has made Arizona a destination for both families and entrepreneurs. And if we stay on this path, our state is on track to continue its route of economic growth and perhaps one day see that number one ranking.

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.