by admin | Nov 22, 2017 | News and Updates
Today, the Arizona Republic published an op-ed written by Christina Sandefur of the Goldwater Institute and Scot Mussi of the Arizona Free Enterprise Club about the recent decision by Phoenix bureaucrats to shut down a Christmas light display. It is a classic example of how the regulatory Grinch can steal Christmas, and why additional reforms are needed to protect home-based businesses and property rights in Arizona.
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Phoenix Canceled Christmas Because a Guy Handed out Cocoa
By Christina Sandefur and Scot Mussi
Every year, Lee Sepanek’s Christmas display brings joy to Phoenicians, who visit to enjoy the glistening decorations and sip the hot chocolate he serves them.
But not this year. Thanks to Phoenix bureaucrats, Lee has been forced to cancel the show.
The trouble started this summer, when the city warned him he was in violation of its Mobile Food Vending Ordinance, even though he isn’t operating any kind of “mobile” facility. He doesn’t even charge for the cocoa — he just asks for donations. But the city says its rules are broad enough to prohibit even giving away cocoa — made from hot water and powdered mix — from your driveway.
Officials told Lee he “would need to find a licensed commissary kitchen as a ‘base’ to store, clean and prep any open food,” and that he would have to get a “special event/seasonal permit,” requiring fees and “inspections onsite.” They also complained that Lee was selling Christmas ornaments, arguing that violates Phoenix’s rules against having a “home occupation.”
In their two-page letter, the Goldwater Institute outlined multiple legal issues and factual inaccuracies in the approved resolution and ballot language, and asked the county to remove the proposition from the ballot to avoid a costly lawsuit if it is approved.
After local news exposed Lee’s story, the city indicated it might budge, but it’s too late. Even if city officials changed their minds, Lee couldn’t get the lights up in time for Christmas.
This is part of a larger problem.
Phoenix’s Grinch-like attitude is part of a larger problem: Across Arizona, local governments are working to shut down home-based businesses, violating private property rights and harming economic opportunity. The Legislature eased restrictions on home-based businesses slightly last year, but it’s time the state provided stronger protections for the right to work from one’s home.
Home-based businesses help make this country run. Apple and Disney were both started in garages. Lawyers, psychologists, furniture repairmen and data entry technicians all work from their homes. And it’s hard to see why it’s OK to do one’s own income taxes on the kitchen table but not for an accountant to do someone else’s in her home office.
Cities that shut down home-based businesses often complain about traffic or neighborhood parking, but there are already rules on the books addressing such concerns. Banning home-based businesses out of fear that some might lead to disruptions is like banning all backyard barbecues because some parties get loud.
And while it’s reasonable to regulate food preparation to protect against food-borne illnesses, the law already protects Arizonans’ right to sell or give away food they cook in their own kitchens.
We need broader protections.
The Goldwater Institute and the Free Enterprise Club are urging state lawmakers to broaden protections for home-based businesses.
In Charles Dickens’ “A Christmas Carol,” Ebenezer Scrooge questions the Ghost of Christmas Present about laws that forced Londoners to close their stores on holidays — which, Scrooge says, essentially deprived them of income. Why, Scrooge asks, should the Ghost “cramp these people’s opportunities of innocent enjoyment?”
Shocked, the Ghost says he did no such thing — that was done by people who act “in our name” but who don’t really get the Christmas spirit.
It’s sad to think Phoenix officials have a poorer understanding of the holidays than Scrooge.
by admin | Nov 20, 2017 | News and Updates
In what has to be one of the biggest fake news stories of the year, the local media has decided to target the Ducey administration for pay raises that were provided to members of his staff. According the Arizona Republic, since 2015 Governor Ducey has went on a wild spending spree rewarding political allies in his office yet giving paltry raises to school teachers.
It was a damning report with allegations of cronyism, taxpayer waste and hypocrisy, while subtly digging at his alleged lack of support for public education. One small problem: the entire report was factually wrong and designed to mislead readers on how teachers’ salaries are funded in Arizona.
If the reporters had taken the time to review the full executive budget, they would have discovered that overall spending has not increased in the Governor’s office since 2008. Even more damning, they have actually reduced the number of employees in the executive branch. So, the real story is Governor Ducey has restrained spending in his office and reduced the number of government employees by hiring and retaining better talent. Only in the minds of the media and the liberal Arizona Education Association would it matter that Governor Ducey decided to use the same amount of money on fewer, more qualified workers.
What about the lack of teacher pay raises and education funding? What the reporters didn’t include in the story is the fact that state education funding has actually increased the last 3 years. More importantly, when it comes to teacher salaries, the legislature and Governor have very little control over where the money is spent. Most of the decisions related to teacher pay is made by school boards at the local level, not at the state.
It is why 10 years ago lawmakers and the AEA publicly complained that school districts were not giving raises even after the legislature specifically included teacher pay increases in the state budget. It is why some school districts, following the passage of Proposition 123 last year (which increased annual K-12 funding by $350 million), approved teacher salaries across the board while others did not.
The same problem exists under Proposition 301, the 6/10 of a cent sales tax dedicated to education. Rather than have most of the money going to the classroom as intended, Arizona is now seeing a record amount going toward administration costs.
If the media is so concerned about pay raises and bloated salaries, perhaps they could investigate how Prop 301 money has been spent and the kind of salaries and pay raises administrative staff in K-12 have received. Perhaps they could ask the teachers’ union why they are not holding press conferences to demand school administrators take a pay cut or require more money go into the classroom.
This will never happen, of course. The journalist class would rather push a false narrative that conforms with their left leaning bias than challenge their preconceived positions and report on the facts. It’s no wonder that their favorability ratings and credibility is in the toilet.
Fewer people than ever believe what the media says, and fake news stories like this only confirm their suspicion.
by admin | Nov 9, 2017 | News and Updates
Phoenix, AZ – The Arizona Free Enterprise Club announced today the 2017 Free Market Champion Award recipients. The Free Market Champion Award is given to members of the Legislature that demonstrate leadership and a commitment to free market, pro-growth policies in Arizona. This year’s award includes a picture and quote from world renowned economist and true defender of economic liberty, Milton Friedman. The quote on the award reads, “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”
The two recipients of the Free Market Champion Award are:
- Senator Sylvia Allen (District 6)
- Representative Anthony Kern (District 20)
“The Free Enterprise Club is proud to honor these two legislators for their hard work and consistent support of economic freedom and prosperity at our state capitol,” President Scot Mussi said. “They truly made a difference for Arizona taxpayers and businesses.”
by admin | Oct 17, 2017 | News and Updates
Today the Arizona Free Enterprise Club released a comprehensive study of the Kansas tax reform experiment, reviewing many of the claims made by opponents of the 2012 tax cuts to determine their accuracy and applicability to income tax reform.
Titled “The Kansas Tax Reform Experiment: How Arizona Can Learn the Right Lessons from the Sunflower State,” the study finds that many of the claims made by detractors of the Kansas tax package are simply not true. State spending did not decline after the tax cuts were enacted, economic growth was faster when compared to similarly sized states and business growth accelerated in the state.
Rather, the budgetary problems encountered by Kansas were avoidable mistakes that Arizona can learn from if meaningful tax reform is to be implemented in the Grand Canyon State. Some of the lessons from the Kansas experiment include:
- Spending restraint is key to any large tax cut—Contrary to the myth pushed by critics of the Kansas tax cuts, per capita spending was not slashed in the Sunflower State. In fact, overall spending increased in Kansas from 2013 to 2016. Any state considering large scale tax cuts should not plan to spend more.
- Tax reform should include the elimination of targeted incentives and tax credits—When Governor Brownback originally proposed his tax plan, it included the elimination of carve-outs that would have simplified the tax code and recovered lost revenue. These reforms, however, were excluded from the final package, a major mistake that should not be made by other states considering reform.
- Don’t overestimate revenue growth from tax cuts—A common mistake made by supporters of supply side tax cuts is to overestimate economic growth, and with it new tax revenue, that will immediately pay for the tax cuts. This is often not the case, and projected revenues associated with dynamic scoring should be approached conservatively.
- Some changes in the tax code generate more economic growth than others—A key to successful tax reform is understanding that some taxes are more damaging to economic activity than others. This is especially true when considering job growth related to productivity taxes vs. consumption taxes. It is even possible that revenue neutral tax reform can generate additional economic growth if structured properly.
The paper also takes a look at the arguments made by progressive pundits to determine if the ‘blue state’ model of higher taxes and regulations has been more successful in the US than the low-income-tax ‘red state’ model. Our findings clearly show that red states such as Texas and Florida consistently outperform their high tax competitors such as Illinois, a fact consistently ignored by liberal detractors.
The Club’s policy paper can be viewed HERE.
by admin | Oct 12, 2017 | News and Updates
It is hardly debatable that Phoenix’s decision to get into the hotel business nearly a decade ago has been a costly mistake for taxpayers. Since opening, the city-owned Sheraton has sustained millions in operating losses and does not anticipate being a profitable enterprise anytime in the near future.
So, when the City announced it was going to sell the Sheraton, an opportunity was created for city hall to recoup its costs and make taxpayers as whole as possible. Unfortunately, Phoenix Leadership instead decided to use this opportunity to once again soak taxpayer for short term political gain.
Last week, Phoenix completed a deal to sell the Sheraton hotel to a developer for $255 million. The City built the hotel for $350 million, and even after the sale still owes almost $50 million in debt.
If swallowing a $50 million-dollar loss wasn’t bad enough, Phoenix also gave away millions in subsidies to the developer. Inserted into the deal was a massive $97 million property tax incentive package and the City’s hotel replacement fund, worth approximately $11 million. With all incentives factored in, the real sale price is closer to $144 million, less than half its original value.
All of this begs the question: Why now accept such a lousy deal when for years a majority of councilmembers and Mayor Greg Stanton fought the sale of the Sheraton?
The reason should anger taxpayers even more. To pay for the construction and operation of the Sheraton hotel, the city has used the sports facilities tax, a revenue stream that generates around $10 million a year. It is no secret that Mayor Stanton and others want to use this tax to build a new sports arena (perhaps for hockey or basketball), and needed to unload the Sheraton to make this happen. It is outrageous that taxpayers should endure a $200 million-dollar loss on the Sheraton hotel just so a group of city insiders can use the revenue stream to invest in another project.
Furthermore, the property tax carveout included in the deal (GPLET) is currently under litigation. The Goldwater Institute has sued for several major Constitutional violations with the property tax scheme, one being the “Gift Clause” which precludes municipalities from giving a private person or entity a financial benefit without receiving a benefit to the public at large.
While most of City Hall was on board with this scheme, it should be noted that not everyone went along with this insanity – Councilmen Jim Waring and Sal Dicicio voted against the transaction in an effort to protect taxpayers. But as is most everything in the City of Phoenix politics – insanity reigns.
by admin | Oct 4, 2017 | News and Updates
For Tucson voters, seeing another tax increase on the November ballot probably doesn’t come as a shock. Yet the latest big government spending plan is especially bizarre: a ½ cent sales tax increase to fund a city-wide preschool program.
The audacity and complexity of Proposition 204 is generating opposition not just from conservatives, but liberal groups as well. The nature of the resistance is centered around the plan’s lack of accountability, transparency, and threat to other education funding priorities.
The most obvious problem with Prop 204 is that Tucson simply is not qualified to administer or manage a preschool program. Since statehood, public education has been overseen and funded through school districts and the state, not municipalities. Tucson will waste a great deal of taxpayer money developing, implementing and overseeing a new government program in a field they know nothing about and is already handled by other public entities.
The vague, ambiguous language contained in the initiative has only added to the confusion and has raised more questions than answers. According to Prop 204, a 7-person commission appointed by the City Council would be the decision makers on how the program would work. The commission would then hire and oversee a non-profit corporation to administer the program.
Critical details such as which citizens would qualify for the program, rates of reimbursement, oversight of which pre-k providers would be eligible, a sliding economic scale, etc would all be made by this unaccountable commission. Additionally, a couple of the commissioners would be early childhood education providers, raising serious questions of conflict of interest. The entire structure is long on bureaucracy and short on transparency and accountability: the City Council would oversee a commission, that would oversee a non-profit, that would oversee the pre-k program.
Proponents of Prop 204 have cited programs in Denver and San Antonio as examples of success. However, in both examples the preschool programs enacted were much smaller and included only a 1/8 cent tax increase. Tucson’s proposal is four times larger and proponents have not provided an explanation of why their program would require such a large contribution from taxpayers. Perhaps the answer lies in the complicated governance of the program, eating up efficiency and potential impact.
Even if Prop 204 wasn’t so poorly crafted, it is doubtful that Tucson can afford another large tax increase. It was only a few months ago that voters approved a ½ cent sales tax increase dedicated to road repairs and public safety equipment and facilities. If the latest increase is accepted, residents will shoulder a 50 percent increase to their sales tax within just a year!
The tax hike looks even worse when considering Tucson’s poor economic and job performance over the last decade. It was just announced that Tucson was ranked as the most distressed city in the nation, with 58.6 percent of its population living in economically distressed zip codes. Considering their dire economic situation, passing higher taxes will only make the city more unaffordable to its residents and less attractive to potential job-creators. Hopefully voters will realize the foolishness of Tucson getting into the preschool business and will reject this poorly vetted initiative.
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