by admin | Sep 26, 2017 | News and Updates
Pinal County was notified yesterday by a non-profit watchdog organization that Proposition 417, the proposed $640 Million Transportation tax increase scheduled for the November election, was not lawfully drafted and will likely face litigation in court.
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.
Although Pinal leadership has been warned for months now about the proposition’s legal problems, advocates have blazed ahead with the election. But this newest development makes the decision for Pinal County Supervisors very clear – pull their defunct proposition or cost taxpayer’s their hard-earned money defending it in court. Money that could be used instead for county priorities – such as roads and transportation infrastructure.
The legal issues highlighted by the Goldwater Institute include:
- The ballot language clearly states retail is the only classification that will be taxed, yet the ballot pamphlet states they intend to tax other classifications as well. The language is contradictory, misinforms voters, and likely exceeds their lawful authority if the intent is for county administrators to tax classifications not approved by the Board of Supervisors.
- As crafted, the tax would not apply to purchases over $10,000, an arbitrary exemption that is not allowed under state law. Earlier this year, proponents of the transportation plan introduced legislation to give them the authority to implement a $10K cap, but the bill did not pass. Supporters of the tax hike decided to include the exemption anyway.
The letter from The Goldwater Institute can be viewed HERE. Early ballots are expected to be mailed in early October, so any decision to cancel the election on the transportation plan would need to be made in the next couple of weeks. Pinal County taxpayers should demand accountability of their elected officials and tell them to pull the plug on this illegally drafted and ill-conceived tax increase.
Pinal County residents can find the contact information for their Supervisors here: http://www.pinalcountyaz.gov/bos/Pages/Home.aspx
by admin | Sep 14, 2017 | News and Updates
A lot has changed in the economy over the past several decades with the explosion of technology. The traditional work environment has transformed with more individuals able to stay connected and work from nearly anywhere in the world. This evolution has made it easier than ever for people to start and own businesses, and conform their work to the flexibility of their own homes.
Home-based businesses (HBB) allow millions of Americans to earn a living or supplement their wages, while accommodating realities such as raising children, managing a disability, and/or stretching their current available resources. That is why 52 percent of the over 28 million small businesses in the United States run their operations out of the convenience and comfort of a personal residence.
Many of these businesses are in our own neighborhoods. They are real estate agents, accountants, and contractors. Yet for most of these businesses, we have no idea they’re taking place in our own backyards. Ostensibly, these businesses are operating with little to no visibility to the residents around them.
Although the nature of home-based businesses has vastly changed, the regulatory environment has not.
Many cities and counties across the country still retain the same zoning ordinances and land use requirements from a half century ago. As a result, many jurisdictions promulgate a culture and regulatory environment which stifles home-based businesses.
Common restrictions include not being able to use a garage, backyard, or “accessory dwelling” unit for a HBB. Often there is a limit on the allowable square footage to be used within the home. Prohibitions on signage or seeing any customers or employees. In most jurisdictions, certain types of businesses such as salons or food-making businesses are altogether banned, or require extensive special use permits that take months and thousands of dollars to obtain. Lots of cities limit a business’s hours of operations. Many of these regulations are ambiguous, arbitrary and downright unenforceable.
After all, how is the government supposed to know if someone is using one room versus two rooms in their house for their business? How would they be able to tell if an individual is selling items on eBay or answering business emails at 1:00 AM, after the accepted “hours of operation?” The only conceivable way to consistently enforce these types of regulations is a frightening prospect indeed; with major Fourth Amendment questions and implications.
The Small Business Administration studied the issue in 2004 and determined more should be done by states and localities to eliminate burdens for HBB. They highlighted several states that have passed state-level reforms. Maryland for instance allows for a “no-impact” home occupation – eliminating licensure for thousands of businesses that pose no threat to the livability of surrounding homes. Vermont, a small-business friendly state, has statutory protections for HBB, stating a person has the “right” to operate a business out of their home. Even California has a special regulatory carve-out for home day cares; they void contractual agreements such as HOA CC&Rs that prohibit them.
Creating regulatory space for HBB is not only the right thing to do, it has immeasurable benefits. Aside from providing a flexible environment for people with a variety of needs as well as creating safer neighborhoods by having watchful daytime eyes, these fledgling businesses are the petri dish of the economy. They allow a measured approach to the risk of starting a business. If the entire country disallowed people from having a business in their garage, giants such as Amazon, Apple, Disney, Google, Harley Davidson, Microsoft, and Nike, that employ hundreds of thousands of people, might not exist.
Just like our economy and ideas about the work environment, it’s time for the states and local counties and cities to change with the times. Home based businesses are vital to the health, wealth, and happiness of millions of Americans. Government should not be stifling their efforts, but doing everything they can to allow their growth.
by admin | Sep 5, 2017 | News and Updates
Over the last several years, lobbyists for the movie industry have made multiple attempts to bring back special tax breaks for Hollywood studios in Arizona. After failing to resurrect the unpopular tax credit program that expired in 2010, they pivoted to a new subsidy: a taxpayer financed state film office.
Movie producers claimed a film office is needed because Hollywood studios didn’t know who to call when filming in Arizona if they needed access to state monuments, freeways, etc. This argument was obviously nonsense—movies have been filmed in AZ for decades at special locations without such an office, and securing film locations is an issue easily addressed by the private sector.
Thankfully, the legislature saw through their claims and rejected two separate proposals to fund a state film office and provide subsidies to the industry.
This should have been the end of the story, except last month the Arizona Commerce Authority announced a joint venture with a local film studio to provide taxpayer funding for a state film office, along with additional grants and discounts to moviemakers.
How the Commerce Authority is unilaterally funding a state film office with taxpayer money after the legislature rejected such an expenditure raises several questions:
Who at the ACA authorized such an expenditure? Where in statute does the ACA have the power to fund such a program? Does the ACA have a secret fund to pay for special interest projects the legislature rejects? If the ACA can fund a film office, what projects can’t it fund in the future?
The ACA’s untethered purse strings is a major issue that must be investigated. The good news is lawmakers will soon have an opportunity to get answers. The Commerce Authority is once again up for sunset review, and will have to go before the legislature in the Fall for reauthorization. Last time the ACA received only a 2-year renewal, specifically because of their lack of transparency and poor results.
They promised to do a better job and clean up their act, and we assume that they will make the same promises. Judging by their questionable actions, they must think that it is far easier to ask for forgiveness than ask for permission. Hopefully lawmakers won’t be duped again and will finally reign in this rogue agency.
by admin | Aug 31, 2017 | News and Updates
Since 1987, Pinal County taxpayers have paid a dedicated ½ cent sales tax to build transportation improvements in the region. More than $350 million dollars later the results have been a failure.
Now the County Board of Supervisors and Regional Transportation Authority (RTA) are back asking residents to approve Proposition 417, an additional $640 million dollar sales tax increase to fund road construction. The entire plan is ill-conceived, unnecessary, tilted to benefit the politically well connected and is likely illegal.
Among the reasons Prop 417 should be rejected is that the existing ½ cent transportation tax has been misused and wasted over the past 15 years, which is why the proponents of the ballot proposition do everything they can to pretend the current tax doesn’t exist.
The abuse has been well documented in several State Auditor General reports. Since 1998, several municipalities have used their disbursements for unknown credit card expenses, an employee appreciation breakfast, and even Christmas bonuses. Mammoth used the money they received to backfill deficits in non-transportation departments. In the case of Superior, the town literally siphoned off millions of dollars.
Apache Junction, Kearny, and Eloy were cited for such offenses as poor accounting, inadequate planning processes for future projects, and deficient record keeping for road projects. Despite the multiple infractions, the current proposal awards millions more to these same offenders. Superior, Kearny, Mammoth, and Eloy each receive $6 million in Prop 417 for undefined “local projects.”
Of the funds not being abused and wasted, most of the rest has been doled out to fund local street projects in municipalities throughout the county. Using a regional tax to build city streets was never the purpose of the tax, and is a major reason why Pinal County lags behind Maricopa (which has the same ½ cent transportation tax) in regional freeway and roadway construction. Rather than passing a new transportation tax, Pinal taxpayers would be better served by fixing the existing tax and directing the funds to worthy county projects.
The entire planning process used to craft Prop 417 was gamed by the political establishment in Pinal County. Communities with representation on the Regional Transportation Authority are the winners in the plan. The rest of the county’s residents are the losers.
San Tan Valley – a community of nearly 90,000 people and approximately 22 percent of the entire county population, sees zero benefit from Prop 417. Saddlebrooke doesn’t fare much better. The only project going to the community of 26,000 is a proposed 6/10ths mile stretch of road at a cost of $1 million, 0.1% of the total revenue included in the $640 million dollar plan. If you live in Arizona City, all you get is a park-and-ride. Gold Canyon is left out of the plan entirely.
Well over 1/3 of County taxpayers will be paying a tax in which they receive no benefit in return.
Additionally, Pinal County already has the highest sales tax in the region at 6.7 percent. If the new tax were to pass, Pinal’s sales tax would be a penny higher than both Maricopa and Pima. Pinal County already struggles to compete for new jobs and businesses, Prop 417 will only make matters worse.
It would be hard to dream up a worse plan to punish taxpayers and paper over past mistakes, which is probably why the proponents of Prop 417 are trying to sneak this proposition through in November. A vote to raise taxes could have been put on the ballot in 2018 at a regularly scheduled election, but the political establishment believes that a low turnout election later this year increases their chance of success.
Hopefully voters will see through their electoral ploy and reject this poorly crafted, uneccessary tax increase.
by admin | Aug 2, 2017 | News and Updates
It has been known for over a decade now – the State’s pension system is a sinking ship. Despite efforts in recent years by the Legislature to bail as much water out of the vessel as possible; it would seem the system has been doomed by the Bermuda Triangle of forces: unions and their politically complicit cities, the system’s managing investment board, and activist Courts.
PSPRS is currently a $9.3 billion fund, with roughly 50 percent unfunded liabilities. Recently, 20 Arizona Mayors penned a letter to Governor Ducey calling for him to “do something” about PSPRS (Public Safety Pension Retirement Fund), and its deepening insolvency that threatens to completely tank cities such as Bisbee, Prescott and Flagstaff and unleash a tidal wave that would topple the system as a whole.
Among the suggestions being offered by local leaders is to fire the PSPRS board and move its financial and investment management to the State Treasurer’s office. It is clear the panic has finally settled in. Consider, these same local leaders have been at best complacent to union-efforts to continually ratchet up benefits, and at worst complicit in efforts to stop the State from curbing benefits, cost of living adjustments, and employer contributions.
Although local cities are trying to shift blame to the legislature for all their pension woes, State lawmakers have made several attempts to right the ship. In 2011 lawmakers passed legislation to suspend Cost of Living adjustments and increase public safety personnel’s’ contributions. In 2013, they partially eliminated pensions for new judges and elected officials. And in 2016, they made modest improvements to the system going forward by creating a third tier of beneficiaries who would be subject to new provisions for pay-outs, cost of living adjustments, and employee contribution rates. Although this latest legislation provides some cost savings in the future, it does little to nothing for the impending crisis everyone is currently facing.
For smaller cities, especially those that have stagnated growth, a lack of fiscal restraint, generous overtime and vacation, retirees who are living longer, and other factors have driven their contribution rates skyward. Though the average jurisdiction contributes 32 and half percent, Bisbee pays almost 88 percent. Bisbee is on the cusp of capsizing. Cities have a habit of adopting each other’s bad ideas. Over-recruiting, over-paying, and over-promising rich benefits in the future they can’t possibly make good on, is one of the worst practices that has spread among the cities like a plague.
Even with the knowledge that the bill has come due, cities are still trying to kick the can down the road to avoid the day of reckoning. The City of Mesa and the City of Phoenix recently voted to extend their amortization schedules from 20 to 30 years for their pension debts. For Phoenix, this freed up $50 million in additional spending capacity for the next year at a cost of $2.3 billion in additional debt on the backs of taxpayers.
One complaint that does seem to generate consensus among most cities and the legislature has been the inept management of the PSPRS system. The Pew Research Trust ranked Arizona’s PSPRS system as one of the worst managed in the country. Last year, the fund only achieved less than a percent in returns. In the past 10 years they averaged 3.67 percent returns; in the same period the S&P 500 achieved an average 7.88 percent returns. These low returns have made a difficult situation nearly impossible to manage as liabilities continue to outstrip contributions to the fund.
The call by Arizona Mayors to wrestle control away from the PSPRS board is well founded. Of the 73 largest public retirement systems in the country, PSPRS paid the highest percentage in fees for outside investment management – $129 million last year though they earned only $49 million in returns. Compare this management to Arizona State Retirement System (ASRS), a fund 4 times the size, that performs in the top third of funds on investment returns and pays about four tenths of one percent the management fees PSPRS pays.
Arizona’s public pension system is in the 11th hour of unavoidable implosion. A series of decisions by governments, elected leaders, and the courts have brought us to this situation and only these parties can correct it going forward. The answer cannot be to expect taxpayers of fiscally prudent cities to subsidize the poor decisions of insolvent cities. Nor can it be to drain the wealth of private citizens (and public employees coming under the third tier in the system) to bail out outrageously generous benefits of previous public employees.
The ship may be sinking, but taxpayers shouldn’t have to go down with it.
by admin | Jul 20, 2017 | News and Updates
Prescott is at a crossroads. Due to a crippling pension debt that has the city staring at possible bankruptcy in the next decade, the voters of Prescott will have an important decision to make in the upcoming election for Mayor.
Add in critical issues surrounding water and job crushing regulations, it is clear the decisions made by voters today will determine whether Prescott continues to grow and prosper for years to come, or begins down a path of financial and economic turmoil.
Currently there are three candidates vying for Mayor, and based on their public positions on the issues it is difficult to make an endorsement at this time. What is obvious is that there is one candidate that should be avoided by taxpayers at all costs.
Current sitting Councilwoman, Jean Wilcox, is the WRONG choice for Prescott Mayor.
Jean Wilcox has been a dedicated tax-and-spend politician from her first moments in office. She has publicly supported increases in the sales tax, property tax, gas tax, and a water tax. It’s hard to find a tax Wilcox does not want to raise.
Since being elected to Council in 2014, Wilcox has been beating the drum to raise taxes at every turn. The first tax increase she pushed for was an increase to the City’s sales tax in June of 2014. She had barely taken office but it did not take long for her to be convinced that increasing taxes was the only option for the city.
Wilcox then voted in June of 2014 to raise Prescott taxpayers’ property taxes. While casting her vote, Wilcox arrogantly stated that she was disappointed that they were “stuck” with Arizona’s voter enacted constitutional limitations on how high property taxes could go. Just two years later Wilcox voted again to raise property taxes.
After raising property taxes, Wilcox began pushing the council to increase water rates to pursue her environmentalist agenda and subsidize various crony capitalist pet projects. When it comes to municipal water service, taxpayers should have 100 percent confidence that water rates are based solely on the cost of providing the service. Water bills shouldn’t include extra taxes and fees to pay for special interest projects, which is exactly what Jean Wilcox wanted to do.
Jean Wilcox used her position on the council to work around these important protections for rate payers. Wilcox even entertained the idea that higher water fees could be cycled into select industries Jean Wilcox liked. In other words, she wanted to raise water rates in order to provide a few politically-connected commercial users with a subsidy.
What is even more telling of Jean Wilcox’s character is how she responded when voters didn’t agree with her high tax mentality. Two years ago, Councilwoman Wilcox pushed to roll a series of tax increases for open space, pension funding and street improvements into one package. The purpose of this maneuver was to increase the chances that her favored tax increase—more money for open space—would pass.
She failed in this endeavor to log roll the measures and the triple tax proposition went to the ballot as three separate proposals. After voters rejected two of the three measures, Wilcox expressed her disgust for taxpayers, stating those who did not vote for the tax were duped and that they “don’t understand that paying this tax will benefit the whole community.”
This is what Prescott residents must look forward to if they vote for Jean Wilcox for mayor. Her love of taxes knows no bounds, and as Mayor she will have a lot more power to implement her agenda.
As Prescott prepares itself for the future, it is going to require a leader with a strong record of fiscal discipline. That person is clearly not Jean Wilcox.
Paid for by the Arizona Free Enterprise Club. Not authorized by any candidate or candidate campaign committee.
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