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.
by admin | May 30, 2017 | News and Updates
It has been a couple of weeks since Governor Ducey signed the FY 2018 budget into law, a $9.8 billion dollar plan that was the result of four months of tense negotiations with the legislature. And though there were a few crony capitalist giveaways to special interests included in the final package, overall the budget should be considered a win for fiscal conservatives.
Structurally Balanced Budget
Among the lesser talked about accomplishments is that the legislature passed what can be considered a structurally balanced budget for the third year in a row. If it seems like a low bar to give politicians credit for spending money they don’t have, consider that for a decade our elected leaders failed to pass a single budget without using accounting gimmicks and fake assumptions to paper over an ongoing deficit. Arizona finally has its fiscal house in order, which is good news for taxpayers.
Tax Cuts
When the preliminary budget was announced, many lawmakers were frustrated that regular taxpayers were left out of the plan. In particular, not a single tax cut was included for hardworking families. That was changed when Representative Tony Rivero (District 21) and Representative Michelle Ugenti-Rita (District 23) led the charge to secure a $12 million tax cut by increasing the personal exemption by $100 through 2019. It was tax relief that was broad based and will benefit low income families the most.
Consolidated Elections
Throughout the session, efforts were made by freshman lawmaker Kevin Payne to pass legislation that would require local government to hold all elections proposing a sales tax increase to occur in November of even numbered years. After passing the House, the bill failed in Senate Judiciary. However, conservative lawmakers seized an opportunity to include this major reform in the budget package. This was a tremendous win for taxpayers as consolidating TPT elections will save money, yield greater voter turnout and prevent cities and counties from trying to sneak tax hikes through in low turnout elections.
Education
During the entire budget process, the Club encouraged lawmakers that if additional funds were to be spent on education, to direct it toward results-based funding and increased intellectual diversity at our universities. Conservative lawmakers were successful in both efforts.
In the budget $38 million was allocated to “Achievement Districts,” whereby schools that meet certain academic targets receive additional funds. The purpose of this program is to expand and replicate schools with proven effective outcomes, to increase every student’s access to a high-quality education. The program also directs funds to partnerships between under-performing schools and excellent “A”-rated schools for mentorship.
Conservative lawmakers also successfully ensured funds designated for “Freedom Centers” located within the public universities were retained. Not only did they secure the $5 million from last year’s budget, but were able to negotiate an additional $2 million this year. These centers have proven to be bastions of intellectual diversity and provide students with much needed education on classical political philosophy and free market economics.
Overall, 2018 State budget reflected the education priorities of the Legislature and Governor, but did so with fiscal restraint. Most importantly, the budget was structurally balanced and spending did not exceed inflation plus population growth. Factoring in a solid tax cut for every Arizonan and consolidated elections, conservatives secured some major wins for tax payers this year.
by admin | May 23, 2017 | News and Updates
Last month the Trump Administration released their budget proposal, which among many shifting priorities, included eliminating a long-standing federal program called “New Starts.” New Starts was created in the 1990’s and has funneled hundreds of millions of federal monies to localities to build expensive transit projects, including light rail systems.
It was no surprise that many who have benefitted from the light rail gravy train over the past few decades reacted as if the fields were on fire.
Among the arguments made to attribute value to the New Starts program, was the claim that light rail in the Phoenix Metro Area has generated $9 billion in “real estate activity” surrounding the transit line in the last decade. More than being overly optimistic, this claim has been summarily debunked.
Just a year and a half ago, light rail enthusiasts took credit for $7 billion in development. Upon further investigation however, it was discovered that new development was actually $6.9 billion in development plans. And these plans were mostly submitted prior to the financial crash and prior to the light rail line opening or even being announced.
Furthermore, many of these plans languished and never came to fruition. Specifically, at least half a billion dollars’ were cancelled and as a result, assertions that a boon of development had occurred were pared back from $7.4 billion in 2009 to $6.9 billion in 2013.
Not only did many private developments fall through or cancel, much of the development that has occurred has been subsidized by the government in the way of low-income housing tax credits and other government programs. In many instances the government has had to pay people to build by light rail.
And lastly Valley Metro has included in their figures, development that would have occurred anyway, such as the construction of a new high school and the expansion of the Phoenix Convention Center.
This isn’t just in Phoenix. There is no evidence that light rail spurs development.
According to the independent study commissioned by the Federal Transit Administration itself, light rail does not create growth, but at best redistributes it. The strongest correlation in fact, is the cities that have spent the most in transit have had the slowest growth. Though not spending money on transit is not a guaranteed advantage, spending more on transit has consistently been correlated to slow or stagnate growth.
This should come as no surprise considering the amount of debt cities generally take on when building fancy rail lines. Not only do many cities incur debt to fund capital costs to match federal contributions, but often cities fail to have the necessary funds for ongoing maintenance and operations costs. Of all the rail lines in the country, only one has been built “on time” and “on budget.” And it wasn’t Phoenix.
But set aside the apparent fact that Arizona has wasted hundreds of millions of dollars on a transit system that has increased congestion on the roads, cannibalized bus ridership, and failed to provide any external growth. There’s an even more salient reason tax payers should be thrilled by Trump’s prerogative to eliminate the carrot for more light rail spending.
The country is on the verge of a transportation revolution. The reality is no one knows what transportation, transit, or infrastructure will look like in the next five to ten years with the advent of autonomous vehicles. Government incentivizes to incur long-term debt to invest in century old technology that is already obsolete is an absurd policy decision.
Rationalizing spending more money on a sunk system because we have already spent so much, is throwing good money after bad. It’s past time the outdated New Starts program as well as the old transit line technology be ushered out to make room for the possibilities of the future.
by admin | May 15, 2017 | News and Updates
Among the flurry of special interest tax breaks the Free Enterprise Club opposed this session, one was able to make its way to the Governor’s desk. The Angel Investor Tax Credit program, a bill The Club fights every year, passed out of the House on the last day of session and is awaiting action by Governor Ducey.
Under HB 2191, $10 Million would be allocated in tax credits to wealthy investors to subsidize their risky business ventures. In the words of Robert Robb from the Republic, “The state is stumping for a third of the investment but getting no stake in any returns. That’s not really an incentive. That’s being played for a sucker.”
This tax credit giveaway is even harder to swallow considering that the legislature allocated only $12 Million in income tax relief for all taxpayers when it increased the personal exemption in the budget. Why should special interests get $10 million in tax breaks when hardworking taxpayers only get $12 million?
The Free Enterprise Club urges Governor Ducey to VETO HB 2191. Taxpayers should not be in the business of subsidizing risky venture capital investments by wealthy investors. It’s a program that picks winners and losers among taxpayers, among venture capital investors, and among aspiring entrepreneurs.
***Update***5/23/2017
Unfortunately, Governor Ducey sided with wealthy investors over taxpayers and signed HB 2191. The Club will continue to monitor this giveaway very closely to see how our tax dollars are wasted over the next four years. The early prediction is that the Arizona Commerce Authority and the politically connected investors will identify the low risk/safest investments possible (ones that would have received funding regardless of the credit) in order to declare the program a success. Be prepared to see them at the capitol again pushing these “success stories” looking for more taxpayer cash.
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