Bill to Provide Handouts to Investors and Insurance Companies Returns to the Legislature

Bill to Provide Handouts to Investors and Insurance Companies Returns to the Legislature

Year after year, legislators in the Arizona House and Senate introduce bills advertised as jobs producers and the solution to affordable housing: tax credits for banks, investors, and insurance companies to finance development projects.  Because bad ideas never die as long as there are lobbyists hired to push them, this year the Low Income Housing Tax Credit (LIHTC) bill is back again as HB2562 sponsored by Representative Regina Cobb and SB1327 sponsored by Senator David Gowan.

The Arizona program allows for $8 Million a year of tax credits that can be matched with the subsidies offered through the federal program.  The bills mirror the federal LIHTC percentages and can be carried over for 5 years.  Banks sell these tax credits to investors who make up a pool to finance the project. This mechanism is supported by layers of middlemen who add to the cost of building these projects. As a result, the program is lucrative for investors, very costly for the taxpayers, and results in fewer units being produced.

The LIHTC program also lacks transparency and oversight making it fraught with fraud.  In 2018, Wells Fargo made an over $2 Billion dollar settlement with the Department of Justice for purported nation-wide collusion to devalue these tax credits.  Hundreds of millions of dollars have been siphoned from the program which led to a report by the Office of Government Accountability, noting poor oversight and wide variations in per-unit building costs.

There are many legitimate ways the legislature can address affordable housing that don’t include swampy D.C handouts to banks, investors, and insurance companies.  Here are three:

  1.  Housing Choice Vouchers (HCVs) which are tenant-based subsidies, not developer-based ones. Instead of incentivizing profiteers to supply housing – HCVs empower individuals and families to access housing in places they desire to live. 

    This approach allows low-income families to move to higher income places which often gives them access to better jobs and school districts and affords children of low-income families’ greater opportunities to succeed.  Because the LIHTC programs provide greater incentives for building in designated areas of greater poverty, it has the direct effect of actually concentrating poverty and segregating poor people.

  2. Direct appropriation of the Arizona Housing Trust Fund.  The appropriation process forces lawmakers to set their priorities based upon available revenues and balance their decisions with the tradeoffs presented.  The appropriations process is more transparent as it is revisited each year (unlike tax credit programs) and the body responds to environmental changes in the state and shifting priorities.  Projects are chosen by representatives who know the needs within their districts instead of developers who decide based upon the potential for maximized profits. Additionally, development with public monies goes through an open bidding process, ensuring taxpayers get the best bang for their buck.

  3. Address the underlying tax and regulatory structure responsible for nearly a third of the cost of development.  A study conducted by the National Association of Homebuilders concluded that 32 percent of the costs associated with building housing are attributable to regulations, mostly land-use and development hurdles by local governments.  In Arizona, the state allows the cities to charge a residential rental tax and gives them broad authorities to regulate development.  The fees, extensive permitting processes, and slow timelines add cost to development that is passed on to the consumer.  No tax credit program can fix this problem.

The expansion of this 35-year-old failed D.C. program in Arizona would be a big mistake. The bills being peddled this year are not being backed by advocates for the poor; but by those who stand to gain the most – insurance companies, investors and banks.  If lawmakers truly care about the poor – and the taxpayer – they will resoundingly reject HB2562 and SB1327.

Arizona Free Enterprise Announces 2020 General Election Endorsements

Phoenix, AZ (September 3, 2020) – Today the Arizona Free Enterprise Club announced its slate of candidate endorsements for the 2020 general election cycle.    

The endorsed candidates represent individuals who align with the organization’s principles and key policy goals.  Club President Scot Mussi stated, “It is critical Arizona has leaders and policy makers who are able to articulate and stand up for free market principles and pro-growth policies.  This slate of candidates has proven they can and will.”

Proposition 207 – No

Proposition 208 – No

U.S Senate

Martha McSally

U.S Congress

Tiffany Shedd, CD 1

Brandon Martin, CD 2

Daniel Wood, CD 3

Paul Gosar, CD 4

Andy Biggs, CD 5

David Schwiekert, CD 6

Debbie Lesko, CD 8

Corporation Commission

Eric Sloan

Jim O’Connor

State Legislative Races

Judy Burges, LD 1 House                                                         

Quang Nguyen, LD 1 House                                                     

Deborah McEwen, LD 2 House

Travis Angry, LD 4 Senate

Joel John Dee, LD 4 House

Regina Cobb, LD 5 House

Leo Biasuicci, LD 5 House

Walt Blackman, LD 6 House                            

Brenda Barton, LD 6 House

David Peelman, LD 7 House

Vince Leach, LD 11 Senate

Mark Finchem, LD 11 House

Brett Roberts, LD 11 House

Warren Petersen, LD 12 Senate

Travis Grantham, LD 12 House

Jake Hoffman, LD 12 House

Sine Kerr, LD 13 Senate

Tim Dunn, LD 13 House

David Gowan, LD 14 Senate

Gail Griffin, LD 14 House

Becky Nutt, LD 14 House

Nancy Barto, LD 15 Senate

Steve Kaiser, LD 15 House

Justin Wilmeth, LD 15 House

Kelly Townsend, LD 16 House

Jacqueline Parker, LD 16 House

JD Mesnard, LD 17 Senate

Liz Harris, LD 17 House

Suzanne Sharer, LD 18 Senate

Paul Boyer, LD 20 Senate

Anthony Kern, LD 20 House

Shawnna Bolick, LD 20 House

Rick Gray, LD 21 Senate

Kevin Payne, LD 21 House

Beverly Pingerelli, LD 21 House

David Livingston, LD 22 Senate

Ben Toma, LD 22 House

Frank Carroll, LD 22 House

Michelle Ugenti-Rita, LD 23 Senate

John Kavanagh, LD 23 House

Joseph Chaplik, LD 23 House

Tyler Pace, LD 25 Senate

Rusty Bowers, LD 25 House

Tatiana Pena, LD 27 House

Jana Jackson, LD 28 House
C

Maricopa County

Proposition 449 – No

Stephen Richer, County Recorder

Allister Adel, County Attorney

Steve Chucri, Board of Supervisors District 2

Bill Gates, Board of Supervisors District 3

Gilbert

Matt Nielsen, Mayor

Scottsdale

Lisa Borowski, Mayor

Phoenix

Merissa Hamilton, Mayor

David Seibert, City Council, District 1

COVID-19 One-Size Fits All Policies Have Unintended Consequences

Dr. Jeffrey Singer is in a unique position to opine on the current situation in our country and state.  Not only has he worked as a general surgeon for 35 years, including within a hospital, he is also a Senior Fellow with the Cato Institute, researching and analyzing public policy.

Dr. Singer has published several articles on the COVID-19 pandemic, two recently in the Washington Examiner and USA Today.  Both highlight areas in which governments have taken broad policy actions that have had major costs and harmful unintended consequences.  He instead recommends policymakers take both a targeted as well as softer, education-focused approach to public health directives.

Our leaders are in a difficult situation trying to balance the roller coaster of public opinion which often supports those decisions which avoid consequences that can be readily observed.  This explains why elected officials have gravitated toward sweeping lockdowns, bans, and mandates.  Yet Singer points out, these policies do not consider the consequences that are not as easily observed.  Aside from the obvious financial hardships forced shutdowns have wreaked on employment, businesses, life savings and the overall economy, there have been massive public health costs.

These include the untold lives that will be claimed from serious illnesses because of bans on screening procedures, from chronic diseases because patients could not keep routine appointments, and from suicides as those already battling depression fail to cope with prolonged isolation. 

Furthermore, Arizona’s Governor, like in many other states, issued an executive order prohibiting “elective” surgery. This was a strategy to ensure the hospitals could build capacity and not be overrun by pandemic patients.  But as Dr. Singer points out in his USA Today article, elective surgeries are not the same as unnecessary surgeries.  He suggests instead that a more lasered and effective approach would be to allow doctors, not bureaucrats, discern which surgeries should be done based upon an analysis of risk to the hospital and patient on an individual basis.

A wise approach.

Aside from economic and health repercussions to top-down mandates, our country and state has seen dramatic civil unrest.  Afterall, this is still the “land of the free” and Americans do not accept controls and dictates from government as easily as citizens of other countries.

Ultimately Singer’s conclusion is the right one, “Central governments and public health officials should use a light touch when responding to public health emergencies. Responses should be targeted, nuanced, flexible, and easily adjust to changes on the ground based upon local knowledge. For this to happen, the government should provide people with accurate and up-to-date information on the nature and status of the public health emergency, along with the necessary information and tools so they can best cope with the emergency. There is good reason to believe that, given the right information and using persuasion instead of coercion, public health officials are more likely to get cooperation from the public.”

Supervisor Mike Goodman Wants Higher Taxes But Doesn’t Pay His Own Taxes

Hypocrisy in politics in nothing new, but it does matter when it comes to taking more money out of your wallet. That brings us to the story of Pinal County Supervisor Mike Goodman.

For years Mike Goodman has pushed for tax increases in Pinal County, the largest being the $640 Million dollar tax hike in 2017. This was suppose to fund transportation projects throughout the county, except that his district does not get one penny of the revenue from the tax hike.

That’s right, Supervisor Goodman pushed for a tax increase knowing that his community would not benefit. Now his constituents are being stuck with the tax bill to improve roads for developers and other special interest groups around the county.

But it gets even worse. It turns out that while Mr. Goodman wants others to pay higher taxes that he doesn’t even pay his own!

For years Supervisor Goodman was sent notices from the IRS on back taxes owed totaling over $100,000. After refusing to pay, the IRS was forced to issue a lien on all property and income owned by Supervisor Goodman in the amount of the taxes owed plus interest and penalties.

The IRS isn’t the only entity that Supervisor Goodman has stiffed over the years. Mr. Goodman also operated MB Goodman, LLC., a business that had a poor track record of paying vendors and creditors.

His failure to pay became so problematic that one vendor, Crop Production Services Inc. was forced to take Supervisor Goodman to court for debts owed. Not surprisingly the court ruled against him, issuing a judgement against Mr. Goodman and in favor of Crop Production Services Inc. for $95,300.54.

Yet that judgement wasn’t enough, as Supervisor Goodman continued to avoid paying Crop Production Services what they were owed. They were forced to take him to court again, getting a second order issued ensuring that his wages would be garnished until full payment of his debts were made.

Supervisor Goodman doesn’t pay his taxes. He doesn’t pay his creditors. But he wants his constituents to pay more in taxes for projects that don’t even serve or benefit the community.

This type of irresponsible and hypocritical behavior should not be rewarded. Supervisor Goodman is up for reelection this year, it’s probably time for voters to pick someone new to represent them in Pinal County.

 

 

 

 

 

Paid for by the Arizona Free Enterprise Club. Not Authorized by any Candidate or Candidate Committee.

 

 

 

 

Open Letter to Governor Ducey on Extending Shutdown Nightmare

Dear Governor Ducey:

As a free market organization that represents entrepreneurs, job creators and hardworking taxpayers throughout the state, the Free Enterprise Club has defended many of the actions that you have taken to combat the Covid-19 pandemic. Dealing with a crisis in real time is always going to be difficult, especially when information and data is incomplete. There was an incredible amount of uncertainty and risk in mid-March, and a shutdown of the economy–while drastic–was understood.

To say that the press conference announcing the extension of the stay-at-home order was a disappointment would be an understatement.  Your decision was confusing, provided no certainty for the thousands of small businesses that are on the verge of bankruptcy, and shifted the rationale for why we started the shutdown to begin with.

The goal post shifting might be the most frustrating aspect of the extended stay-at-home order. When the closures began in Mid-March, we were told that these extreme measures were necessary to accomplish two tasks:

  1. Flatten the Curve to ensure so we don’t see a huge spike in hospitalizations resulting in our healthcare system being overwhelmed.
  2. Provide an opportunity for our hospital system to ramp up and prepare for an influx of Covid-19 cases.

Both of these goals have been achieved by wide margins. The curve has been flattened. There has been no large increase in the number of Covid-19 cases in Arizona and hospitalization rates have been flat for a month. Our healthcare system took advantage of the time provided by increasing supplies of ventilators, beds and other essential PPE needed to combat the pandemic. And residents throughout the state sacrificed their income, jobs, businesses and mental health to do their part to stop the spread.

Yet now we have created a new arbitrary set of metrics for ending the shutdown. At the press conference you commented that a Fortune 100 company told you that public confidence is too low to open. That polling showed some people believe Arizona is just not ready to reopen. You claimed that another governor had a “bad experience” during their reopening (even though it is way too early to make any such declarations). It was also mentioned that we need better data trendlines than what we have seen.

It is easy to see why thousands of Arizona residents and businesses owners were furious after the announcement. These explanations offered no clear path forward and made it appear that the voices of large companies and wealthy restaurant owners speak for the entire business community, not the thousands of small businesses being wiped out because of the shutdown.  

Even more frightening for those waiting to reopen is that likely nothing will different by May 15th to satisfy your new criteria. The number of new daily Covid-19 cases will be roughly the same and hospitalization rates will remain flat. Public confidence won’t be improved. Doomsday modelers that have been wrong from the beginning will still be warning of dark days ahead if we end the shutdown. And your office will encounter the same opposition to reopening from the same politicians, media outlets and twitter pundits, most of whom have not lost a single paycheck or suffered any financial hardship during the pandemic.

Not surprisingly, citizens watching their lives be destroyed are becoming more defiant in the face of what they see as government overreach and abuse. The number and size of protests throughout the state are growing by the day. Restaurants and other small retail shops on the verge of bankruptcy are beginning to open despite warnings from law enforcement or concerns about losing their business license. Social unrest is becoming a real threat, something that is not carrying enough weight in the current decision-making process.

Now more than ever the residents of Arizona crave leadership. This is not a crisis that can be solved looking at polling numbers or crafting a snappy slogan. You have often spoke of “being bold” during your time in office—that is what Arizona needs today! It is time to lead, and here are a few suggestions:

  • Reopen Arizona Today! The debate has often centered around reopening our economy, but this is much bigger than that. This is about reopening society, and you need to lead on a plan that gets our state opened today. Most understand that our lives won’t go back to normal right away and that some activities (sporting events, concerts, large gatherings, etc.) will be delayed. But there is no reason that anyone wanting to get back to work should be denied that opportunity.
  • Provide Clear Guidelines for Businesses. Missing from your press conference was any clear guidelines for businesses on what to do when they reopened. This was rectified somewhat a few days later, but the reality is that businesses are as confused as ever on what do to. Providing simple guidelines will improve confidence for both employers and the public as places begin to reopen.
  • Trust our Judgement. The primary reason that the so-called “experts” and modelers continue to be wrong in their predictions is that they believe they can predict and control the actions of millions of people. They cannot and the more that the government or the Karens of the world try to impose their will on others, the more it will backfire. You must trust that citizens will make healthy choices and are better at protecting themselves and their families than the government. 
  • Provide the Facts on Covid-19. As Arizona begins to reopen, people should be provided with an accurate picture of the true risks associated with Covid-19. The data is overwhelming that there are at at-risk populations, primarily those over the age of 65 or with chronic health conditions. But it is also a fact, supported by evidence, that healthy children and adults under the age of 45 are at an extremely low risk of getting seriously ill. There is also little evidence to support the notion that major suppression/lockdown efforts have been any more effective at containing the spread of Covid-19 than lighter mitigation efforts. This information should guide our response and also help people make informed decisions on the lifestyle decisions they choose to make.

Governor Ducey, if you lead on reopening, people will follow. We urge you to take the reigns and lead our great state back to prosperity.

It’s Time to Reopen Arizona

This cannot go on much longer. The economic and societal damage being inflicted by the shutdown is escalating by the day, and Arizona business owners and families are getting crushed.

There are now over 22 million unemployed unemployed in the US, thousands of small businesses on the verge of bankruptcy, surges in domestic violence and abuse, delays in testing and life-saving treatments for non-Coronavirus diseases, an explosion in calls to suicide hotlines and local governments facing a larger budget crunch than the one encountered during the financial crisis in 2008.

Even basic necessities and staples relied upon by everyone are beginning to falter as well. Major food providers are warning that supply chains are breaking down and we should expect shortages. Hospitals are beginning to lay off and furlough employees since the Covid-19 peak promised by the models never materialized. And our entire energy market is in disarray after the oil markets crashed last week:

U.S. equity markets slid Monday as oil crashed below zero and closed at its lowest level since record keeping began in March 1983.The Dow Jones Industrial Average fell by as many as 489 points, or 2.02 percent, before paring its losses. The S&P 500 and Nasdaq Composite were down 1.53 percent and 1.01 percent, respectively, at their lows.

Ongoing concerns over swelling oil inventories pushed West Texas Intermediate crude for May delivery plunged 305 percent to a record low -$36.73 per barrel. At a price below zero, buyers would be paid to take delivery as there are costs associated with transportation and storage.

Just 2 months ago the oil industry was thriving in America. Now traders are being forced to pay vendors to unload their product as inventories exceed capacity. That’s right, if you can safely store crude on your property, someone is willing to pay you to take it (delivery not included).

The reality is that lives are being lost and ruined by the current shutdown, and it will only get worse every day that we wait. Arizona must reopen, and fast. Governor Ducey announced that he is working on a reopening plan for the state, which will likely include a phased-in approach largely based on the guidelines provided by the Trump Administration.

That is good news, but the next step is going to be the toughest. Reopening Arizona is not going to be easy, especially since any discussion on relaxing the Covid-19 restrictions has become a politically divisive issue. The rhetoric has become so intense that in some corners any mention of ending the shutdown means putting the economy ahead of lives. This is complete nonsense.

Supporting an end to the lockdown means understanding that lives can be lost to economic destruction just as easily as they are to Covid-19. This is being recognized in other countries, as Austria, Switzerland, Germany, Norway, the Czech Republic, Poland and many others has already begun easing restrictions. Here in the US, states such as Texas, Georgia, Tenessee and Florida have begun taking action as well on a reopening plan.

Arizona needs to follow suit, and it can be done in a smart and safe way. Mitigation efforts such as continued social distancing, encouraged teleworking, mask wearing and the suspension of congested gatherings (such as sporting events) will continue. Extra precautions can be taken to protect the most vulnerable populations (senior citizens and those with chronic illness) impacted by Covid-19. If the purpose of the lockdown was to prevent our healthcare system from being overloaded, then a phase down of the restrictions will be more than enough to prevent that from happening.

The end of the current stay-at-home order is April 30. That is the perfect time for Arizona to begin reopening for business. The process won’t be seamless, but the cost of inaction at this point will be worse than staying home.