Home builders are warning that Gov. Katie Hobbs’ moratorium on home building will hurt the state’s economy severely.
The Home Builders Association of Central Arizona (HBACA) cited a recent study by Elliott Pollack, a Scottsdale-based real estate and economic consulting firm.
“From an economic perspective, the sudden and drastic measures announcing no new certifications of assured water supply from groundwater created uncertainty and risk, an effective deterrent to potential investors in our state’s economy,” read the study. “The prevailing sentiment that Arizona is out of water is now a significant hurdle that requires educating all future potential investment in our State.”
The study projected that the governor’s moratorium on new builds, imposed last June by ceasing certifications of assured water supply, could cost the Phoenix area over 26,000 jobs over the next decade. That, along with a projection that the moratorium would exacerbate the state’s affordable housing crisis.
Hobbs issued the moratorium in response to an Arizona Department of Water Resources (ADWR) report projecting a 100-year deficit of four percent in groundwater for the greater Phoenix area.
I unveiled the latest study of groundwater conditions across the Phoenix metropolitan area. Families and businesses from around the world come to Arizona in part because we are serious about water management, and that we are the leader in safeguarding groundwater supplies. ⬇️1/4
— Governor Katie Hobbs (@GovernorHobbs) June 1, 2023
Assured water supply requires demonstration that developers have a plan to use groundwater in compliance with water management rules set by the ADWR and facilitated by the Central Arizona Groundwater Replenishment District (CAGRD).
After ADWR allowed CAGRD membership to meet the renewable water management obligations in 1995, an estimated 460,000 homes were built, bringing in over 1.2 million residents. CAGRD’s existence ensured that water providers and landowners wouldn’t be on the hook for assuring the 100-year renewable water supply up front.
After the ADWR rule change concerning CAGRD, Elliott Pollack reported that the state brought in $50.4 billion in wages and $135.7 billion in economic impact. CAGRD region residents also spent over $180 billion in the local economy, and contributed over $35 billion in tax revenues.
According to a long-term forecast by the Maricopa Association of Governments (MAG), one out of seven newly built homes would be in Buckeye by 2030, with an estimated 14 percent of new builds cropping up in the city through 2060. That’s up to 3,700 new builds annually on average. However, Elliott Pollack said that this long-term forecast wouldn’t come to fruition under Hobbs’ moratorium — meaning, the expectation of the economy-boosting annual influx of around 10,000 new residents wouldn’t occur.
The study further projected the moratorium could cause mass out-of-state migration by escalating home prices in formerly affordable housing regions, with the supply of homes under $400,000 dwindling or ceasing to exist altogether. The median home price in Arizona sits at around $434,000.
Mortgage rates would demand a minimal income of about $100,000 to afford a $400,000 home. Census data estimated that around 40 percent of the greater Phoenix area’s population made $100,000 or more as of 2022, and further estimated median household income to be about $72,000.
That means about 60 percent of the area wouldn’t be able to afford a home in the area.
The study also found that most out-of-state migration from Arizona was to cities with more affordable homes. Out of nearly 30 cities analyzed, 25 had median home prices more affordable than Arizona’s.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
The U.S. Air Force has plans that are expected to further devastate Tucson’s economy.
The Air Force plans to divest the entire fleet of A-10 aircraft within the next three to five years. Pilots and maintainers at Davis-Monthan will move onto the extraordinarily expensive F-35 aircraft due to the divestment, the Arizona Daily Independent reported.
The Davis-Monthan Air Force Base, where the A-10 “Warthog” ground-attack jets are stationed, hosts more than 10,000 airmen and civilian employees and contributes nearly $1 billion to the Tucson-area economy annually.
Fans of the A-10 will have one of their last opportunities to see the Warthog up close at the Luke Days 2024 airshow March 23-24.
The Air Force announced that after nearly 50 years at Davis-Monthan Air Force Base, the 355th Wing had begun divesting its fleet of A-10 Thunderbolt II aircraft in February of this year.
Some say the Air Force has sought divestment of the A-10 Thunderbolt II aircraft for years because it is an economical and effective aircraft and does not benefit defense contractors.
Arizona representatives sought to save the aircraft in May 2021 after a Biden administration budget plan called for the retirement of the Warthogs. Six Arizona Democrats — Sens. Mark Kelly and Kyrsten Sinema, and Reps. Ann Kirkpatrick, Ruben Gallego, Tom O’Halleran and Greg Stanton — and Republican Rep. Debbie Lesko vowed to oppose the A-10 retirement plans. They cited its unique role in close air support of ground troops and lack of any near-term replacement for that mission.
“Removing A-10s from the fleet when there is not another aircraft capable of performing this mission takes a vital tool away from our military and is the wrong step for our national security,” said Kelly, a former Navy combat pilot who sits on the Senate Armed Services Committee.
The A-10C Demonstration Team has performed for more than 40 years with dozens of pilots and teams at hundreds of air shows across multiple countries.
Pima County Board of Supervisors candidate John Backer served as an A-10 electrician in the 1980s.
“Having been blessed with first-hand experience of working on the airplane, I understand completely what a unique air frame the A-10 remains to this day,” he said. “Through the years, countless Marines and Army soldiers have shared their love, respect, and gratitude for the A-10 – a majority feel the A-10 directly saved their lives.”
Though the base is reportedly bringing in additional missions, Backer said the Warthogs will be hard to replace due to their Close Air Support capabilities and financial impact for Pima County.
Elizabeth Troutman is a reporter for AZ Free News. You can send her news tips using this link.
Inflation persists due to record levels of spending over the past three years, according to Rep. David Schweikert, R-Ariz., in a speech on the House floor Thursday night.
Schweikert said the total deficit spending for FY24 will be dramatically higher than both the Congressional Budget Office (CBO) and the Office of Management and Budget (OMB) initially projected if the national debt continues to increase at the current pace of over $99,000 per second.
Last May, Congressional fights over the next speaker overshadowed the greater concern, the national debt, Schweikert said.
“And think of this — in that time, we were fighting over like $16 billion,” he said. “We’re borrowing about $9 billion a day. So we’ve gone how many months, and we’ve never gotten around to actually working on the real problems because of the theatrics around here.”
As a result, the Scottsdale-Phoenix area resident said the Congressional Budget Office missed its FY24 deficit spending projection by $1 trillion.
Interest spending alone is projected to top $1 trillion this fiscal year, he said.
“When I came here a couple of months ago and said we could be heading for $1 trillion [in interest spending], I got mocked. I even saw my colleagues go, ‘Schweikert, you’ve got to stop making things up!’ Well, turns out I’m right,” he said.
“We will spend all day fighting over a few million here, which is important, and I am willing to cut these things, but we’re picking up pennies off the ground as the avalanche is crushing us,” he continued. “Because that same day we fought over those millions, we borrowed $9 billion a day when we are fighting over millions. Understand, $1 trillion has 12 zeros. Start to work your zeros and understand the scale.”
Addressing inflation, Schweikert said America is paying the price for spending money in ways that did not actually spike productivity. He said subsidizing things does not yield the most efficient and cheap way to produce them.
Schweikert advocated for a level of competition so the best, fastest product is rewarded.
“The last two months, [inflation] hasn’t been going down the way it’s supposed to,” he said. “So expect these interest rates I just showed you to continue. And if you live in my neighborhood, if you live in the Scottsdale-Phoenix area — wonderful area, absolutely incredibly beautiful this time of year. From January 2021 to two months ago, if you’re not making 23.6% more, you are poorer today than you were in January 2021.”
Making Americans less sick with new healthcare technology is one of the most powerful things we could do to lower the national debt, he said. Six weeks ago, the FDA approved the first cure to sickle cell anemia.
“Artificial intelligence is about to have a revolution in bringing cures to market dramatically faster,” Schweikert stated. “We’ve actually now had the first couple of AI drugs designed to make it through the FDA.”
Schweikert said policies can make it possible to bring new drugs to the market without costing $100 million.
“Do we think about things we could do in farm policy and nutrition policy in helping our brothers and sisters live better, healthier, more prosperous, [improve their] ability to join the labor force, maybe family formation, crushing income inequality,” he asked his fellow congress members.
Elizabeth Troutman is a reporter for AZ Free News. You can send her news tips using this link.
Arizona ranked fifth out of states adding the most mortgage debt between quarters three and four of 2023 according to a WalletHub survey.
WalletHub released a report Friday showing in what state homeowners are struggling the most in response to the upward trend of mortgage debt over the past few years.
The personal finance website compared the 50 states based on its proprietary data on mortgage debt from Q3 to Q4 2023.
Mortgage debt is by far the biggest category of debt for Americans, with the average household owing around $100,000. WalletHub found the total balance to be more than $12 trillion.
“Mortgage rates are the highest they’ve been in around a decade, and home prices have seen a meteoric rise in recent years as well,” WalletHub Editor John Kiernan said in a news release. “Even small increases in home prices can lead to thousands of dollars in extra mortgage interest costs for homeowners, so it’s important to choose wisely when deciding where and when to buy a house.”
The average mortgage balance in Arizona increased by 0.068% from Q3 to Q4 2023, and the average mortgage balance was more than a quarter of a million in Q4 2023.
The Grand Canyon state’s average monthly payment for mortgages in Q4 2023 was $1,751.
The states ahead of Arizona for adding the most mortgage debt included Maryland, Nevada, Hawaii, and Texas. The states with the smallest increases to mortgage debts were Wyoming, Delaware, and Vermont.
Elizabeth Troutman is a reporter for AZ Free News. You can send her news tips using this link.
The Grand Canyon State welcomed a grand manufacturing funding expansion this week.
On Wednesday, President Joe Biden appeared in Chandler, Arizona, at the Intel Ocotillo location to “announce that the Department of Commerce has reached a preliminary agreement with Intel to provide up to $8.5 billion in direct funding along with $11 billion in loans under the CHIPS and Science Act.” According to a White House fact sheet, this investment would “support the construction and expansion of Intel facilities in Arizona, Ohio, New Mexico, and Oregon, creating nearly 30,000 jobs and supporting tens of thousands of indirect jobs.”
Today, President Biden announced a historic agreement with Intel to build and expand four semiconductor manufacturing facilities here in America – helping put us on track to manufacture 20% of the world’s leading-edge chips by the end of the decade. pic.twitter.com/EeUtyFTw3R
In a post on “X” after his speech, President Biden wrote, “Semiconductors are the tiny computer chips smaller than a fingertip that power our everyday lives. We invented them, but over time we moved manufacturing overseas. I came to office determined to bring their production home. That’s what our CHIPS Act does.”
Semiconductors are the tiny computer chips smaller than a fingertip that power our everyday lives.
We invented them, but over time we moved manufacturing overseas.
I came to office determined to bring their production home.
Arizona Governor Katie Hobbs attended the event at Intel and spoke to attendees. After the announcement, Hobbs championed the increased funding for a vital sector within her state, saying, “I’m excited to announce that Intel will receive a historic investment from the CHIPS Act, made possible thanks to President Biden’s leadership. This critical investment will drive innovation, create jobs, and solidify Arizona’s position as a leader in semiconductor manufacturing.”
I’m excited to announce that @Intel will receive a historic investment from the CHIPS Act, made possible thanks to @POTUS' leadership. This critical investment will drive innovation, create jobs, and solidify Arizona’s position as a leader in semiconductor manufacturing. pic.twitter.com/cu0CC6k4qq
Hobbs added, “Our success story is only possible with our exceptional workforce. BuildItAZ, Future48 Workforce Accelerators, and semiconductor apprenticeships will help ensure Arizonans are ready to take advantage of these good paying jobs. Intel has been a leader in the Arizona business community for decades. Thank you to CEO Pat Gelsinger for continuing our partnership. Your vision and leadership are driving innovation, creating jobs, and strengthening Arizona’s position in the global semiconductor industry.”
Gina Raimondo, the Secretary of the Commerce Department, also took part in the gathering at Intel. She shared, “Today, we announced an $8.5 billion preliminary agreement with Intel that will help strengthen supply chains, revitalize American semiconductor manufacturing, and create nearly 30,000 jobs. It was great to join President Biden in Arizona to share the news.”
Today, we announced an $8.5 billion preliminary agreement with @Intel that will help strengthen supply chains, revitalize American semiconductor manufacturing, and create nearly 30,000 jobs.
“Today is a defining moment for the U.S. and Intel as we work to power the next great chapter of American semiconductor innovation,” said Intel CEO Pat Gelsinger. “AI is supercharging the digital revolution and everything digital needs semiconductors. CHIPS Act support will help to ensure that Intel and the U.S. stay at the forefront of the AI era as we build a resilient and sustainable semiconductor supply chain to power our nation’s future.”
Huge news for American semiconductor manufacturing and technology leadership.
WalletHub compared the 50 states across three metrics: return on taxes paid to the federal government, federal funding as a share of state revenue, and share of federal jobs.
While Arizona’s overall rank was tenth, the Grand Canyon state ranked 15th for return on taxes paid to the federal government, fifth for federal funding as a share of state revenue, and 23rd for share of federal jobs.
President of the Arizona Free Enterprise Club Scot Mussi took issue with WalletHub’s methodology.
“WalletHub doesn’t do a great job outlining their methodology, but from what I can gather they are basing ‘dependency’ on federal payouts, regardless of the purpose of the funds,” Mussi said. “For example, states with more military bases are likely punished as being more ‘dependent’ on federal funds. So to rectify the dependency problem should we equally spread out military bases among all 50 states so that every state receives equal funding? That makes no sense.”
Mussi said he wonders if Arizona has a higher dependency score due to the number of retirees from states like Illinois and California.
“Because people choose to come to Arizona, does that mean we are a “dependency” state?” Mussi asked. “Again, not a great metric to measure dependency.”
Blue states were found to be less financially dependent than red states.
“Regardless of whether the distribution of federal funds is fair or not, living in one of the most federally dependent states can be beneficial for residents,” WalletHub Analyst Cassandra Happe said in a news release. “For every dollar residents of the top states pay in taxes, they get several dollars back in federal funding, which often leads to higher-quality infrastructure, education, public health and more.”
Alaska was found to be the most federally financially dependent state, followed by New Mexico, Kentucky, West Virginia, and Mississippi. New Jersey ranked as the least dependent.
“Alaska is the most federally dependent state, with over 57% of the state’s revenue coming from federal funding,” Happe said. “For every $1 that residents pay in taxes, the state receives $2.47 in federal funding. Plus, nearly 5% of Alaska’s workforce is employed by the federal government, one of the highest rates in the country.”
Vanderbilt professor Carolyn J. Heinrich said federal resources often support programs that increase societal benefits and reduce societal costs.
“For example, Title I funds in education are distributed according to the level of family economic disadvantage, recognizing that it is important to ensure that all children are healthy and well-educated,” she said. “State resources may be prioritized for uses that yield benefits primarily within the state, such as economic development incentives.”
Mussi said he does think there are examples of states benefiting from their congressmen bringing home federal money for special interest and pork projects.
“Senators from West Virginia have been notorious for this activity, and it should be opposed,” he said. “But metrics like state dependency don’t ever seem to accurately reflect this type of activity, so we usually never rely on them.”
Elizabeth Troutman is a reporter for AZ Free News. You can send her news tips using this link.
