Congress’s Joint Economic Committee (JEC) warned that the Biden administration’s economic policies have caused an unsustainable debt crisis and historic inflation.
This assessment was announced formally earlier this week by JEC Vice Chairman and Congressman for Arizona’s first district, David Schweikert, through the 160-page Republican Response to the Council of Economic Advisers’ 2024 Economic Report of the President.
Schweikert stated in a press release that 2024 serves as a “critical juncture” for the nation’s fiscal health, one that transcends political parties.
“The challenge before us is neither Republican nor Democrat — it is our moral obligation to ensure American families aren’t left behind. Congress holds the keys to determine which path we choose,” said Schweikert. “We can either behave like adults and choose the path of fiscal responsibility or continue our partisan gamesmanship that will put the American dream further out of reach for future generations.”
Schweikert said that the problems and proposed solutions put forth by the JEC report were inherently bipartisan, focusing on common-ground economy boosters like a healthier population and secure social safety net programs.
“Those of us on the Republican side, we built a report that offered actual moral, great economic solutions instead of the election year rhetoric.”
— Joint Economic Committee Republicans (@JECRepublicans) June 21, 2024
The JEC assessed that the Biden administration’s demand-side policies financed by increased borrowing have placed unsustainable pressure on constrained supply. As a result, JEC predicted that debt-to-GDP would grow from 99 percent to 116 percent by 2034, with interest costs rising. JEC noted that the labor force participation rates haven’t recovered to prepandemic levels; historic mortgage payments for new homebuyers, the highest in 30 years; constraints on budding American industries due to new restrictions on trade; and the cost of clean energy subsidies amounting to $1.2 trillion over 10 years, despite emissions from electricity production declining.
Further exacerbation of the economy comes from an aging population, declining fertility rates, and decreased prime-age labor force participation among men, per the JEC. The aging population is anticipated to drive Social Security spending to 6 percent of GDP by 2035, an increase from the present 5.2 percent and the 1970s at 3.1 percent, though no major expansions have occurred in over 20 years. The JEC reported that one in nine prime-age men remain out of the labor force; if just 25 percent of those entered, the economy would grow by $215 billion.
JEC disputed the Biden administration’s belief that increased taxes of wealthier individuals would amount to their desired revenue, a dwarfed amount of around 1.1 to 2 percent of GDP compared to future deficits. JEC stressed that only reduction in spending would improve fiscal consolidation.
Another demographic with an outsized impact on the economy, according to the JEC, is the rapid increase in obesity. Excess medical expenditures are anticipated to amount to over $9 trillion, as well as federal government spending of over $4 trillion within the next decade. Labor productivity and supply reductions impacted by obesity are projected to cost nearly $3 trillion and $12 trillion, respectively.
As for a positive solution to the nation’s current and looming fiscal woes, JEC indicated that artificial intelligence could grow the economy and improve government efficiency.
JEC also issued a lengthy assessment of the Congressional Budget Office’s revised budget and economic projections for the next decade. This included a $400 billion increase in projected FY2024 deficit, with about 80 percent of the increase coming from President Joe Biden’s student loan forgiveness, the Federal Deposit Insurance Corporation failing to recover payments from 2023 bank failures quickly, new legislation, and higher than expected Medicaid outlays.
CBO recently released its updated budget and economic projections for 2024-2034 from the original forecast in February 2024. Below are some key takeaways from the revised estimates 🧵
— Joint Economic Committee Republicans (@JECRepublicans) June 19, 2024
AZ Free News is your #1 source for Arizona news and politics. You can send us news tips using this link.
On Tuesday, June 18, 2024, the Gilbert Town Council will hold a meeting to adopt the boundaries of a redevelopment plan which could encompass up to 18% of the town’s landmass extending from its western boundary eastward to Lindsay Road and then south to Ray Road, an area of almost 9 ½ square miles. The Town is seeking to take this action under Arizona Revised Statue § 36-1471-1491 using laws intended to curb “slum or blighted areas,” terms that could hardly be used to describe the 22nd Best Place to Live in the U.S. by Money Magazine and the 2nd Safest City in America by Law Street Media according to Gilbert’s website.
The controversial move, which seems to carry the broad support of the Town Council, would allow Gilbert to bypass property taxes over the vast swath of real estate, opening a path for the town to engage in a property acquisition and lease scheme known as a Government Property Lease Excise Tax (GPLET) according to Arizona Tax Research Association President Kevin McCarthy.
Ironically, McCarthy, who has opposed this method of redevelopment for years, told AZ Free News that he penned an op-ed for the Arizona Republic crediting Gilbert with not employing this strategy.
“Most of your suburban cities have done very little of this,” McCarthy explained. “Gilbert to date has done none of it. Ironically, I wrote an op-ed for the paper, I don’t know, six, seven years ago that was in the Arizona Republic, crediting the city of Gilbert for doing development the right way and not doing it by harvesting the property taxes that are otherwise owed, making everybody else’s property taxes higher as a result of some development, not being on the rolls and shorting the schools, their monies, that kind of thing.”
Adding another wrinkle to the matter though, is a potential legal vulnerability to the strategy which could land the town in court. McCarthy continued, “And so now we’ve got them wanting to break through and begin using this tool. But what’s different about this now than even five years ago, the last time we made a legislative effort to narrow the use of it, is that there have been court decisions in this space that we’ve been involved in with the Goldwater Institute that have found that this mechanism violates the constitution’s gift clause.”
As reported by the Arizona Republic, a 2020 ruling found that a similar GPLET scheme between the city of Phoenix and developers of The Derby Roosevelt Row, involving a promised tax break, was illegal. In 2016 the Phoenix City Council okayed a plan that would have had developer Amstar/McKinley successfully avoid paying the appropriate property taxes for 25 years. For eight years under the law, the tax would be completely waived, and it would’ve been further reduced for an additional 17 years.
McCarthy explained how the process works: “I assume what happened in Gilbert: Gilbert’s probably got a new economic development director, or maybe it’s the city manager goes to some meetings, and here’s what fund the city of Phoenix is having harvesting the property taxes that otherwise would be owed on a development. To make development easier, the way these deals are usually done is a developer goes to City Hall, and if a city has a central business district that they’ve declared as slum and blight, they know that if they want to propose an $80 million multi-use building that is 30 stories high and have some residential apartment building and then commercial on the first floor, that kind of thing they can negotiate to have it qualify as a GPLET.”
During a Town Council meeting on April 16th, Gilbert Redevelopment Program Manager Amanda Elliott explained that under the law, a municipality must have a combination of nine findings for redevelopment “to eliminate or prevent your [town’s] signs of decline”
Under the applicable law (ARS § 36-1471), the statute states that a “’Blighted area’ means an area, other than a slum area, where sound municipal growth and the provision of housing accommodations is substantially retarded or arrested in a predominance of the properties by any of the following:
(a) A dominance of defective or inadequate street layout.
(b) Faulty lot layout in relation to size, adequacy, accessibility or usefulness.
(c) Unsanitary or unsafe conditions.
(d) Deterioration of site or other improvements.
(e) Diversity of ownership.
(f) Tax or special assessment delinquency exceeding the fair value of the land.
(g) Defective or unusual conditions of title.
(h) Improper or obsolete subdivision platting.
(i) The existence of conditions that endanger life or property by fire and other causes.”
This language is explicitly presented by the Town as the basis for the redevelopment plan. Further, under the finding for the necessity of the law, the legislature explained clearly, “That the existence of these areas contributes substantially and increasingly to the spread of disease and crime, necessitating excessive and disproportionate expenditures of public funds for the preservation of the public health and safety, for crime prevention, correction, prosecution, punishment and the treatment of juvenile delinquency and for the maintenance of adequate police, fire and accident protection and other public services and facilities, constitutes an economic and social liability, substantially impairs or arrests the sound growth of municipalities and retards the provision of housing accommodations.”
The law adds, “the acquisition of property for the purpose of eliminating the conditions or preventing recurrence of these conditions in the area, the removal of structures and improvement of sites, the disposition of the property for redevelopment and any assistance which may be given by any public body in connection with these activities are public uses and purposes for which public money may be expended and the power of eminent domain exercised.”
According to the Town Council, the moves toward this step have been gradual and ongoing for more than a decade.
Two Words Not Spoken: Property Taxes
During the presentation given by Elliot, the Town explicitly made the claims that the redevelopment plan “will not,” “Specify individual properties, specify commercial centers industrial complexes or neighborhoods, show up on a title report, displace residents or businesses, institute zoning changes, decrease property values or change the voter approved general plan.” However, conspicuously absent from that list is: property taxes.
McCarthy told AZ Free News that when a municipality negotiates to have a redevelopment qualify as a GPLET, “they are exempted from paying any property taxes on the improvement of the property for the first eight years, which is usually when the maximum amount of tax exposure is going to be on a property. That results in the schools not getting all the property tax money that they should get. The counties get zeroed out. The community colleges get zeroed out. The city themselves, it doesn’t get the property. If they do use property taxes, they don’t get any property taxes out of it. And the way that they execute this is that upon completion of the building, they literally deed the property back to the city.”
He added that a developer then wouldn’t have the property added to the tax rolls, “but it’s put on the tax rolls as an exempt property as any government property is, and [wont’] get a property tax bill for eight years.” In prior years, the period was as high as 25 years, but organizations like ATRA, working with the legislature, succeeded in getting that narrowed to eight. A bill was passed to lower it again to four years, but was vetoed by Governor Katie Hobbs. McCarthy noted, “Our argument to lawmakers was that at four years, it’s a lot closer to being able to pass the mathematical calculation of whether or not it’s a gift of public funds and therefore in violation of the constitutional gift clause.” The same gift clause that Phoenix ran afoul of in the Derby ruling.
McCarthy concluded, “Last thing I’ll say is that these property taxes are harvested because in many instances, these deals are agreed to by the cities because there’s a mutual benefit between the developer and the city to exempt the property from paying property taxes and enter one of these GPLET deals, and that is they can enter into any number of agreements that allow them both to benefit financially and maybe not. So not just the developer benefits the city.
So in the example I gave you that the deal might include me as the developer paying for infrastructure that otherwise may not be owed by the developer, but would be a city obligation. Whether the utilities that would be going in the city would bring up to the boundary of the property, any number of improvements in city of Phoenix, it could include, if it’s going to have multifamily, which is a lot of our stuff that we’re seeing in Tempe and Phoenix, a lot of apartment buildings where I as a developer grant concessions to the city council that a certain percentage of the apartments are going to be saved for low-income housing.”
The implications for property taxes also could impact the Gilbert Unified School District considerably as McCarthy observed with properties that “normally would be paying a million dollars a year in property taxes to Gilbert Unified,” not doing so. State funds would be used to subsidize the difference. However, that isn’t so for school bond measures, which are voter approved as are school overrides. “In those instances, the tax rates are going to be higher than they otherwise would’ve been if that property would’ve been on the tax rolls. But even there, the schools really don’t lose money.”
“It’s the other taxpayers that are on the tax rolls that get screwed because the property isn’t paying taxes.”
Gilbert Mayor Brigette Peterson made particular mention during the April meeting that the council is “not trying to turn the town of Gilbert into a city because that’s always a bone of contention with our residents. But it is focused on making sure that this town doesn’t become a city that we’ve seen in the past go downhill. We’re trying to make sure that we’ve learned from other cities’ mistakes in the past and do what’s best for our community to move us into the future and forward.”
Peterson added, “The other thing that we heard at that last meeting that was so well attended was um they they felt like the decisions had already been made. We have not made any decisions, and tonight even we’re just offering more feedback. We’re not voting on anything at a study session, so this still has a lot of time to go through more of a process and to hear from the public too.”
A mailer sent to Gilbert residents in the proposed ‘Blighted area’ indicated that the next meeting is scheduled for June 18, 2024 at 6:30 PM.
The owners of the businesses that power the economy of southern Arizona are about to see some long overdue relief from a 2018 excise tax which was struck down by the State Supreme Court in 2022. Affected businesses will be able to file for a waiver or refund of the tax by April 9, 2026 to recover at least $87 million that was unlawfully collected by the county with another $4 million in interest to be paid out proportionally. Unfortunately, consumers who paid the tax as part of a transaction, will be unable to seek a refund.
The Pinal County transportation excise tax was invalidated by the Arizona Supreme Court in Vangilder v. Arizona Department of Revenue, in which the court found that the Pinal County Board of Supervisors violated state law by adopting a “two-tiered retail transaction privilege tax (TPT) on tangible personal property as part of a transportation excise tax.” While the court held that the basis of the tax was lawful, it invalidated the two-tiered system where the first $10,000 of any one item was taxed at one rate and any in excess was taxed at zero percent.
Arizona Supreme Court Justice Kathryn H. King, a former Deputy General Counsel in the Office of Governor Doug Ducey and appointed by Ducey wrote for the court:
“For the foregoing reasons, we conclude that Pinal County complied with state law in adopting the transportation excise tax. We further conclude, however, that state law does not permit Pinal County to adopt a two-tiered retail TPT structure as part of a transportation excise tax, whereby the first $10,000 of any single item is taxed at one rate and any amount in excess is taxed at a rate of zero percent. For that reason, Pinal County’s two-tiered retail TPT structure in Proposition 417 is unlawful and invalid.
Accordingly, we affirm the court of appeals’ opinion in part and vacate in part. We vacate paragraphs 2 and 23–30 of the court of appeals’ opinion. We affirm the superior court on other grounds. We deny Vangilder’s request for attorney fees.”
The filing opportunity was announced in a letter from the Arizona Auditor General on May 17 according to The Center Square. The letter detailed that approximately $87 million was collected through the excise tax which has earned $4 million in interest adding that the ‘applicable interests” would be paid out to those requesting a refund as well. However, the actual consumers who paid the 0.5% sales tax up to the first $10,000 have no such recourse because of the “transaction privilege tax” status of Arizona the outlet noted cited the Pinal County website.
PINAL COUNTY TRANSPORTATION EXCISE TAX REFUND/WAIVER
Request refund/waiver of Pinal County transportation excise tax invalidated by AZ Supreme Court. Businesses that reported & paid tax 4/2018 to 3/2022 eligible. Must be received on or before 4/9/2026.https://t.co/ybsSxNPBZfpic.twitter.com/zfe3GNrnoL
— Maricopa County Republican Committee | MCRC (@MaricopaGOP) April 24, 2024
The Auditor General wrote, “Between April 1, 2018, and February 28, 2024, the Pinal Regional Transportation Authority did not expend any of the 2018 Excise Tax revenues or accrued interest.”
The county website explained, “Specifically, taxpayers who will be able to request a refund or waiver of monies paid toward this invalidated tax are generally limited to those businesses that filed and paid tax to the Department for the April 2018 through March 2022 tax periods as part of their overall transaction privilege tax liability, for business activity that they conducted either in Pinal County or with Pinal County customers.”
Arizona legislative Republicans are seeking to bring economic relief to many of their constituents who are struggling to make ends meet.
Over the weekend, Arizona Senate President Warren Petersen issued a statement about the harsh economic circumstances faced by thousands of Arizonans – and countless more around the nation. Petersen said, “Crippling prices on basic necessities continue to wreak havoc on hardworking Arizonans. Sadly, this will remain the case while the Biden Administration continues to enact costly policies, and while Washington D.C. continues its out of control spending spree.”
The Republican Senate President pointed to a study from a local thinktank, which proved his point about the current state of the economy, as compared to years earlier, writing, “According to a recent report from the Common Sense Institute, the average family would have saved approximately $8,400 annually over the past three years, if inflation remained at the Federal Reserve’s 2% goal. In comparison to 2020, rent for a two-bedroom apartment is now 30% higher, a tank of gas is $24 dollars more, and a month’s worth of groceries for a family of four is $302 higher!”
The report also showed that “real wages in Arizona have fallen 1% since peaking in April 2020.”
Feeling the pinch? Our latest estimate reveals Arizona households are shelling out an extra $8,428 yearly due to inflation rates exceeding the 2.0% target.
— Common Sense Institute Arizona (@CSInstituteAZ) May 20, 2024
As he ended his statement about the economic woes across the state and country, Petersen said, “Senate Republicans provided families some relief with a tax rebate last year, and by also eliminating the tax renters pay on their monthly bill. We are committed to doing more to ease these burdens, while Democrats, unfortunately, ignore the problem.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Two Arizona Republican bills to tackle the state’s deepening housing crisis were recently signed into law.
Last week, Governor Katie Hobbs signed HB 2720 and HB 2721. HB 2720 “establishes requirements relating to accessory dwelling units” – according to the overview from the Arizona House of Representatives. HB 2721 “adopts requirements for middle housing development” – also according to the overview from the state House.
In a statement that followed the governor’s signature of his bills, State Representative Michael Carbone, a Republican, wrote, “It’s the goal of Republicans in the Legislature to make life more affordable for everyday Arizonans by addressing the urgent need for more diverse housing options. I’m pleased to have the Governor sign my two bills into law, which will help mitigate the effects of rising housing costs and ensure that our teachers, nurses, firefighters, police officers, and families can live in the communities they serve and love.”
Carbone added, “Importantly, the legislation reinforces a homeowner’s right to use their property as they see fit which, for some, may include adding accommodations for multigenerational housing or to generate additional income. The enactment of this legislation is a significant step toward solving the state’s housing crisis, and I am proud of the bipartisan effort that made it possible.”
Hobbs also released a statement to mark her signature on these two proposals, saying, “I’m glad the legislature heard my calls to come to the table to pass common sense, bipartisan legislation that will expand housing options and help mitigate the effects of rising costs to make life more affordable for everyday Arizonans. And today, I’m proud to sign bills into law that will expand access to ADUs and missing middle housing.”
The governor continued, “I was born and raised in an Arizona where a middle-class family could buy their own home. In the past year alone we have made dramatic strides towards making that the reality again for the next generation. …Moving forward, I hope we can work together to address short term rentals that displace long-term community residents, and crack down on speculation by out-of-state real estate investors that drives up the cost of housing for Arizonans.”
Both bills will go into effect 90 days after the conclusion of the 2024 Arizona Legislative Session.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Prices as measured by the seasonally adjusted Consumer Price Index are now up by almost 20% in the years since President Joe Biden took office.
The prices of five of McDonald’s most popular items — french fries, a cheeseburger, 10 McNuggets, the Big Mac, and the McChicken — on average have increased by more than 140% from the end of 2019, when Donald Trump was president, to this year.
An order of medium french fries cost $1.79 when Trump was president but now costs $4.19. The McChicken increased from $1.29 to $3.89. The cheeseburger went from costing $1.00 to $3.15, a 215% increase.
Taco Bell’s popular items have on average increased by 57.4%, with the beefy five layer burrito increasing in price from $1.69 in 2019 to $3.69 in mid-2024, a 118% increase.
At Chick-fil-A, the average price across the Deluxe Chicken Sandwich, eight nuggets, four chicken strips, medium waffle fries, and a large milkshake increased by 80.1%.
The eight-piece chicken nugget, which once cost customers only $3.05, now costs just short of six dollars. The medium waffle fries increased from $1.65 to $2.99.
Biden has acknowledged the increases consumers have faced in prices during his presidency.
“Inflation has fallen more than 60% from its peak, and core inflation fell to its lowest level in three years,” he said, acknowledging that “prices are still too high” and reiterating that fighting inflation is his “top economic priority.”
The typical U.S. household needed to pay $227 more a month in March to purchase the same goods and services it did one year ago because of inflation. Americans are paying on average $784 more each month compared with the same time two years ago and $1,069 more compared with three years ago.
Elizabeth Troutman is a reporter for AZ Free News. You can send her news tips using this link.
