How Phoenix Mayor “Queen Kate” Gallego mismanaged (and exploited) the COVID-19 pandemic.
As normal life returns and Americans look back at the past year with clear eyes, it’s almost difficult to believe the actions that some local officials took to undermine their constituents’ recovery efforts.
Bill de Blasio at the gym. Muriel Bowser at a Delaware campaign event. Eric Garcetti’s threat to shut off water to families who invite private guests into their own homes. We remember these names. Throughout the country, though, local mayors outside of the spotlight followed similar paths, privately dismissing the gravity of COVID-19 while publicly leveraging ‘pandemic porn’ in order to advance political goals—and nowhere was that mismanagement (and personal exploitation) more prevalent, or less covered, than in the U.S.’s fifth-largest city.
There is a reason Phoenix Mayor Kate Gallego, who presided over a coronavirus hotspot in 2020, glossed over the pandemic during her second inaugural speech last Monday.
Gallego—née Widland, prior to her marriage to her now ex-husband, Congressman Ruben Gallego—always had her eyes on this prize. After working for the state party in her 20s, the Democrat’s career followed the trajectory of Peter’s Principle, by which people inadvertently are promoted to their level of incompetence. Gallego’s allies ushered her into various political positions for which she was little-qualified until finding a sweet spot: a safe-blue district on the Phoenix City Council, set to the backdrop of a low-turnout, odd-numbered-year election.
The Arizona state coffers are running over with cash. The state is set to receive $12B in federal recovery funds, more than the entire annual state budget. On top of that, forecasting by the Joint Legislative Budget Committee projects by 2024 the state will have a $6.4B cash balance with $1.5B in ongoing revenues. Republicans in the Legislature and Governor Ducey are looking to return the record high, multi-billion-dollar state surplus to taxpayers by passing major tax cuts.
On the front lines to defeat these efforts—the cities—that are claiming major income tax reductions will significantly impact their bottom line. But it isn’t just the state sitting comfortably on a mountain of cash, the cities are too.
In opposing the proposed tax cuts, cities are arguing that the package will result in a $225 million decrease in their shared revenue from income tax collections. Despite this estimate being seriously flawed, their projections are in reality insignificant.
Based on research from the Arizona Tax Research Association, we’ll look at 4 cities—urban, rural, small, and large—comparing their estimated “cut” from the tax package to their cash balances and scored against additional revenues generated from the 2019 Wayfair legislation, which permanently expanded the cities’ tax base.
Chandler
The city of Chandler has a budget of just under $317 million in general fund expenditures for FY2021, leaving nearly $135 million in the general fund.
So far in FY2021, the city has collected close to $3.6 million in new, local TPT revenue and $1.2 million in state shared TPT collections by remote sellers. Taking the average from the 8 months of collections so far in FY2021, this would result in just over $7 million annually.
The estimate of Chandler’s decrease in shared revenue? Just over $10 million.
With a cash balance of $135 million, $7 million in new revenue from Wayfair, Prop 207 revenue, and nearly $36 million in Covid cash from the latest package, residents of Chandler need not worry about their city providing a high level of service.
Their estimated “cut” represents a 0.67% decrease in Chandler’s general fund when scored against new ongoing tax revenues.
Flagstaff
The city of Flagstaff budgeted $81.7 million in general fund expenditures for FY2021, leaving the city with a cash balance of over $33 million.
From Wayfair, Flagstaff has already collected $1.3 million from remote sellers and their estimated state share is $340,000. Averaged out this is just under $2.5 million in new annual revenue. Flagstaff has also received $15.2 million in new Covid cash.
The estimated “cut” from income tax reductions? $2.9 million. This represents a mere 0.36% decrease in the general fund when scored against new ongoing tax revenues…
The Arizona state General Fund is flooded with revenue. Latest projections show the state with $1.2 billion in ongoing revenue and a cash balance upwards of $6.5 billion in FY2024. This is by far the largest budget surplus in state history and doesn’t even include the $1 Billion stashed away in the rainy day fund.
When the state is sitting on a pile of cash this big, it means one thing: they are taking too much of your money. And the answer is simple: give it back to taxpayers.
With Republicans at the Legislature and Governor Ducey planning to provide a large and comprehensive tax cut, one special interest group is already lobbying hard behind the scenes to kill that plan: local cities.
The fight of course is over money. 15 percent of income tax revenues are shared with cities. In Phoenix, that accounts for just over $241 million this year, or roughly 4.8 percent of their $5 billion operating budget. Phoenix is arguing that the proposed income tax cut would result in a $65 million reduction in shared revenues; or 1.3 percent of their operating budget.
Of course, this estimated “cut” in revenue is seriously flawed. It fails to take into account that shared revenues from the income tax are based on collections from two years prior. Considering the tax package wouldn’t be fully implemented for another 4-5 years, any potential decrease in shared revenues would not be fully realized for at least 6-7.
Additionally, complaints about static reductions in revenue fail to include any dynamic analysis of economic growth and the corresponding increases in tax revenues, both from income and TPT collections, promulgated by tax cuts.
The passage of Prop 208 made Arizona the 9th highest income tax rate in the nation. It has already begun pushing small businesses to relocate to lower tax states, taking their jobs and income, property, and TPT tax revenues with them. Make no mistake, the loss in revenue for cities such as Phoenix will be much larger if no action is taken to address Arizona’s uncompetitive income tax climate. In fact, a study by the Goldwater Institute found that the Prop 208 price tag to state and local revenues will amount to a $2.4 billion loss.
Knowing that a debate over a potential 1.3% reduction in revenues 7 years from now won’t generate much sympathy to stop the tax package, the city of Phoenix has decided to tell lawmakers that if the legislature cuts your income taxes, cities will be forced to cut police officers on the street. In other words, legislative tax cuts would be responsible for “defunding the police.”
This rhetoric can’t be described as anything other than complete hogwash.
Here is the real bottom line: The City of Phoenix is downright reckless with taxpayer money. The city spends like drunken sailors. They’ve never seen a tax increase they don’t like. And they don’t think twice about fleecing the taxpayer every opportunity they get.
In 2017, Phoenix’s spending appetite was so colossal they extended the amortization of their pension debt, to free up a few million dollars for one time spending at the cost of billions to taxpayers down the road.
For years Phoenix ran a hotel that never managed to make a profit. In 2017 they finally shed the asset, but not before a staggering $200 Million loss to taxpayers.
All this reckless spending has forced the city to constantly raise taxes and fees. Just last month, Phoenix approved raising their water rates for the 5th time in 6 years on top of rate increases for trash and recycling.
On top of these tax and rate increases, research done by the Arizona Tax Research Association shows the city has also received over $24.6 million year to date in FY2021 (with four additional months of collections to go) from remote sellers. This is new revenue to the city due to the passage of 2019 Wayfair legislation. If these new monies were scored, that 1.3 percent revenue loss would actually be a potential 0.8% reduction realized in 6-7 years, a fraction of the money Phoenix has wasted in just the past couple years.
With tax increase after tax increase and revenue windfalls from the state, the city of Phoenix does not have a revenue problem, it has a spending problem. The legislature providing relief to taxpayers (who will surely be more responsible with their own money than Phoenix will be) will not cause any city to “defund the police.”
The Arizona legislature failed this year to pass a bill that would have required third grade students to be held back if they failed to learn to read adequately. The unsuccessful bill uncovered some unhappy truths about the state of education.
Third grade is recognized as a critical progression point for reading proficiency. Students through third grade are taught to read, after which they are expected to read to learn. Those unable to do so suffer a lifelong handicap in today’s knowledge economy with enormous economic and social consequences.
In 2019, 60 percent of Arizona’s third graders failed to meet our own reading standards. Unfortunately, nothing really new here.
Yet this ongoing failure is largely ignored by educators. There is little sense of urgency. Almost all of the failing third graders are routinely promoted to fourth grade, as if nothing of consequence had happened.
Here’s the worst of it. These dismal scores were recorded in the year before Covid, during which teachers’ unions refused in-person instruction. There was never the least evidence that school children suffered from Covid nor spread it.
Nevertheless, teachers received full pay and benefits. Ignoring “the science”, the unions insisted their work was far too dangerous.
No matter how much their students and families suffered, they stubbornly persisted. We’ll be years assessing the educational damage caused by their intransigence. Third graders mostly losing a year of reading instruction will be especially hard hit.
Yet even under these circumstances, government educators fiercely resisted the notion of a do-over, as they had before. They claimed that holding students back would cause more to drop out and result in worse outcomes. (Harvard research suggests the opposite).
Admittedly, holding back all non-reading third graders would be logistically difficult, although the long-term benefits to students and heightened accountability for educators would be well worth it. But educators’ real objection is that thousands of students in remediation would shine a bright light on their failure to perform what is arguably their most important duty: teaching basic literary skills to students who need them the most.
American education, with achievement levels lagging behind most other industrialized nations, has badly needed an overhaul for some time. The irony is that we know how to teach children effectively.
The Success Academies in New York, KIPP schools nationwide, Arizona charter schools and others have shown that it is a lie to pretend that disadvantaged students are “ineducable.“
Thomas Sowell found that New York City charter schools achieved proficiency levels several times that of district schools housed in the same building. Tuition scholarship programs in Arizona, DC and elsewhere have provided life-changing opportunity for thousands of children who otherwise would not have been so fortunate.
But in spite of their successes, school choice programs have been met with implacable hostility from an educational status quo that sees only threats, not opportunities to better serve. Some teachers’ unions even demanded further charter school restrictions as a condition for returning from their Covid vacation.
The result has been that critical reforms have been stymied. Tuition scholarship programs and charter schools, though growing, still have waiting lists. The default option for too many students is still the failing school closest to their home.
But the Covid debacle could be the springboard to wide sweeping reforms. Parents noticed the callous disregard for their children’s welfare from those they trusted. Some parents were shocked by the pervasive ideological indoctrination in the zoom lessons they observed.
They became comfortable with homeschooling and other options that put them more in charge of their children’s education. Not coincidently, Education Savings Accounts, funds made available to parents for any educational expenses in lieu of public school attendance, have been introduced in over twenty legislatures this year.
The fallout from our failing schools is enormous. We have produced a generation too many of whom are uneducated, entitled and angry. They are enamored with socialism and disdainful of American culture, including free speech. Moreover, income inequality has been widened by the very education activists so vexed by it.
Covid is our best chance to finally open up and modernize the structure of American education. Viva la Revolución!
Dr. Thomas Patterson, former Chairman of the Goldwater Institute, is a retired emergency physician. He served as an Arizona State senator for 10 years in the 1990s, and as Majority Leader from 93-96. He is the author of Arizona’s original charter schools bill.
By Alexa L. Gervasi and Daryl James with the Institute of Justice |
North Carolina business owner Jerry Johnson needed a new semi-truck for his logistics company in summer 2020. So he scraped together his savings, borrowed money from family, and flew west from Charlotte to try to negotiate a cash deal at an auction house near Tolleson.
Unfortunately, the Phoenix Police Department and Maricopa County Attorney’s Office made other plans for the money. Acting on a tip from an informant, officers got ready to intercept the currency at Phoenix Sky Harbor International Airport.
A detective started by obtaining Johnson’s itinerary and running a background check. Then he and two other plain-clothed officers took positions in the baggage claim area and waited. When Johnson arrived and picked up his suitcase, they surrounded him and demanded to know whether he was carrying a large amount of currency.
Johnson assumed he was safe because he had done nothing wrong. Traveling with cash—any amount—is legal on domestic flights, so he consented to a search.
Officers discovered no drugs, weapons or contraband of any type, but they did find $39,500 in Johnson’s bags. What followed was a backroom interrogation and threats of arrest if Johnson did not sign a waiver purporting to release his claim to the money.
As someone with felony convictions in his younger years, Johnson felt he could not afford to call the bluff. He also had no attorney present to explain the waiver or its implications, so he bowed to the pressure and signed it. Then he left the airport without his money.
More than eight months later, nobody has charged Johnson with a crime. Yet the government has attempted to keep the cash permanently through civil forfeiture. The moneymaking scheme, which generates an average of $32 million annually in Arizona, does not require a conviction or even criminal charges. Some property owners lose their assets without even receiving a hearing.
Worried about the lack of due process, Arizona lawmakers raised the burden of proof necessary for civil forfeiture in 2017. Previously, the government only had to build a case that was more likely true than not—basically a coin flip. Now, the government must produce “clear and convincing evidence” before permanently taking property.
The new standard requires prosecutors to show that it is highly and substantially more likely true than untrue that seized assets are connected to criminal activity. Yet the court system did not hold the government to this standard.
Instead, during a preliminary hearing on Jan. 6, the Maricopa County Superior Court shifted the burden to Johnson. Specifically, the judge required him to prove he was the innocent owner of the property—a standard higher than the one imposed by Arizona law, which merely requires a person to prove he is the owner of seized property.
Johnson did more than enough to meet his obligation. He swore under oath that the money was his and demonstrated that it was seized directly from him. This evidence alone should have been sufficient, but Johnson went further. He provided bank statements, tax returns, business documents and affidavits to back up his testimony.
None of this satisfied the court, which dismissed Johnson’s claim for the cash without making the government prove anything. With no one else claiming ownership, the court issued an order permanently giving the cash to the state without the government ever needing to show clear and convincing evidence of anything.
If the ruling stands, it would render the 2017 reform meaningless. Essentially, anyone carrying cash in Arizona would be guilty until they prove themselves innocent.
Rather than accept the outcome, Johnson has partnered with the nonprofit Institute for Justice and taken his case to the Arizona Court of Appeals. Even if he wins, his struggle highlights the need for additional reform.
House Bill 2810 could help. Rep. Travis Grantham, R-Gilbert, and other sponsors drafted the measure to require a criminal conviction prior to forfeiture. That would be a step in the right direction, but the bill has stalled in the Senate as law enforcement officials—the same people who profit from forfeiture—demand amendments that would gut the reforms.
The government already has shown a willingness to exploit loopholes, sidestepping the requirement to produce clear and convincing evidence. Property owners like Johnson will not be safe unless their rights are guaranteed with airtight language, and courts show a willingness to restrict policing for profit.
Alexa L. Gervasi is an attorney and Daryl James is a writer at the Institute for Justice in Arlington, Va.
Vaccines should always be voluntary and never be forced. But COVID-19 came in like a wrecking ball last year, and perhaps its most significant contribution to the world has been an overwhelming growth in government overreach.
From the abuse of emergency orders to the senseless “mask mandates,” some government officials have leapt at the chance to dangle the carrot of “normalcy” in the faces of their citizens in order to take away more of their freedoms. Unfortunately, many have taken the bait. And now, we find ourselves at a crossroads.
The latest promise to return to normal comes in the form of “vaccine passports.” This ridiculous concept would serve as “proof” that a person has been vaccinated so he or she can have access to all the freedoms they should already be able to enjoy as an American citizen. As you would expect, Big Tech is first in line to team up with the government on such an initiative. And New York has already implemented the “Excelsior Pass” so that its citizens can “be a part of [the state’s] safe reopening.” (Given Governor Cuomo’s handling of the pandemic, what could go wrong?)
But nothing about this is normal.
It’s not normal for companies to collect the private health data of individuals. And it’s certainly not normal to force American citizens to submit to certain medical procedures as the price of doing business.
Thankfully, some of our lawmakers here in Arizona have not fallen asleep on this issue. Earlier this month, Congressman Andy Biggs introduced his No Vaccines Passports Act. This piece of legislation would prevent federal agencies from issuing any standardized documentation that could be used to certify a U.S. citizen’s COVID-19 status to a third party, such as a restaurant or an airline.
And just a few days ago, Arizona became the sixth state to ban COVID-19 passports when Governor Ducey signed Executive Order 2021-09. This prevents state agencies, counties, cities, and towns from issuing measures that require an individual to provide documentation of their COVID-19 vaccination status in to order to enter a business, building, or area to receive a government service, permit, or license. It also prevents businesses that contract with the state to provide services to the public from requiring documentation.
While this is certainly a step in the right direction, Governor Ducey’s executive order still allows for businesses, schools, and health providers to ask about an individual’s vaccine status.
That’s why lawmakers should consider additional action on this issue. One option being considered is HB2190. This bill, sponsored by Rep. Bret Roberts (R-LD11) and Sen. Kelly Townsend (R-LD16), would prohibit a company that conducts business in Arizona from refusing to provide everyday services, transportation, or admission because a person does not divulge whether they have received a particular vaccine. It would also prohibit a state, county, or local government entity from offering anyone a special privilege or incentive to receive a vaccine.
Currently, HB2190 is awaiting action in the senate, and negotiations are underway on potential amendments to the bill. Regardless of what those amendments are, Arizona lawmakers need to work toward stopping vaccine passports. They are a serious threat to our civil liberties. And while we all want to return to normal, we must remember that “normal” shouldn’t come with a price tag.
