by Daniel Stefanski | Jan 22, 2025 | News
By Daniel Stefanski |
One of Arizona’s leading watchdog organizations is starting off the new year with a significant lawsuit.
Last week, the Goldwater Institute announced that it had challenged “Arizona’s unconstitutional tax subsidies for filmmakers.” The lawsuit, McEwen v. Arizona Commerce Authority, was filed in the Superior Court of the State of Arizona for Maricopa County.
In that lawsuit, attorneys for the Goldwater Institute wrote that “this case challenges the constitutionality of a state program that subsidizes the film industry and private film companies to the tune of millions of dollars in refundable tax credits each year.” The filing adds that “The Arizona Motion Picture Production Program violates the Arizona Constitution’s Gift Clause, both facially and as applied to two film production projects approved to receive taxpayer-funded subsidies.”
Parker Jackson, a Staff Attorney at the Goldwater Institute, wrote a blog post about the lawsuit after it was filed with the court. He said, “…In 2022, when the state legislature controlled a $5.3 billion surplus, film industry executives and lobbyists who for years had failed to revive a subsidy program seized their chance to get back in on the action. They cobbled together enough votes to enact the Arizona Motion Picture Production Program, which provides up to $125 million in refundable tax credits each year to qualified film production projects. ‘Refundable’ means that if a film company qualifies for more in credits than they owe in taxes, the state cuts them a check! That’s even worse than the old program, which only allowed for ‘transferable’ credits (meaning the recipient could transfer or sell the credit to someone else, but the state didn’t directly send them cash).”
Jackson shared that “After delays due to administrative rulemaking and recent strikes that rocked the film industry, the state is set to finally begin issuing the first round of credits this year. The Arizona Commerce Authority has begun the process of approving subsidies up to $1.2 million for a single project.”
The Goldwater attorney finished his piece, saying, “These types of abuses are exactly why the Arizona Constitution prohibits the state from subsidizing or otherwise giving out money for private purposes unless taxpayers receive direct benefits in return. That means that the state can contract with private companies to perform services or provide supplies at fair market rates, but donations, grants, subsidies, and other forms of corporate aid are not allowed.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
by Matthew Holloway | Jan 12, 2025 | Economy, News
By Matthew Holloway |
The Town of Gilbert is the target of a lawsuit by the Goldwater Institute on behalf of the Home Builders Association of Central Arizona and a local property owner, Jonathan Barth, for allegedly violating the Arizona Constitution which bans tax increases on “services.”
According to Goldwater, the tax increase imposed by the Town of Gilbert includes “many types of business that do not produce tangible goods, such as advertising, photography, utilities, hotel/lodging, and construction.”
Goldwater is challenging two of the tax increases in particular: on homebuilding and short-term rental properties.
As noted in the text of the lawsuit, the Arizona Constitution prohibits “any county, city, town, municipal corporation, or other political subdivision of the state, or any district created by law” from creating any new or increasing any existing transaction-based taxes on the “privilege to engage in, or the gross receipts of sales or gross income derived from, any service performed in this state.”
The new tax ordinance in question, per the Town of Gilbert’s website, imposes a 0.5% increase in the existing sales tax and creates a “use tax” to be “paid for by residents and businesses when purchases are made online with out-of-state vendors who do less than $100K of sales in Arizona per year.”
The lawsuit explains that, “As a result of the Ordinance, individuals, businesses, and taxpayers, including Plaintiff Jonathan Barth, who engage in the rental or lease of real property, including for transient lodging, will pay a higher tax rate for the services they perform. Additionally, individuals, businesses, and taxpayers that engage in general contracting services, including the members of Plaintiff Home Builders Association of Central Arizona (“HBACA”), will pay a higher tax rate on the services they perform.”
Barth, an educator and father of five, will be impacted because he earns supplemental income by managing his detached bungalow as a rental for short-term tenants. He told Goldwater, “This tax hike makes it all the more difficult to make ends meet in Gilbert.”
Former Mayor Brigette Peterson and all of the members of the Town Council are named as defendants in addition to the town itself.
The town allegedly intends to use the projected $55 million yield of this new tax for “Critical Infrastructure Projects,” adding that “Time is of the essence as many of Gilbert’s services are over capacity and new infrastructure is needed.”
The Goldwater Institute has found however, that these “Critical Infrastructure Projects,” include pickleball courts, splash pads, a ropes course, and a “statement” bridge.
The Home Builders Association of Central Arizona (HBACA) told Goldwater that the new taxes will result in increased construction costs in the town as well. HBACA CEO Jackson Moll warned, “Gilbert officials are trampling on their own constituents’ rights with no regard for the consequences their illegal actions will have on taxpayers and homebuyers. The Arizona Constitution is clear: increasing taxes on services, including on construction contracting, is unlawful.”
As previously reported by AZ Free News, the Goldwater Institute pursued a similar action against the Town of Payson in September when the Town Council decided to incur a $70 million debt via a bond measure without a public referendum.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Matthew Holloway | Dec 20, 2024 | News
By Matthew Holloway |
According to a recent letter from the Goldwater Institute, Governor Katie Hobbs’ administration has imposed a regime of regulation that has ground the development of new home construction in the fast-growing areas of Maricopa County to a halt. Now, the organization is challenging the validity of the newly established rules.
A press release this week from Goldwater stated that the action conducted by the Arizona Department of Water Resources (ADWR), which lacks the approval of the Arizona legislature or a formal regulatory approval process, is “driving up housing costs for all Arizonans and threatens to stifle economic growth in our state.”
Goldwater went on to characterize the ADWR’s move as “one of the most significant bureaucratic overreaches in Arizona’s history.” In its letter to the agency, it urged leaders to reverse course.
Jon Riches, Goldwater’s Vice President for Litigation, explained in his letter:
“ADWR has imposed two AMA-Wide rules that have prevented HBACA (Home Builders Association of Central Arizona) members from obtaining Certificates of Assured Water Supply. The first of these invalid rules provides that, if groundwater modeling predicts that a well may not be able to fully satisfy projected demand in any location within the Phoenix AMA Model domain within the next 100 years, then there is no groundwater available throughout the entire model domain (‘AMAWide Unmet Demand Rule’). The second invalid rule provides that if modeling predicts that depth-to-water will exceed 1,000 feet in any location within the Phoenix AMA in the next 100 years, then there is no physical availability of water anywhere within the Phoenix AMA model domain (‘AMA-Wide Depth-to-Water Rule’).”
Goldwater noted that the AMA-Wide Unmet Demand Rule doesn’t exist under Arizona law and was not adopted through the legal rulemaking process. It argued that under previous rulings in Arizona courts, the policies are “rules” and are legally subject to Administrative Procedure Act’s (“APA”) rulemaking process. Specifically, it cites “an agency policy as a rule subject to the Administrative Procedures Act’s rulemaking process as one that ‘is generally applicable, and … implements, interprets or prescribes law or policy, or describes the procedure or practice requirements of an agency.’”
Furthermore, the rule was reportedly created under what Goldwater refers to as a “flawed concept,” the eponymous “unmet demand,” which establishes that if a groundwater shortage is projected by models at any location within a given management area, then zero groundwater across that area will be considered available for any use.
“The model further compounds this issue by arbitrarily placing wells throughout the management area that do not move over the course of 100 years, far in excess of the life expectancy of most wells,” Goldwater writes.
”If water in a hypothetical well is projected to dip below a certain depth in the East Valley, the agency declares a water shortage for developments in entirely unrelated areas like the West Valley.”
In the release, the Goldwater Institute expressed concern that the Hobbs administration took this action unilaterally, effectively defying both the legislative and judicial branches of the Arizona government in what amounts to a massive overreach of her executive authority.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Staff Reporter | Dec 11, 2024 | News
By Staff Reporter |
Maricopa County Republicans no longer wish to challenge the voter-approved transportation sales tax.
The Maricopa County Republican Committee (MCRC) filed a motion to dismiss their lawsuit against Proposition 479 on Sunday.
The attorney for MCRC’s lawsuit, Bryan Blehm, filed the motion to dismiss on behalf of plaintiffs Craig Berland (chairman) and Shelby Busch (first vice-chairman).
Proposition 479 was styled as a continuation of a half-cent sales tax first established in 1985 and last renewed in 2004. The tax revenue funds Maricopa County infrastructure and will last until 2045.
Just short of 60 percent of voters passed Proposition 479. Polling months ahead of the election indicated this to be the case. The proposition came out of a Senate bill advanced by Republican leadership in both legislative chambers, SB 1102, which Senate President Warren Petersen hailed as “the most conservative transportation plan” in Arizona history.
Not all Republican leaders agreed. Arizona Freedom Caucus members expressed opposition to the Senate bill, as did the “conservative watchdog groups” they referenced.
“[This proposition is] a massive win for Hobbs and the Democrats,” said caucus member State Representative Justin Heap.
The Arizona Free Enterprise Club and Goldwater Institute also opposed Prop 479. The two entities claimed in remarks of opposition submitted to the county that the proposition would mostly fund transit.
Per the Maricopa Association of Governments (MAG), 40 percent of the sales tax revenues is slated for the construction of freeways and highways, 22 percent for arterial roads and regional transportation infrastructure, and 37 percent for transit.
Democratic leadership at all levels stood in support of the proposition’s passage and opposition to the MCRC lawsuit, from Governor Katie Hobbs to Phoenix Mayor Kate Gallego.
MAG Regional Council also joined the county to argue for dismissal of the lawsuit. Kevin Hartke, MAG chairman and Chandler mayor, said in a statement to InMaricopa that the lawsuit went against the majority of voters and their desire for transportation funding.
“We won’t let a flawed claim stand in the way of our 40-year legacy of building one of the best transportation systems in the country,” said Hartke. “The transportation plan unanimously approved by the region’s elected leadership, sent to the ballot by the Maricopa County Board of Supervisors and overwhelmingly approved by the voters of Maricopa County, is critical to the quality of life of our residents and the continued strength of our local economy.”
MAG predicts the tax will generate up to $15 billion in revenue (using 2020 dollars) and slash commute length to an average of 30 minutes through 2050, even with an estimated influx of 1.7 million residents and 900,000 jobs.
MAG Executive Director Ed Zuercher indicated that county officials weren’t going to cease moving forward with their transportation plan, even if the lawsuit had progressed.
“The regional transportation plan that was unanimously approved by MAG’s mayors, tribal and county leaders, and supported by business leaders and the voters, will be implemented on schedule,” said Zuercher.
In reporting from last week, Arizona’s general contractors also sided with the efforts to protect the sales tax. The Arizona Chapter of Associated General Contractors of America had criticized MCRC’s lawsuit as “frivolous” and based on political contentions advanced by “disgruntled partisans.”
AZ Free News is your #1 source for Arizona news and politics. You can send us news tips using this link.
by Matthew Holloway | Nov 29, 2024 | Education, News
By Matthew Holloway |
The Goldwater Institute released a report on Tuesday detailing the shocking expenditures of the Tolleson Union High School District (TUHSD). According to the report, the district has blown a total of $76,969 “on what amounted to luxury vacations for school board members and administrators,” per public records obtained by Goldwater.
In the space of two days, the board reportedly shelled out $42,000 in hotel costs, $22,000 of which was for the catering. And this was all for just thirty people. The math works out to a brutal $700 per person, per day.
Christopher Thomas, Goldwater’s director of legal strategy for education policy, told AZFamily, “Those are monies that could have been spent on teacher salaries and educational programs for students.”
According to Goldwater, despite the public access requirements of the state of Arizona’s Open Meetings Law, these “Board and Administrator Retreats,” which act as long-form working meetings, are essentially hidden from the taxpayer. Furthermore, Goldwater reported that, “As a result of the noted board member absences, many of the meetings held during the $42,000 retreat in 2024 lacked even a board quorum (a majority of the five-member board), meaning that under the law, these were not lawful meetings of the board at all.”
Thomas explained that the retreats, “lacked transparency that’s required by the Open Meeting Law.”
Matters of great public interest were reportedly decided at these retreats, including strategies for improving student participation and graduation rates, student attendance rates and test scores, and budget priorities and academic goals, all away from public and parental oversight.
The costs revealed did not include transportation or the hourly pay of those involved, as many of them were effectively “clocked-in” during these “retreats.”
TUHSD reportedly indulged board members and administrators at two four star resorts in 2023 and 2024: the JW Marriott Starr Pass in Tucson and the Hilton Sedona Resort at Bell Rock. Notably, Goldwater observed that although records pertaining to these expenses were requested in July, they weren’t released until the middle of November… after new bond and a budget overrides were approved by Tolleson Union voters and a member of the governing board was safely re-elected.
At the JW Marriott Starr Pass in Tucson for the board’s two-day 2023 Board/Administrator Retreat, TUHSD reportedly paid $33,969 to the resort, which included $22,061 on catering. In 2024, the three day retreat at Hilton Sedona Resort at Bell Rock ran up a tab of $42,154 for 36 people.
“The leaders in this school district do not fundamentally understand that they are working with public dollars, and that every one of those public dollars has got to be spent in a way that gives the maximum benefit to the taxpayer and accomplishes their educational mission,” Thomas said.
Comparatively, as Goldwater Institute and AZ Free News previously reported, the Creighton Elementary School District’s Governing Board and Administrative Team attended a three-day, $4,000-per-person “diversity, equity, and inclusion” (DEI) conference at a Napa Valley wine country resort in July, which also drew heavy criticism of district leaders.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
