Republicans in the state House of Representatives revived a measure on Monday that would continue an agency that’s in the crosshairs of the Arizona Freedom Caucus.
The caucus is divided over the fate of the Arizona Commerce Authority, which Attorney General Kris Mayes recently determined violated the state’s gift clause after the agency spent millions in public funds to invite company executives to sporting events, including the 2023 Super Bowl.
While many Republicans have expressed concerns over the agency during the session, they’ve also said the authority plays a vital role in the economy and passed a bill in the House to continue the agency for four years.
That bill was held up in the Senate after Senate Government Committee Chair and Freedom Caucus Chair Sen. Jake Hoffman, R-Queen Creek, refused to hear it.
Instead, Hoffman gave HB2471 the opportunity for a hearing on March 21. That measure would terminate the agency completely and transfer its duties to other state agencies, including the Office of Economic Opportunity and the Arizona Department of Administration.
“The ACA and entities like it across the country represent the epitome of cronyism that really bothers the American people and bothers the people of Arizona,” Hoffman said. “The ACA has lacked basic legislative oversight. It’s enjoyed several very broad exemptions that have made it far less accountable than even the rest of state government.
Hoffman’s proposal comes in the form of a strike everything amendment to a bill sponsored by Freedom Caucus member Rep. Cory McGarr, R-Tucson.
The measure passed 4-3 along party lines and is awaiting a floor vote in the Senate.
But Republicans in the House used the same tactic of a strike-everything amendment to get around the continuation bill needing to be heard in Hoffman’s committee.
On Monday, the House Appropriations Committee passed an alternative measure in SB 1676 that would extend the authority for five years.
“I think this is the best bill we’ve seen on the ACA this session. I look forward to passing it as is and putting it on the governor’s desk,” Livingston said.
The bill comes with conditions. House Republicans intend to require the authority to testify before the Legislature more frequently to show it’s taken steps to follow state law.
Gov. Katie Hobbs supports continuing the agency with more oversight, Capitol Media Services reported on March 24.
Like the Hoffman bill, the five-year continuation is in the form of a strike-everything amendment to the Senate bill sponsored by Sen. David Gowan, R-Sierra Vista. The measure passed the Appropriations Committee Monday 15-2, with only Freedom Caucus Republicans Reps. Joe Chaplik, R-Scottsdale; and Barbara Parker, R-Mesa, voting against it.
The Arizona Commerce Authority was created in 2011 by Republican Gov. Jan Brewer to revitalize the state’s economy after the Great Recession. The agency’s board of directors comes from a mix of people both in the public and private sectors who work to attract businesses to the state and facilitate workforce development and job training.
The agency’s president, Sandra Watson, said Monday the authority has worked with over 1,000 businesses since its inception, which have created over 272,000 jobs and generated billions of dollars for the state while administering tax credits and grants for businesses.
A September report from Auditor General Lindsey Perry notes the authority lacked documentation to ensure some businesses qualified for tax credits and grants before approving nearly $11 million in incentives.
The authority also spent another $2.4 million between 2018 and 2023 to host CEO forums at sporting events that the ACA calls “marketing campaigns,” but the ACA admitted these forums are “difficult to attribute direct causation” between a businesses’ attendance and its decision to locate a project in Arizona, according to a December disposition letter from Mayes.
During the Senate Government Committee hearing, Hoffman dismissed the authority’s impact in creating jobs and revenue for the state. He said its reporting is insufficient and lacks definitions of how the ACA collects its data while crediting business attraction to Arizona’s tax and regulatory environment.
“At its core, it lacks basic transparency,” Hoffman said. “The polices of the ACA have absolutely nothing to do with what causes them to come here but it is amazing again that they seem to take credit for every private sector job and business that comes to this state.”
Arizona’s business community largely supports continuing the agency. Arizona Chamber of Commerce and Industry President Danny Seiden testified Monday in support of the bill and said a five-year continuation is preferable so the sunset review can fall on an odd year and lawmakers won’t have to consider the agency’s continuation during election years.
The Chamber of Commerce also criticized Hoffman’s proposal.
“Unfortunately, senators instead have proposed an amendment that would effectively gut the ACA, overturn years of progress in attracting jobs to the state, raise taxes on job creators, and inflict tremendous harm on the Arizona economy. The proposal would be laughable were it not for its potentially catastrophic consequences,” the chamber wrote in a statement on March 21.
Democrats in the legislature also support continuing the Arizona Commerce Authority and have called for its continuation to be longer.
“Historically, continuations have not been as polarizing as they have been in the last year and a half and I wonder what has changed in the last year and a half,” Rep. Marcelino Quinonez, D-Phoenix, said Monday as he referred to Hobbs being elected as governor. “Five (years) is better than four,” Quinonez said.
While the continuation bill is destined for passage in the House just as its earlier counterpart, it will still need a Republican majority in the Senate for it to be put up for a vote on the floor.
