State Senate committee puts embattled Arizona Commerce Authority in limbo

Jan 19, 2024, 4:35 AM

Sen. Jake Hoffman chairs a Senate Government Committee of Reference hearing on Jan. 17, 2024....

State Sen. Jake Hoffman chairs a Senate Government Committee of Reference hearing on Jan. 17, 2024. The committee voted to recommend revising or consolidating the Arizona Commerce Authority. (Arizona Legislature Screenshot)

(Arizona Legislature Screenshot)

PHOENIX – The future of the embattled Arizona Commerce Authority is up in the air after a state Senate committee declined to recommend a continuation.

As part of the sunset review process for state agencies, boards, commissions and other renewable programs, the Senate Government Committee of Reference voted 4-3 on Wednesday to recommend revising or consolidating the ACA.

The Senate vote came a day after the House Commerce Committee recommended a two-year continuation.

The Legislature’s options under the sunset review process are continuation up to 10 years, revision, consolidation or termination.

The ultimate fate of the ACA will be determined through legislation.

What is the controversy surrounding the Arizona Commerce Authority?

The ACA was created in 2011 to stimulate the state’s economy in the wake of the Great Recession. The public-private partnership’s mission includes recruiting out-of-state companies to do business in Arizona.

The Arizona Auditor General issued a report in September 2023 alleging that the ACA might be engaging in practices that violate state law and increase the risk of fraudulent or wasteful use of public funds.

The Arizona Attorney General’s Office then opened an investigation into one strategy in particular: CEO forums. The ACA has for years invited corporate executives to forums organized around major sporting events, including the WM Phoenix Open and Super Bowl, in an effort to lure business to the state.

Attorney General Kris Mayes, a Democrat, announced Tuesday that the ACA’s CEO forums violate the state’s gift clause.

“The current structure of the CEO forums confers significant value on invited private executives and their guests without obtaining any value cognizable under the gift clause,” Mayes wrote in a letter explaining her findings.

What is the response to AG Kris Mayes’ gift clause ruling?

Mayes’ ruling put her at odds with fellow Democrat Gov. Katie Hobbs, who believes the ACA has been effective in bringing business to the state and should continue, although perhaps with more accountability.

“We disagree with the findings, and we’re looking at our options to move forward,” Hobbs told reporters after an event in Phoenix on Thursday morning.

Republican Sen. Jake Hoffman, who chairs the Government Committee of Reference, cited Mayes’ opinion during Wednesday’s hearing.

Hoffman opposes the ACA and is the prime sponsor of a bill to repeal it.

“The mission of supporting job creation has never been called into question. Unfortunately, the Arizona Commerce Authority has failed to execute on that mission within the parameters of Arizona law,” Hoffman said in a press release after Wednesday’s hearing. “From failures in oversight, to lack of accountability, the ACA has demonstrated gross mismanagement and, at times, outright illegal activity with taxpayer dollars.”

What does Arizona business community think about ACA situation?

The Arizona business community, including Arizona Chamber of Commerce and Industry CEO and President Danny Seiden, is concerned about the potential downstream effect of Mayes’ ruling.

“It has the ability to freeze all the economic development programs, not just with the ACA, but at the city levels, too,” Seiden told KTAR News 92.3 FM’s The Mike Broomhead Show on Wednesday. “It’s a very, very dangerous opinion … and could have very dire consequences for our economy.”

Seiden believes Mayes’ ruling misinterprets the state law by downplaying the value of business generated through methods like the CEO forums.

“I think that this will end up back in court, as so many attorney general opinions do, and it will be settled there,” he said. “Because you cannot allow something like this to stand.”

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State Senate committee puts embattled Arizona Commerce Authority in limbo