AG Kris Mayes explains why Arizona Commerce Authority CEO forums violate state constitution

Jan 19, 2024, 2:00 PM

Arizona Secretary of State and Democratic gubernatorial candidate Katie Hobbs (R) looks on as Kris ...

Arizona Attorney General Kris Mayes, left, and Gov. Katie Hobbs campaigned together in 2022 but they don't always see eye to eye now that they are in office. (Getty Images File Photo)

(Getty Images File Photo)

PHOENIX — Arizona Attorney General Kris Mayes said Friday there is no evidence of businesses moving to the state as a result of the Arizona Commerce Authority lavishing gifts upon their corporate executives.

That’s why she ruled that the ACA’s CEO forums violate the gift clause of the Arizona Constitution, the Democrat told KTAR News 92.3 FM’s The Mike Broomhead Show.

The Attorney General’s Office started investigating the CEO forums after the Arizona Auditor General flagged the practice in a September 2023 sunset review report.

Mayes released her opinion that the CEO forums were unconstitutional on Tuesday, drawing backlash from the business community and the governor’s office.

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.

How do the ACA’s CEO forums violate Arizona’s gift clause?

Mayes explained Friday that the gift clause requires two things when taxpayer money is spent on private entities: There must be a public benefit, plus there has to be a proportionality between the amount spent and the benefit.

The ACA’s practice of inviting corporate executives to forums organized around major sporting events, including the WM Phoenix Open and Super Bowl, fails to meet the second standard, Mayes said.

“In the course of our investigation, the Arizona Commerce Authority was not able to show us that there was causation, that they were able to draw companies because they were giving them Super Bowl tickets, and because they were throwing these lavish parties, and because they were putting them up at the Biltmore,” Mayes said “No company said that; no CEO said that.”

Does AG Kris Mayes want to disband the Arizona Commerce Authority?

Mayes said she doesn’t want the ACA to be disbanded, although her opinion was cited during the hearing Wednesday where a state Senate committee declined to recommend the entity’s continuation. The Government Committee of Reference instead voted to recommend revising or consolidating the ACA.

A state House committee recommended a two-year continuation on Tuesday.

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 decided through legislation.

What does Mayes say to those who oppose her ruling?

Gov. Katie Hobbs, a fellow Democrat, said she disagreed with Mayes’ findings, while business leaders expressed concerns that the ruling could be extended to other practices and hurt the state’s economic growth.

Mayes said Friday there is nothing wrong the use of private money to entice CEOs.

“I believe in economic development. I think we’ve done that well … over the course of the last 10-20 years, ” she said.

“The state Chamber of Commerce … and cities have been doing this kind of activity with private money for many years, and doing it well. So, they’ve built this city using private money.”

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AG Kris Mayes explains why Arizona Commerce Authority CEO forums violate state constitution