Where Art Thou, Goldwater

As you probably know by now, the stars have aligned long enough for the Glendale City Council to approve a deal to keep the Coyotes at Westgate, without threat of lawsuit by the Goldwater Institute.

Unfortunately, not everyone in Glendale is happy about the deal. It appears that at least one city council member was flipped at the last minute, and the deal was done with a 4-3 vote.

The Glendale Star is reporting that one of the council members on the short end of that vote has asked the AZ Attorney General to investigate the deal-making. Embattled nut job Tom Horne is the AG, so good luck with that. I’m sure his response will be entertaining.

Meanwhile, Goldwater has issued this press release on the subject:

 Based on the information available to us at this time, we do not believe that the Glendale arena management deal would be held unconstitutional.  Changes made to the agreement during the course of negotiations partially bridged the gap between the market cost of arena management and the amount of the payment to the team owner, thus bringing the deal into conformity with cases interpreting the Gift Clause of the Arizona Constitution.

The initial deal proposed several years ago would have included not only a substantial annual arena management fee, but a $100 million up-front payment to subsidize the purchase of the team.  We are proud to have played a constructive role in protecting the taxpayers and taking an illegal deal off the table.

Glendale’s long and painful experience illustrates why local governments should focus on providing basic and essential public services and avoid the temptation to subsidize private enterprises such as sports teams [emphasis added].

I note another relevant, recent post on Goldwater’s website:

Policymakers Need to be Adults when it Comes to Corporate Handouts

Posted on May 29, 2013 | Author: Stephen Slivinski

Being the parent of a four-year old, I’m often the target of my son’s lobbying efforts for a new toy. It usually goes something like this: “If you just get me this new toy, you’ll make me the happiest boy in the world and you’ll never have to buy me anything else again!”

As an adult, I realize this isn’t true. It’s mainly a plea to value the short-term gratification more than long-term financial prudence. As any parent can tell you, four-year-olds aren’t great at long-term thinking.

In this sense, economic development consultants act like children when they talk about attracting new businesses. Maybe a “deal closing” fund can help the state attract high-profile corporate relocations, they argue. Or maybe a special job training grant. Just do it this one time and it will make our state an economic powerhouse. Pretty please!

You might also expect that corporations are eager to lobby for these sorts of things, too. However, when you ask corporate CEOs what matters most to their decision to relocate, their answers diverge greatly from those of many state policymakers and consultants.

Area Development Magazine recently published their 27th annual survey of more than 200 CEOs. Those corporate heads were asked what factors were most important to them when they consider whether to move or open a facility in a new location. The “incentives” packages that states usually offer were pretty far down the list at 13th place. Costs of doing business day-to-day and the ability to hire good workers were a much more important concern. First place went to low labor costs; second place was “highway accessibility”; and third place was “availability of skilled labor.” A bit further down the list – but still higher than special favors and handouts to a company – were low corporate tax rates (7th place), weak union power (10th place), and whether the state was a right-to-work state (11th place).

This doesn’t mean a corporation wouldn’t gladly accept a handout. But it’s likely that the lobbying would be less intense if the handout weren’t offered in the first place.

Just as a father often has to decline his son’s request for a new toy – even if it’s one that dad wants to play with too! – taxpayers should expect elected officials to act like adults as well. Sometimes “no” is the right answer.

Learn more:

Area Development Magazine: 27th Annual Survey of Corporate Executives

Goldwater Institute: The path to jobs is not through the red ribbon

Goldwater Institute: Research shows states don’t stimulate job growth with taxpayer handouts

In spite of all this interesting rhetoric, Goldwater has been remarkably silent on the issue of Scottsdale’s taxpayer-funded subsidies to the Professional Golfers Association and Tour professional Phil Mickelson. Might it have something to do with the chummy relationship between Goldwater founder Steve Twist and Scottsdale Mayor Jim Lane? Steve’s son JP is Lane’s chief of staff.

I also saw another interesting article on a related note in today’s Arizona Republic about Phoenix’s white elephant (no double-pun intended) Convention Center, which appears to not be performing up to the sales job that saw state taxpayers subsidize it to the tune of about $300 million. Now state lawmakers want to call in the marker that guaranteed the financial performance via a sales-tax revenue withholding provision.

Of course, since Phoenix has a Democrat as mayor, I expect Goldwater to be all over this.

The subsidy for the Phoenix Convention Center was a bad idea. Jan Brewer’s SB1070, which cost the state billions of dollars worth of convention business was an even worse idea, as was Maricopa County Sheriff Joe Arpaio’s subsequent stupidity. However, holding the City of Phoenix accountable to the deal they made is perfectly reasonable…I’d just like to see that accountability be a two-way street.