AZ treasurer seeks more information on astronomy center payouts after rodeo money lawsuit

Two months after critics sued Arizona over a $15.3 million payout of public money to a Prescott rodeo, the state Treasurer's Office created new rules for similar budget appropriations to two astronomy centers.

The office published "requests for information" on two unnamed astronomy facilities eligible for a total of $15.6 million in public funding. Only two facilities could qualify for the state funds based on the wording of the requests: Lowell Observatory in Flagstaff and the International Dark Sky Discovery Center in Fountain Hills, which hasn't yet been built.

Before they could obtain the money, the facilities needed to provide a "detailed explanation of how the organization intends to use the funds" and how the value to the public "far exceeds what is being paid by the public through the appropriation."

To one of the Prescott activists who filed the rodeo-money lawsuit, the notices show Republican state Treasurer Kimberly Yee — who's named as a defendant — is trying to avoid more trouble related to the state constitution's Gift Clause.

Howard Mechanic said her action, which plaintiffs recently learned about, makes the same point the lawsuit makes about the "inadequacy" of the legislation intended to fund the rodeo.

"It's clear that this supposed procedure was formulated after the fact to try to make something constitutional that wasn't," Mechanic said.

The suit seeks to stop the state and the Treasurer's Office from making the rodeo payout, claiming it would violate the state constitution's Gift Clause. That's an anti-corruption provision that bans governments in Arizona from giving money to private companies without specific benefits to taxpayers.

After the suit was filed, lawyers for Yee and state Attorney General Kris Mayes agreed to stop the expenditure until a court ruled in the case. Mayes has recused herself in the case but hasn't said why.

The Fountain Hills Dark Sky project has already begun to receive state money, its president confirmed. Lowell Observatory didn't return emails asking for comment.

The Treasurer's Office hasn't previously scrutinized appropriations like the astronomy center subsidies, but told The Arizona Republic it will continue to do so if necessary. The office has not yet fulfilled a records request seeking information about the outcome of the requests for information and declined to say if both facilities were cleared for funding.

Notices seek to ensure 'public purpose'

The nonprofit astronomy facilities received a total of $10 million in the 2021 and 2022 state budgets without having to justify their public worth. In those years, the appropriations were considered part of the state's "capital outlay" and were administered by the Department of Administration. This year, Lowell Observatory was slated to receive $5.6 million, and $10 million was to go to the Fountain Hills project.

Yee wouldn't give details on why her office published the notices, or why no similar request for information was made concerning the rodeo appropriation. The Legislature "directed" her to give the funds to nonprofits "that met specific criteria," she said in written statements through spokeswoman Alyssa Koury.

"To ensure maximum participation and opportunity, the Treasurer determined it was necessary to identify potentially eligible organizations that met the criteria established by the Legislature," Koury said. "Furthermore, the Treasurer has a duty to ensure that the appropriated fund expenditures meet the criteria set out by the Legislature and that such funds will be utilized in support of a public purpose."

Yee is using her discretion under the law to create a grant program to administer the funds, she explained.

"If the Legislature decides to make similar appropriations in the future," Koury continued, the office would carry out its duty "to ensure that government's monies support public purposes."

Requests are 'huge leap,' plaintiff's lawyer says

Questions about Gift Clause violations arose soon after lawmakers in May revealed this year's state budget.

Republican legislative leaders and Democratic Gov. Katie Hobbs gained lawmaker support for the budget by divvying up surplus funds and allowing individual lawmakers to spend them as they saw fit.

Two Prescott-area GOP lawmakers, Reps. Selina Bliss and Quang Nguyen, directed some of their portions to a nonprofit that operates the town's long-running rodeo, fanning criticism over the budget plan. Mechanic, former Yavapai County judge Ralph Hess and the Phoenix-based Center for Law in the Public Interest filed their lawsuit soon after.

They accuse the state of failing to adhere to two traditional criteria for a gift of taxpayer funds to be legal under the state constitution's Gift Clause: It must serve a public purpose, and it must be a good deal for taxpayers. The Arizona Supreme Court ruled in 2021 that such gifts cannot simply increase sales tax revenue.

The plaintiffs also claim the plan violated the constitution's Appropriations Clause, which allows a general appropriations bill to provide funds only for "different departments of the state, for state institutions, for public schools, and for interest on the public debt."

Their complaint focuses in part on how the Legislature appropriated millions with no explanation of a public purpose for the funds and no explanation of how the nonprofit company that runs the rodeo would spend the money. That's the same information Yee's office sought from the astronomy facilities.

The budget language for the rodeo funding contained "no instructions or limitations on when or how the appropriated funds must be used" and did not promise "sufficient direct benefits," the suit claims.

State officials deny the rodeo funding broke the law. Hayleigh Crawford of the state Attorney General's Office, in a November response to the lawsuit, portrayed the lack of detail in the budget about the rodeo expenditure as the state's normal way of doing business.

Yee's requests for information about the public "value" of the astronomy centers are different, said Danny Adelman, executive director for the Center for Law in the Public Interest. He questioned why the Treasurer's Office is now making determinations on what nonprofits are eligible for public handouts "when the Legislature fails to do it in the legislation."

"It's a huge leap from what we've seen before," he said. "That her office has to come up with something seems to be quite a stretch for what the constitution envisions for the people's money."

Educational projects

The two taxpayer-assisted astronomy projects will undoubtedly be popular attractions when completed.

Lowell Observatory in Flagstaff, itself a 129-year-old state treasure, expects to open a $54 million Astronomy Discovery Center in 2024 that will pull in more visitors and economic activity to the area. The International Dark Sky Discovery Center in Fountain Hills plans to boast the largest telescope in metro Phoenix, along with a planetarium and other features.

State Sen. John Kavanagh, a Fountain Hills Republican who directed some of his budget apportionment for the $10 million Dark Sky project, defended the payout when answering questions about the current budget shortfall that will require "clawing back" certain projects including roadwork around the state.

"I think education is as important as roads," Kavanagh said. "Some would say more important."

Asked later about the Treasurer's Office request for information, Kavanagh said he believed the Treasurer's Office issued the notices "on advice from their attorney."

"The budget allocated money for a dark sky project but did not give it to any group," he said. "Groups had to present proposals, and the best one who could do it got the grant."

Kavanagh said only one group applied "and was qualified" for the $10 million. That's because "apparently, nobody else could or was interested in doing the project in Fountain Hills, where it had to be located because it is the only 'Dark Sky' community here."

"The state did conclude that we met all the necessary qualifications and approved the allocation," said Joe Bill, president of the International Dark Sky Discovery Center in Fountain Hills. The nonprofit has received the first two quarterly dispersals, he said.

The completed questionnaire contains details of the facility's planned benefits, Bill said, adding that it will be "an amazing project" for the state.

Proponents of the Prescott rodeo funding say it will improve what is known as the "World's Oldest Rodeo," generating economic activity for the Prescott region and keeping a tradition alive.

A judge ruled on Dec. 27 that Prescott Frontier Days, the nonprofit that runs the rodeo, can join the lawsuit as intervenor defendants.

Factual disclosures are due in the case by mid-January.

Reach the reporter at rstern@arizonarepublic.com or 480-276-3237. Follow him on X @raystern.

This article originally appeared on Arizona Republic: Arizona treasurer seeks more info ahead of astronomy facility payout