Legislative panel says Arizona Commerce Authority must 'revise and consolidate'

The Arizona Commerce Authority should be revised or consolidated, a state Senate committee recommended Wednesday, adding to doubt over the future of the state’s leading economic development agency.

As part of a “sunset” review of the authority, the Senate Government Committee voted 4-3 to reshape the agency. Its other options were to continue the ACA for a number of years, or abolish it.

“It doesn’t mean that some of these critical functions the ACA does will go away,” committee chairman Jake Hoffman said. Hoffman, R-Queen Creek, has introduced his own bill to abolish the agency.

But Wednesday's vote does signal senators believe the agency needs more guardrails, and perhaps a narrower portfolio.

The ACA provides various state incentives to bring companies to Arizona.

Lawmakers relied on a state Auditor General report that detailed problems from a lack of documentation to verify companies met requirements for subsidies issued by the ACA to extravagant spending around marquee events such as the Waste Management Open and the Super Bowl.

Hoffman said the audit found “gross mismanagement and negligence” and even "outright alleged illegal activity," charges he also made when he publicized his bill to kill off the agency. But he suggested on Wednesday any revisions that might result from legislative deliberations would be amended in his repeal bill, Senate Bill 1044.

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Sandra Watson, president and CEO of the ACA, politely and continuously disputed Hoffman, who quoted from the audit's findings that the authority did not document that businesses met the criteria for receiving state assistance.

“The issue is around the documentation, not that our team didn’t review it,” Watson said. She said the agency only failed to memorialize their review in writing, saying it has been done verbally.

She declined to comment after the vote, saying her agency needed time to process the decision.

Gov. Katie Hobbs came to the agency's defense in a statement issued after the hearing. She noted in a statement Arizona’s “booming economy” and touted the companies Arizona has attracted, in large part due to the ACA’s work.

“We must pass continuation so Arizona doesn’t lose out on good-paying jobs to Texas and California,” said Hobbs. As a state senator more than a decade ago, Hobbs voted against creation of the agency but has now emerged as a defender of its work.

Wednesday’s vote adds to the list of different options for the agency. On Tuesday, the House Commerce Committee recommended the agency continue for another two years, with a July 1, 2026 expiration date.

Rep. David Livingston, R-Peoria, has introduced a bill that would continue the agency for four years.

Ultimately, lawmakers in both chambers will need to reach a consensus on the ACA’s future.

The business community was publicly quiet on the issue, although it circulated a letter to lawmakers signed by 110 businesses urging ACA continuation.

The authority has had a "profound impact" on the state's economy since its inception in 2010, business executives wrote, producing $11.3 billion in tax revenue and $443.2 billion in economic output.

Signers included some of the state's largest employers, such as the Taiwan Semiconductor Manufacturing Company, Freeport McMoran and Blue Cross Blue Shield.

The Arizona Free Enterprise Club encouraged lawmakers to disband the agency. Greg Blackie, deputy police director for the low-tax, low-regulation group, argued the authority's very existence violated the state’s gift clause.

By providing incentives to businesses to locate in Arizona, he said, the agency violates the constitutional provision that bars the state from handing out state funds if the state investment was far more than any value provided to the public.

Attorney General Kris Mayes underscored that in an opinion issued Tuesday, Blackie said. Mayes’ opinion found the authority's expenditures on CEO forums ran afoul of the gift clause.

“If our economy were a shopping mall, the ACA is the concierge,” Blackie said. It effectively picks winners and losers, he suggested, creating an uneven economic playing field.

Sen. Janae Shamp, R-Surprise, broke party ranks and voted against the recommendation to revise and consolidate.

"Until we can have a conversation on what that looks like, I vote 'no'," Shamp said, joining with the two Democrats on the panel.

Hoffman said lawmakers need to sit down and evaluate every piece of the commerce authority's mission, determining if it is constitutional, if it's best policy and if it is a proper role for government.

Whatever comes of that discussion, he said, will probably be amended in his bill, which repeals the agency altogether.

Reach the reporter at maryjo.pitzl@arizonarepublic.com or at 602-228-7566 and follow her on Threads as well as on X, the platform formerly known as Twitter @maryjpitzl.

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This article originally appeared on Arizona Republic: Lawmakers hit Arizona Commerce Authority for 'gross mismanagement'