Republicans push to kill agency credited for rebuilding Arizona’s economy after Great Recession

As Arizona lawmakers return to the capitol to try and fix the state’s budget deficit, one group of legislators has proposed cutting costs by closing the state’s economic development agency.

The Arizona Commerce Authority (ACA) was created by the state’s Republican governor and legislature in 2011 and has received praise from economic leaders for helping the state rebuild its economy after it was devastated by the Great Recession.

Despite the agency’s successes,  a group of Republican lawmakers have now turned on the agency and have vowed to close it.

If passed, Senate Bill 1044 would immediately repeal the creation of the ACA, and with it would go any tax breaks or financial incentives currently offered to businesses that relocate to Arizona.

The legislators that have signed onto the bill are:

• Sen. Jake Hoffman, R-Queen Creek
• Sen. Anthony Kern, R-Phoenix
• Sen. Justine Wadsack, R-Tucson
• Rep. Neal Carter, R-San Tan Valley
• Rep. Justin Heap, R-Tucson
• Rep. Laurin Hendrix, R-Mesa
• Rep. Alexander Kolodin, R-Scottsdale
• Rep. Barbara Parker, R-Mesa
• Rep.  Jacqueline Parker, R-Mesa
• Rep. Austin Smith, R-Wittman

Agency praised by Hobbs

During her State of the State address on Jan. 8, Gov. Katie Hobbs highlighted Arizona’s strong workforce numbers, multi-billion dollar investments in the state from foreign entities, and the addition of high-paying job opportunities in tech and manufacturing.

While she thanked business leaders and legislators for their help in the state’s economic growth, the lion’s share of credit went to the ACA.

“We should applaud the chambers of commerce and economic development groups across the state, and most particularly, the Arizona Commerce Authority,” Hobbs said. “With this continued success, there’s no question we must pass continuation of the Arizona Commerce Authority.”

The governor also reminded the legislature of the bipartisan successes of 2023—many of which were due in part to the efforts of the ACA. She thanked a bipartisan group of lawmakers for their successful efforts last year to put an extension to Prop 400 on the 2024 ballot. Prop 400 is a ten-year transportation tax of half-a-cent that is used to fund public transportation and transit infrastructure projects, and has been vocally supported by the ACA.

Another successful venture brought up by Hobbs was a workforce accelerator program that participants and employers will begin to see the benefits of in 2024. Thirty million dollars was committed to the creation of six accelerator training centers as part of a workforce-building initiative known as Future48, .Thanks to these investments, Hobbs says thousands of Arizonans will learn skill sets for the semiconductor, renewable energy, and aerospace and defense sectors. The ACA is one of the main partners in this endeavor.

The governor also pointed to her Build it AZ Apprenticeship Initiative, another ACA-supported program launched last year. It’s designed to connect more job-seekers with trade organizations with the goal of doubling Arizona’s current stock of roughly 4,000 apprentices by 2026.

Hobbs characterized her past efforts to grow the job market and bring more high-paying jobs to the state as an investment in the future of the state, noting that Arizona will now have a built-in workforce to meet the infrastructure and technological demands that come with its growing population.

Budget cuts expected

These efforts could be severely stalled or hampered, however, if the ACA were to close. The language in SB 1044 eliminates the agency in its entirety, and many of the programs and projects it is integral to would be left in limbo with its closure.

Even without SB 1044, the ACA’s future remains uncertain. While the Republican-backed bill would shut down the agency immediately, the agency is set to automatically terminate in June 2024, unless the legislature votes to give it an extension—and more importantly, funding.

The ACA has been criticized recently for spending over $2 million on premiere sports tickets, luxury travel accommodations, and meals on out-of-state business leaders in an effort to convince them to relocate or expand their company to Arizona. Attorney General Kris Mayes is currently investigting the spending to determine whether or not it was in violation of the state’s restrictions on public gifts.

The agency’s sunset date comes as the legislature is faced with a daunting task: the state budget is expected to have a $1 billion deficit. The shortage is largely a result of former Gov. Doug Ducey’s tax cut, coupled with an expanded school voucher program with no limits on spending. Both initiatives were championed by Republicans, who still control the state legislature.

Lawmakers of both parties will be looking for ways to cut spending, which could give some legislators pause when considering whether or not to fund the ACA.