The best way to promote a vibrant and prosperous economy in Arizona is by lowering the regulatory and tax burdens for all businesses, both new and existing, rather than just a select few, Scot Mussi, president of the nonprofit advocacy group Arizona Free Enterprise Club (AFEC), said recently.
Specifically, Mussi is talking about the Arizona Commerce Authority (ACA), the state’s economic development organization. AFEC says the commerce authority garners $20 million a year, half of which gets funnelled to a small group of well-connected businesses.
“Right now, the current mission of the ACA is to provide targeted incentives to favored industries, which is great for the few politically favored industries that benefit, but does nothing for the other 99 percent of job creators in the state,” Mussi told Arizona Business Daily.
Most recently, on Dec. 9, the joint state Senate and House Commerce Committee voted 9-0 to recommend a complete overhaul of the ACA, a decision supported by AFEC.
“If the Legislature sees an advantage to renewing the ACA’s charter, substantive reforms need to be a condition of the renewal,” Mussi said during a recent committee hearing. “That includes a full review of the mission, scope and role the ACA would play in promoting broad-based economic growth in Arizona.”
Mussi also chastised the ACA-managed Competes Fund, which he said was established to provide financial incentives and subsidies to a select few companies at the sole discretion of the executive director and ACA board, which consists of public- and private-sector members considered leaders in Arizona business and policy.
“Through the ACA mission and corresponding Competes Fund, taxpayer money is being used to pick winners and losers among both industries and companies that compete with one another,” Mussi said.
In fact, Mussi said, whether ACA dollars are spent to subsidize job training for a handful of corporations, as a sweetener to close deals, or as a credit to wealthy investors to hedge their risky ventures, the ACA is an agency whose very job is to pick winners and losers in the marketplace.
“This is a role the government should not be in,” Mussi said.
Seemingly in alignment with the AFEC stance, the state’s auditor general in September released a report on the ACA’s practices and performance. The audit – the first major government review of the agency since it was created in 2011 as a replacement for the state’s Commerce Department -- found that the ACA should more clearly explain its impact on Arizona’s economy and make the information more accessible to the public, improve safeguards against conflicts of interest, and create and implement improved oversight of the businesses it has been charged to help, among other recommended changes.
“The most troubling aspect of the report is how the ACA seems to take credit for thousands of jobs that haven't actually been created," Mussi said. Mussi also said planned or committed jobs are not the same as created jobs.
“Even of the jobs that have actually been created, it is impossible to determine what role, if any, the ACA had in creating those jobs,” Mussi said.
ACA CEO Sandra Watson has not disputed the audit’s findings and vowed in a written response to implement the auditor’s requested changes.