Theme Park Measure Could Take State for a Ride

UPDATE: This measure passed out of the Senate, despite being poor policy, and is now headed to the Governor.

By Byron Schlomach, Commentary

In the Mel Brooks play, “The Producers,” a planned swindle would only succeed if a joke of a Broadway play was a monumental flop. The play, “Springtime for Hitler,” ended up being a success against all reason. Right now the Arizona Legislature is planning a similar heist: the Decades Music Theme Park.

The Legislature has proposed a law to create a “special attraction district” in Eloy that would only include the Decades park and give it quasi-governmental status. Why is this proposed law a scam? In essence, the law is designed to subsidize private companies that cannot raise the money or otherwise get financing without special government treatment. In this case, the special privilege is the ability to issue government bonds. The bill now being considered would allow the owners of Decades to issue $750 million in government bonds.

People who buy government bonds accept less interest than they would otherwise for two reasons. First, they don’t have to pay federal income tax on the interest earned. Second, government bonds are backed by the ability of a government entity to tax its citizens, so they are generally safe investments.

In the case of the proposed theme park, the bonds will be financed by sales taxes paid only by park visitors. That means these bonds are really every bit as speculative as corporate bonds, because they are entirely dependent on the ability of a company to attract customers.
There are very likely to be good-faith buyers of these special attraction district bonds who will have every reason to think the bonds are as safe as school district bonds.

Then, if the park doesn’t work out and goes out of business, widows, retirees and institutional investors could find their government-grade bonds worth pennies on the dollar at best. If this unfortunate scenario were to happen, disappointed investors would likely sue those responsible, including the state of Arizona. Even if there’s no lawsuit, Arizona’s bond ratings will suffer if the park goes belly-up. Future bond buyers, with no idea if they’re really buying speculative corporate bonds or genuine government bonds, might avoid buying Arizona bonds all together.
Not only could Arizonans lose financially if policymakers ultimately approve this highly speculative project, we could lose in other ways. The private sector sets a pretty high bar for potential enterprises to pass in order to get funding. That doesn’t mean there is always success when enterprises are privately funded, but it does mean the winners often win big. Who knows what kind of big winner this government-backed project might prevent from opening.

If a theme park comes to Arizona, it needs to stand on its own financial feet. The test any such proposal passes should come from the private sector school of hard work, not the political school of smooth talk.

Byron Schlomach is director of the Goldwater Institute Center for Economic Prosperity

AZ Free Enterprise Club Press Release

UPDATE: As of today, June 24th, it looks like this proposal is dead in its tracks! The commerce committee hearing scheduled to hear the bill has been cancelled! Glory be...there is still a bit of reason left among my colleagues.

Arizona Legislature Should Reject Stimulus Package
Christmas Tree of goodies will hurt, not help, Arizona economy

Phoenix, AZ – The Arizona Free Enterprise Club, a pro-economic growth advocacy group, today announced its opposition to an “economic stimulus” package that reportedly consists of subsidies for a downtown entertainment district, solar production, and research and development. The package also intends to grant Pima County the authority to hold an election seeking a sales tax increase on restaurants, hotels and rental cars to enhance Tucson-area spring training facilities. The package, the details of which have not been released, is being formulated by a handful of special interest groups and lobbyists.

“There is no way a package larded down with this much pork should ever get off the ground,” said Steve Voeller, president of the Club. “not only is this not economic stimulus, it’s not even decent public policy. Tax credits and exemptions are exactly like spending items. Proponents of this package want to pay people for these activities. Do they need to be reminded that the state faces a $2.2 billion budget deficit?”

The plan does not address the looming statewide property tax increase set to occur next year.

“The state faces a $250 million tax hike next year since the governor vetoed a bill to prevent it from occurring. The notion that you can bestow tax subsidies on a few developers and companies and think you’re going to turn around the economy, all while ignoring a massive tax hike on millions of Arizona taxpayers, is sadly absurd. You want to create jobs? Let’s start by not raising taxes.”

In addition to the veto of the property tax repeal, the governor and some business leaders are pushing for a 17.8 percent statewide sales tax rate increase for roads, trains, light rail, open space, non-profit groups, and other endeavors.

“The policies coming out of the state legislature should scare everybody concerned about the status of the state’s economy.”

Center For Arizona Policy Weekly Update

To: CAP Board Members and Friends of CAP
From: Cathi Herrod, President

1) Slow Go at the State Capitol. Legislative activity has slowed to a crawl as lawmakers discuss ways to address the budget deficit for the fiscal year beginning July 1. Lawmakers adjourned Wednesday until next Monday.

Here’s a brief recap of CAP-supported bills still pending:

2) Marriage Amendment. The Arizona House vote on the marriage amendment did not happen this week for one simple reason: two representatives who support the amendment are out of town. For the last three weeks or so, we’ve been in a holding pattern: waiting on the “yes” votes to all be present at the same time so the House can pass the amendment and send it to the Senate. It’s been one thing after another –legitimate reasons like sickness, family funerals, work obligations – that have caused some members to be absent. Hopefully, this phase of the campaign to let you, the people of Arizona, decide the definition and meaning of marriage in our state will be over next week. Then, our efforts to unite Arizonans in a strong coalition to vote “yes” on the marriage amendment will begin. (Groe Note: We are going to attempt to vote on this Monday, May 12, 2008)

3) Ban on Partial-Birth Abortion. The revised partial-birth abortion ban that addresses the concerns the Governor identified in her veto letter passed out of conference committee on Tuesday. The bill will need a final vote in both the House and the Senate before going back to the Governor.

4) Prohibition on Nurses Performing Abortions. On Tuesday, the Advanced Practice Advisory Committee of the state Board of Nursing voted unanimously to recommend that the Board rule that first trimester surgical abortions are within the scope of practice for nurse practitioners. The full Board will vote on this recommendation next week. Meanwhile, HB 2269, which unambiguously prohibits nurses from performing surgical abortions, is awaiting floor action in the Senate.

5) Students’ Religious Liberties Act. HB 2713, the bill that identifies the free speech rights of religious students in public schools, is waiting for a hearing before the Senate Rules Committee.

6) School Choice. As the legislative focus turns toward the state’s 2009 budget, making the corporate tax credit permanent is of utmost importance to school choice advocates. The program is currently set to end in 2011, and all children currently benefiting from the program would suddenly lose their scholarships. Making the tax credit permanent is a simple budget item that would have no effect on this year’s general fund. Including this item in the budget would ensure that kids continue to receive the quality education of their parents’ choosing.

7) Jesse’s Law. HB 2823, which would make minor changes to the laws on medical decision-making for patients who cannot communicate their wishes, is waiting for a final vote in the Senate.

Stay up-to-date on of all the CAP-supported bills at www.azpolicy.org/legislation.