Blog

Insurance Companies and Bureaucrats, Obamacare's Big Winners

mpfeifer — Wed, 23 May 2012 21:54:56 +0000

When the topic is protecting liberty and the headline reads, “Even in Illinois but not in Arizona,” we’re in trouble. Indeed, while even the Democrat-controlled legislature in President Obama’s adopted home state of Illinois said no to establishing an insurance exchange to facilitate the federal health care law, Arizona is moving full steam ahead with its exchange and is using more than $30 million in federal tax dollars to do so.

While exchange supporters euphemistically refer to exchanges as “marketplaces,” exchanges are in fact government-sanctioned, invitation-only clubs where only government-approved insurance companies can sell government-approved insurance. No wonder big insurance companies are lobbying so hard for an Arizona exchange and want them to stand even if the President’s health care law is struck down by the Supreme Court in June – they want to make sure they get an invitation to the party so that they can monopolize the market now and forever. Bloomberg News reported just last week that insurance companies stand to gain billions in revenue over the next seven years from the President’s health care law.

While exchanges will benefit the big insurance companies and bureaucrats who will get jobs, the Arizona taxpayers will be stuck paying the bill. At a Senate hearing last November, Arizona’s exchange director, who previously worked for the very insurance lobby that advocated for the passage of the President’s health care law, said he could not answer the question of how much the exchange will costs taxpayers until it was up and running. We do know the Massachusetts exchange costs taxpayers in that state $60 million a year.

Last fall, the Goldwater Institute sent a public records request to the Governor’s office to find out how much the state is spending on the exchange, including specific requests for the payroll records of all state employees who have worked on the exchange since its inception in March 2010. The response was a mere 33 pages of undated, redacted records, most of which are indecipherable. What little is visible indicates that in addition to paying salaries of some unknown amount, tax dollars are paying for exchange employees’ food, lodging and travel. This non-response appears to be a violation of Arizona public records law and we hope the Governor’s office will soon make a full and transparent disclosure of these records.

States are not required to establish exchanges and Arizona should say no. Instead, it is entrenching the federal health care law, along with a new government bureaucracy and the special interests that go along with it.

Learn More:

Goldwater Institute: States Must Protect the Health Care Freedom of their Citizens by Saying No to Federal Health Care Insurance Exchanges

Arizona Governor's Office: Payroll Records (PDF)

Bloomberg: Insurers face $1 Trillion in Revenue at Stake in Health Law

Statement on Glendale's Proposed Coyotes Arena Deal

JGabriel — Wed, 23 May 2012 22:05:40 +0000

"Although the Council approved an arena management fee in the budget Tuesday, nothing requires the Council to spend all or any part of it. The city could sign an arena management contract for less than that amount or for no amount at all if the city decides to manage the arena itself or put it out for competitive bidding. That said, we do believe this arena management fee is legally questionable if it is far greater than the value of the services to be provided. Additionally, Glendale taxpayers may choose to pursue future action to contest the fee by referendum. The Goldwater Institute cannot authoritatively comment on the legality of the deal until we and Glendale taxpayers can see the details. However, we are encouraged by reports that this deal will not include a massive up-front payment to help the buyer purchase the team, and we hope that the city will reach a deal that comports with the law and protects the interests of Glendale taxpayers."

— Darcy Olsen, President, Goldwater Institute

For additional details on this issue, please consult the Goldwater Institute v. City of Glendale case page.

Although the Council approved an arena management fee in the budget Tuesday, nothing requires the Council to spend all or any part of it. The city could sign an arena management contract for less than that amount or for no amount at all if the city decides to manage the arena itself or put it out for competitive bidding. That said, we do believe this arena management fee is legally questionable if it is far greater than the value of the services to be provided. Additionally, Glendale taxpayers may choose to pursue future action to contest the fee by referendum. The Goldwater Institute cannot authoritatively comment on the legality of the deal until we and Glendale taxpayers can see the details. However, we are encouraged by reports that this deal will not include a massive up-front payment to help the buyer purchase the team, and we hope that the city will reach a deal that comports with the law and protects the interests of Glendale taxpayers.Wednesday, May 23, 2012 - 15:03NoGovernment Accountability BlogYesCoyotes, Glendale, NHL, gift clause, Jamison, Jobing.com, arena, management feesBy TopicsDarcy Olsen

Tombstone Ain't Dead Yet

mpfeifer — Tue, 22 May 2012 22:04:12 +0000

The Goldwater Institute has already appealed the decision as a violation of the Tenth Amendment and, on May 21st, we filed an emergency motion for an injunction with the Ninth Circuit Court of Appeals on behalf of the City of Tombstone. The motion urges the Court to allow Tombstone to repair its Huachuca Mountain water system because the loss of water to the City is especially dangerous now that wildfire season has arrived. It is entirely possible that the motion will be granted in just a few days. But even if it is denied, the City won’t be firing blanks just yet. The next move is an emergency request before Justice Anthony Kennedy, who “rides” the Ninth Circuit.

Meanwhile the cavalry is on the horizon. County and rancher organizations from around the Western States are gearing up to file “Friend of the Court” briefs in support of Tombstone’s appeal. And three days after the denial of Tombstone’s request for emergency relief from Judge Zapata, U.S. Representative Jeff Flake introduced a bill entitled the “Emergency Water Supply Restoration Act.” The bill would allow state and local governments to freely and fully restore water supplies in Wilderness Areas without interference from federal agencies during a declared State of Emergency. No doubt the bill will catch the U.S. Forest Service’s attention.

Congressman Flake’s bill may have an uphill battle in the Senate, but combined with the cutting edge legal theories being used by the Goldwater Institute’s posse of public interest attorneys, no one should count out the “Town Too Tough to Die.”

Learn more:

Goldwater Institute: Emergency Motion Pending Appeal (PDF)

Goldwater Institute: Tombstone v. United States

U.S. Congress: Emergency Water Supply Restoration Act (PDF)

Last week, the U.S. Forest Service got the drop on Tombstone when the City’s request for an emergency injunction was denied by Senior Judge Frank Zapata of the United States District Court. But Tombstone’s legal posse has a more than a few rounds left in the chamber. Wednesday, May 23, 2012 - 08:00NoConstitutional Rights BlogYes Emergency Water Supply Restoration Act - Flake.pdf Filed 12-16172 Tombstone v USA Emergency Motion.pdfTombstone, Flake, 10th Amendment, Arizona, FiresBy TopicsNick Dranias

Rich Man, Poor Man: Public Pensions and Taxpayers

mpfeifer — Mon, 21 May 2012 23:01:34 +0000

I’m regularly told that Arizona’s public employee retirement system is one of the best managed in the nation. That’s old news, though. From 2001 to 2009, Arizona’s retirement system funding level dropped 39 percentage points, the third worst performance among the states. Officially, Arizona’s state pension systems are $15 billion (with a “b”) short, though other estimates show them much further in the red.

The Manhattan Institute recently released a public pension calculator for Arizona. You can calculate the total annuity that would be required to fund a given individual’s pension. For example, let’s say a teacher retires at 55 with 33 years of experience, making $60,000 per year. The yearly pension would be about $45,000. If the teacher had saved for her own pension, she’d have to have about $870,000 in the bank.

By my calculations, for a teacher to save $870,000, she’d have had to save 15 percent of her salary and earned 8 percent interest every single year, without exception. Taxpayers are effectively on the hook to guarantee a retirement as if public employees had been this disciplined and this clever as investors. We all want workers to have access to retirement plans, but they should be more in line with what regular taxpayers have. The rest of us fund our own retirements while dealing with recessions and the realities of being unable to save 15 percent every year and guaranteed rates of returns in the stock market.

Legally, it might not be possible to get taxpayers off the hook for current public employees. But there’s no reason we should keep digging the hole. New state workers should get 401(k)’s that they own and manage – and that don’t make false promises that taxpayers are forced to keep.

Learn more:

Goldwater Institute: Defusing the Pension Bomb: Making Retirement Plans Solvent for All Public

Goldwater Institute: Debt and Taxes: Arizona Taxpayers on Hook for $66 Billion Tab Run Up by State, Local

Manhattan Institute: Calculate Your Public Pension

Cato Institute: State and Local Pension Plans: Funding Status, Asset Management, and a Look Ahead (PDF)

While state lawmakers are to be congratulated for passing a balanced budget and largely holding the line on spending increases, there is an unnecessary $11 million spending increase tucked in the nooks and crannies. That’s the additional contribution to the state’s financially troubled retirement funds for state workers.Tuesday, May 22, 2012 - 08:00NoGovernment Spending BlogYesPension reform, Unions, Retirement, lawmakers, Public EmployeesBy TopicsByron Schlomach

Update on Release Time

JGabriel — Fri, 18 May 2012 19:16:57 +0000

We wanted to give you a quick update on our effort to end union worker “release time” – that’s when taxpayers pay government worker’s salaries and benefits, but instead of doing their government job, they are doing union work on the clock. You may remember that we filed a legal challenge to block the City of Phoenix from including release time in its contracts with unions because we believe it violates the Arizona Constitution’s ban on gifts of taxpayer money to private organizations.

Unfortunately, Phoenix just renewed its contract with the police union and it again includes release time. Our legal team wants to stop this contract from taking effect until we have a decision in our court challenge. We just got word that a hearing has been scheduled for next Friday to consider our request for a preliminary injunction. In her order, the judge said that based on evidence presented so far, she believes that an injunction is likely warranted.

The court hearing will be open to the public and we would be delighted to see you there. Here are the details:

Friday, May 25
1:30 p.m.-4:30 p.m.
Maricopa County Superior Court
East Court Building, Fifth Floor
101 West Jefferson, Courtroom 514
Phoenix, AZ 85003

You can read more about the Goldwater Institute’s legal effort to prevent taxpayers from subsidizing union work here.

The Taxpayers Win One

mpfeifer — Wed, 16 May 2012 22:45:25 +0000

The Authority was designed to be a “deal-closing” entity, wherein government and private officials possessing greater wisdom than market forces, can deploy resources to lure businesses to Arizona and create new ones. A nice concept, perhaps, but in most states such entities merely dole out subsidies to favored businesses.

That isn’t supposed to happen in Arizona. Our Constitution prohibits gifts to private entities “by subsidy or otherwise.” In Turken v. Gordon, litigated by the Goldwater Institute, the Arizona Supreme Court held that government can assist specific businesses only if they receive direct, tangible, commensurate, and enforceable benefits in return.

That leaves the Authority plenty of latitude—but not for what it tried to do a few weeks ago. At a ceremony honoring businesses competing in the Authority’s “innovative challenge” program, the Authority’s CEO Don Cardon decided to dole out $5,000 “stipends” to 15 unsuccessful applicants. Given that the stipends were after-the-fact, it would be impossible for the state to demand anything in return.

That’s exactly what the Institute said in a letter to Cardon, declaring that the payments looked more like a “slush fund” than the limited quid pro quo agreements the Authority is permitted to make. On May 11, the Authority relented and decided the stipends will not be paid.

It is a small victory for taxpayers, but an important one, for it calls the Authority’s attention to the constitutional limits on its powers—and to the fact that its actions will be watched closely.

Learn more:

Arizona Supreme Court: Turken v. Gordon (PDF)

Goldwater Institute: The Path to Jobs is Not Through the Red Ribbon

Goldwater Institute: Research Shows States Don’t Stimulate Job Growth With Taxpayer Handouts

Arizona Commerce Authority: Public Meeting Agenda and Minutes

Two years ago, Gov. Jan Brewer abolished the Arizona Department of Commerce. It wasn’t an act of getting rid of government waste or excess, but rather making way for a new entity: the “quasi-public” Arizona Commerce Authority.Thursday, May 17, 2012 - 08:00NoConstitutional Rights BlogYesCommerce Authority, gift clause, ConstitutionBy TopicsClint Bolick

Governor Brewer Signs Historic Cut in the Capital Gains Tax

mpfeifer — Wed, 16 May 2012 15:34:34 +0000

When policymakers say they have enacted “historic” legislation, they are usually accused of hyperbole. And, in many cases, that is a fair criticism. But in the case of Governor Brewer’s signing of HB 2815, it isn’t a big stretch to say that the action did make one historic move in regard to tax policy. It made Arizona the ninth state in the U.S. to effectively cut its capital gains tax. When the tax cut is phased in completely by 2016, the effective tax rate on capital gains will be 3.4%, instead of the current rate of 4.54%.

This is a very important step in making Arizona a more attractive place to do business and create jobs. And while we still have a ways to go to be really competitive with states that have no income tax, this move makes us more competitive with our neighbor, New Mexico, which in 2003 became the eighth state to cut its capital gains tax. New Mexico cut its capital gains tax in half, which put their rate at around 2.4 percent – a full percentage point lower than Arizona’s new rate. That tax cut precipitated a venture capital boom in New Mexico and translated to substantial job growth. To beat New Mexico at the capital gains tax cut game, we should lower our rate by another 25 percent. That would make Arizona’s capital gains tax rate the lowest in the nation.

There were some other important elements in this bill, too. It brought Arizona’s tax code up to par with most other states by increasing the number of years that corporations can carry business losses into the future. And it finally conformed the Arizona tax code to the federal code by allowing businesses to write off a larger share of the new capital investments they make by allowing what is called “bonus depreciation.” This is something that economists have long advocated as a job creator and something that the Goldwater Institute has been encouraging the Legislature to do since 2002.

Unfortunately, every rose has its thorns. The bill took a step in the wrong direction by creating a new tax credit that subsidizes a company for opening a new facility in Arizona or expanding an existing one. It’s not at all clear that credits like these actually encourage activity that would not have occurred in the absence of the subsidy. And, to make matters worse, the tax credit is "refundable." That means if a company has zero tax liability, they can still receive the subsidy in the form of a check from the government.

In the end, the Legislature and Governor Brewer are to be congratulated for this bill and moving Arizona toward a future in which venture capital and job growth return to the state and stay for the long term. But Arizona needs to go further, not just in reducing capital gains tax rates but in fundamentally reforming the tax system so that it doesn’t punish the creation of wealth, the starting of businesses, and real long-term job growth. So, who’s ready for round two?

Learn more:

Governor of Arizona: Press Release on Signing of HB 2815 (PDF)

Goldwater Institute: Investing in Arizona

Goldwater Institute: Don’t Repeat Jimmy Carter’s Failed Policies in Special Session Jobs Bill

Is Tombstone the next Katrina?

mpfeifer — Mon, 14 May 2012 23:03:43 +0000

More than the lives and properties of Tombstone, Ariz. residents and tourists are at stake in the historic town’s ongoing legal battle with the U.S. Forest Service to restore its water infrastructure. Arizona’s wildfire season is now underway with numerous dangerous wildfires being reported across the state. Tombstone is under contract with the Arizona State Forester to deliver water for suppressing wildfires; but that contract cannot be reliably fulfilled so long as the Forest Service blocks emergency repairs to Tombstone’s Huachuca Mountain water supply.

The Arizona State Forester often supplies the U.S. Forest Service with needed water and equipment to fight fires on federal land. So, the irony is that in refusing to yield to Governor Brewer’s declared State of Emergency authorizing Tombstone to restore its water supply, the U.S. Forest Service may find itself without the water it needs to fight wildfires this fire season. The federal government’s violation of state sovereignty on a local scale now has statewide dimensions.

This latest turn of events shows the importance of vindicating the Tenth Amendment’s protection of decentralized control over essentially local matters. When state and local governments are denied authority to respond quickly to local emergencies—which is what they are best at—inevitably larger interests will be threatened as well. Nothing good can result when the federal government presumes to command and control state and local government from Washington, D.C.

Americans must stand with Tombstone before federal intransigence and incompetence generates the next Katrina. If Tombstone prevails, we will all be a whole lot safer.

Learn more:

Arizona State Forester: Cooperative Fire Protection Agreements (PDF)

Arizona State Forestry: Wildfire Risk Map

Christian Science Monitor: Arizona wildfires: Five fires mark start of 2012 wildfire season

East Valley Tribune: Governor signs action plan to arm Arizona against wildfire threat

Video: A New Showdown in Tombstone

JGabriel — Fri, 11 May 2012 23:26:40 +0000

"The Town Too Tough to Die" is in a standoff with the federal government — one that jeopardizes their very survival. The Goldwater Institute has joined with the historic community to help them assert their constitutional rights. Fox Business host John Stossel interviews Goldwater CEO Darcy Olsen about this landmark case.Friday, May 11, 2012 - 16:24YesImageState Powers BlogYesstossel, tombstone, usfs, darcy, olsen, government, water rights, federalism, states rights, arizonaBy Topics

Are We Talking About a Sales Tax... Again?

mpfeifer — Wed, 09 May 2012 20:26:26 +0000

Recently, the Arizona Education Network (AEN) opined in the Arizona Republic, “Once in a great while, Arizona citizens have the opportunity to do something truly transformational for the trajectory of our state.”

With such a dramatic statement, one would think they were advocating innovative, new reform ideas or cutting-edge approaches to teaching. Turns out AEN was referring to plans to permanently raise the state sales tax and spend more on Arizona’s outdated public education system.

This idea is neither new nor “transformational.” In fact, this is just an extension of the “temporary” sales tax from 2010. In the past 40 years we’ve increased education funding with no corresponding improvement in student achievement. Nearly three-quarters of 4th graders in Arizona cannot read at grade level — about where we were 20 years ago.

Between 1969 and 2008, inflation-adjusted per pupil spending in Arizona increased 104 percent. The spending increase didn’t make classes any smaller (we have a 20:1 teacher/pupil ratio, nearly identical to where we were in 2000); we don’t direct more dollars to the classroom (we now have the lowest percentage of classroom spending since the state auditor started keeping track); and we continue to keep administrative staff and let teachers go (districts retained more administrators than teachers over the past few years, and the ratio of instructional staff to non-instructional staff is still about 1:1).

Arizona is starting to get beyond the worn-out plan to put more money into the same old system. The state’s new education saving accounts are the most liberty-enhancing school choice program in U.S. history and offer kids the most promise. With these accounts parents can customize their child’s education using their portion of state education funds.

A bill that would double the number of students eligible for these accounts is now on the governor’s desk waiting for her signature. Now that is the kind of change that is truly transformational.

Learn more:

Goldwater Institute: Education Savings Accounts Extend Hope, Opportunities

Goldwater Institute: Education Savings Accounts: Questions and Answers

Goldwater Institute: It’s the Same Old Song

Arizona Republic: A new sales tax for schools?

Recently, the Arizona Education Network (AEN) opined in the Arizona Republic, “Once in a great while, Arizona citizens have the opportunity to do something truly transformational for the trajectory of our state.”Thursday, May 10, 2012 - 08:00NoTax Reform BlogYestax, sales tax, ESA, AEN, ArizonaBy TopicsJonathan Butcher