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The State of Arizona spent nearly $100M of taxpayer money on corporate tax credits intended to stimulate economic development in 2011, but the public received no information about the results of these programs or which companies received the tax credits. A new bill, House Bill 2586, would require disclosure of the recipients of these tax credits, and it has bi-partisan support from a number of lawmakers. The bill will be heard in Monday’s House Ways and Means committee.
“Arizona taxpayers are forking over tens of millions of dollars in economic development tax subsidies every year, but in most cases, we don’t know whether these subsidies provide a good return on investment,” said State Representative Darin Mitchell (R-Litchfield Park), the primary sponsor of the legislation. “That’s like paying someone to fix your roof and never being able to check and make sure he actually did the job you hired him to do.”
The State of Arizona has won praise for its transparency website that allows taxpayers and elected officials to view state spending, including the awards and payments given to individual companies and vendors. However, many of the state’s economic development subsidies – which are funded with taxpayer dollars – lack this level of transparency. State law currently prohibits disclosing the recipients of corporate income tax credits, even though these programs are in place to advance government’s economic development goals.
“Taxpayers have a right to know who is receiving these credits and in what amount so we can determine if it is a good investment for Arizona,” said Scot Mussi, Executive Director of the Arizona Free Enterprise Club. “At a cost of $100 million dollars a year, a little sunshine wouldn't be such a bad idea."
The bill has support from several groups, including the Arizona Free Enterprise Club and the Arizona Public Interest Research Group (Arizona PIRG).
“The Arizona Legislature should stand up for taxpayers by passing disclosure legislation to show the public whether companies that get economic development subsidies exchange for jobs or other economic growth are doing just that,” said Serena Unrein, Public Interest Advocate for Arizona PIRG. “Are we creating jobs with these tax credits? Are companies doing significantly more research and development? We don’t know, because for the most part, state officials haven’t made that information available.”
There is precedent in Arizona for disclosing other economic development subsidies. The Arizona Commerce Authority discloses information online for several grant programs, and it releases detailed information about the results of Arizona Competes Fund, including the company receiving the money and the number of jobs expected to be created and actually created.
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