- Slug: BC-CNS-Commerce Criticism.690 words.
- 2 file photos available (thumbnails, captions below)
By Reagan Priest
Cronkite News
PHOENIX – A Senate committee grilled Arizona Commerce Authority officials Wednesday, just one day after Attorney General Kris Mayes said the agency’s wining and dining of CEOs violated the state’s gift clause.
The normally routine sunset review by the Senate Government Committee turned into an hours-long review of the agency’s performance.
It included an Arizona Auditor General report that said the authority spent millions on “CEO Forums” for tickets, hotel rooms and food for events like the Waste Management Phoenix Open and the 2023 Super Bowl. The audit also said the authority is at “increased risk of fraud and waste of public monies” because it lacked sufficient documentation for some of its activities.
“Anybody who looked at the letter of the law would have been able to realize that gifting red wine and swag and sports tickets, suites and things like that is not in the taxpayers best interest and arguably a violation of the gift clause,” Sen. Jake Hoffman, R-Queen Creek, said at the hearing.
Hoffman is lead sponsor, with 10 others, of a bill that would abolish the agency. That bill was not before the committee, which voted 4-3 to review the authority’s operations and revisit the issue. The vote came one day after the the House Commerce Committee recommended the authority be continued for two years and reevaluated in 2026.
Much of Hoffman’s criticism Wednesday was based on the opinion released Tuesday by Mayes, who said the authority’s CEO forums violate the state’s gift clause because they use public funds to woo executives without providing tangible benefit to the state.
“While the ACA may hold forums that confer a nominal value on attendees, its past forums, including last year’s $2 million Super Bowl Forum and its planned 2024 Forums, do not come close to meeting that requirement,” Mayes said in a statement Tuesday. “My office fully intends to uphold the state’s constitution and will seek to prevent any future illegal payment of public monies to private entities by the ACA.”
The auditor general’s report said the Commerce Authority spent $2.4 million between 2018 and 2023 on five CEO Forums hosted at Waste Management Phoenix Open tournaments and for events surrounding the 2023 Super Bowl. The agency also has two forums planned this year around the 2024 NCAA Final Four tournament and the 2024 WM Phoenix Open.
Mayes said in her letter to the authority that the forums it has planned for this year will violate the gift clause if they are not altered to provide less benefits to attendees. She also gave the agency seven days to give confirmation that it will comply with her office’s opinion.
At Wednesday’s hearing, Commerce Authority President and CEO Sandra Watson said the agency “respectfully disagrees” with Mayes’ opinion that the forums do not provide a return on investment to the state.
“These CEO forums have been extremely successful for the state of Arizona,” Watson said. “It has really highlighted Arizona’s opportunities and has really put us on the global stage.”
Democratic Sens. Priya Sundareshan of Tucson and Juan Mendez of Tempe voted to continue the ACA, saying at the hearing that the agency should be given time to reform issues.
In a statement released after the hearing, Gov. Katie Hobbs said she agrees that “there is a role for improved guardrails to protect taxpayer dollars in the Arizona Commerce Authority processes.” But she defended the benefits the authority has brought to the state, and urged lawmakers to continue it “Arizonans don’t lose out on good-paying jobs to Texas and California.”
“The world’s leading companies in advanced manufacturing, semiconductor chip production, and aerospace and defense, have all made investments in our communities, resulting in good-paying jobs for everyday Arizonans. This is in large part thanks to the Arizona Commerce Authority,” Hobbs’ statement said.
In addition to violations of the gift clause, the auditor general’s report raised concerns that the ACA did not diligently check businesses to ensure they qualified for tax incentives and grants, making funds vulnerable to misuse. A representative for the Auditor General told the committee Wednesday that those were similar to concerns raised about the authority when it was audited in 2015.
For more stories from Cronkite News, visit cronkitenews.azpbs.org.
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Web links:
_ Committee hearing: https://www.azleg.gov/videoplayer/?clientID=6361162879&eventID=2024011033
_ Auditor general’s report: https://www.azauditor.gov/sites/default/files/23-116_Report.pdf
_ Report highlights: https://www.azauditor.gov/system/tdf/23-116_Highlights.pdf?file=1&type=node&id=11834&force=0
_ Mayes’ statement: https://www.azag.gov/press-release/attorney-general-mayes-finds-aca-ceo-forums-violate-gift-clause
_ Mayes’ letter: https://mcusercontent.com/cc1fad182b6d6f8b1e352e206/files/7a56d25c-54b2-2de3-4641-baadc781e683/2024_01_16_PM2023_0028_Disposition_Letter_Final.pdf
_ House Commerce hearing: https://www.azleg.gov/videoplayer/?clientID=6361162879&eventID=2024011005
_ Hoffman’s bill: https://www.azleg.gov/legtext/56leg/2R/bills/SB1044P.pdf
_ Commerce Authority: https://www.azcommerce.com/
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The 2023 Super Bowl, the fourth held in Arizona, was a major opportunity for the Arizona Commerce Authority, which spent about $2 million on tickets and gifts for CEOs to attend the game. That and other spending by the authority has come under fire by lawmakers and was said this week to be a violation of the Arizona Constitution’s gift clause. (File photo by Drake Presto/Cronkite News)
Kane Brown performs at the Super Bowl LVII Music Fest at Footprint Center, one of the events the Arizona Commerce Authority included in its CEO Forums last year. (File photo by Drake Presto/Cronkite News)