Earlier this month, at the same time Governor Katie Hobbs defended the controversial Arizona Commerce Authority in her 2023 State of the State address, State Senator Jake Hoffman announced his intention to defund it.
Now it turns out the controversial organization has been found to have violated Arizona law.
On Tuesday, the Arizona Attorney General’s Office (AGO) announced that the Arizona Commerce Authority’s CEO Forums violate the Arizona Constitution’s Gift Clause. The AGO shared the findings with the Arizona Commerce Authority (ACA) in a letter.
The AGO’s finding comes after a request for an investigation from the Arizona Auditor General in September 2023 to determine if these forums violated the state’s constitutional gift rules during the ACA’s sunset review.
The purpose of the Gift Clause is to prevent the government from giving away public assets to private businesses. As such, the Gift Clause prohibits the state from making “any donation or grant, by subsidy or otherwise, to any individual, association, or corporation.”
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Hoffman’s bill, SB1044, would repeal the Arizona Commerce Authority, ending what Hoffman says is an “unaccountable agency” guilty of “reckless spending.”
A recent audit by the Arizona Auditor General found that the Arizona Commerce Authority (ACA):
• Met some statutory objectives we reviewed but lacked statutorily required documentation from some grant recipients, guidance for evaluating grant applicants, and policies and procedures for administering nearly $100 million for the Arizona Broadband Development Grant program, increasing risk for misuse and inaccurately accounting for and reporting on use of grant monies.
• Spent more than $2.4 million between 2018 and 2023 hosting 5 private CEO Forums that the ACA reported were marketing campaigns held around the Waste Management Phoenix Open (WMPO) golf tournament and the 2023 Super Bowl, attended by private sector executives, their spouses, and ACA staff.
• As of June 2023, the ACA reported that 23 of the 118 companies whose executives attended the 2018 through 2023 private CEO Forums proposed potential nonbinding investment and jobs commitments in Arizona.
• CEO Forum expenditures included items such as hotel rooms; transportation; suites at the WMPO; a Super Bowl sponsorship providing attendees access to Super Bowl LVII and related VIP events; food and alcohol; conference rooms for educational activities; various gifts such as hats and sunglasses; and opportunities to attend other events, such as a VIP nightclub/concert at the WMPO, and the Super Bowl Music Festival.
“As they currently exist, the CEO Forums violate the Gift Clause of the Arizona Constitution,” said Attorney General Mayes. “The current structure of the CEO Forums confers significant value on invited private executives and their guests without obtaining any identifiable value for 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,” continued Mayes. “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.”