Arizona Commerce to spend less tax money courting CEOs at sports events

PHOENIX — The Arizona Commerce Authority has agreed to use mostly private funds to entertain corporate executives at the upcoming Waste Management Phoenix Open golf tournament.

And that’s apparently enough to satisfy Attorney General Kris Mayes and get her to back off threats to bring charges against the agency.

In a letter to Mayes on Friday, Scott Rooney, the authority’s legal counsel, outlined plans to spend more than $123,000 at the five-day Professional Golfers Association event that begins Monday in Scottsdale.

Of that total, $42,000 will come from taxpayer dollars under control of the authority.

The tab for the big-ticket item — $65,000 for tickets to the event for corporate executives and sponsoring a suite — will be picked up by Greater Phoenix Leadership. That organization of 150 business leaders bills itself as a CEO roundtable promoting public policy initiatives.

Another $14,000 for hotel rooms at the downtown Phoenix Hyatt Regency is being paid for by the Arizona Tourism & Lodging Association, made up of statewide hotels and resorts, tourism attractions, sports teams, airlines and related business partners. Horizon Strategies, a lobbying and consulting firm, will spend $2,500 for “hospitality items’’ ranging from snacks and sunscreen to hats and hand sanitizer.

What that leaves for taxpayers to pick up is $25,000 to rent room space, catering and audio-visual equipment for “informational sessions’’ with the invited guests, $12,000 for their transportation around Phoenix, and another $5,000 for marketing material, which Rooney said include mailings and items “highlighting Arizona’s value proposition.’’

All this comes in response to a letter Mayes sent to the authority last month declaring that their taxpayer-financed expenses for entertaining corporate CEOs are unconstitutional.

Changes save tax money

The attorney general said the law allows state agencies to spend on anything that has a “public purpose.’’ Mayes said part of the authority’s responsibility is to market the state and get companies to expand or relocate here.

But she said the amount spent on what were called “CEO Forums’’ — $2.4 million at the 2023 Super Bowl and at the Waste Management Open over the past six years — violates a constitutional provision outlawing gifts of public money.

“They give valuable benefits to a limited class of private persons without receiving any legally cognizable benefit in return,’’ Mayes wrote. She warned the Commerce Authority against future violations.

What Rooney sent on Friday apparently satisfies Mayes.

“These changes will save taxpayers tens of thousands of dollars,’’ she said in a prepared statement.

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She also was pleased that the authority promised to “follow a similar approach’’ when it hosts executives in April when NCAA basketball’s Men’s Final Four tournament is held in Arizona. Rooney promised to provide a breakdown of its spending — and who will absorb what costs — closer to the event.

Mayes said she will be watching.

“I intend to closely scrutinize the ACA’s activities during the Final Four events to ensure compliance with state law,’’ she said Friday. “Arizona taxpayers deserve a state government that doesn’t waste money hosting lavish parties for wealthy out-of-state CEOs.’’

Hobbs’ response

Mayes’ original threats drew a decidedly negative reaction from Gov. Katie Hobbs, to whom Commerce Authority CEO Sandra Watson reports.

“The ACA plays a critical role in Arizona’s booming economy, attracting businesses from around the world and creating good-paying jobs for working Arizonans,’’ said gubernatorial press aide Christian Slater at the time. “Gov. Hobbs will not let Texas and California beat Arizona in attracting jobs and businesses.’’

On Friday, though, Slater said Hobbs is with happy with the result.

A report last year by state Auditor General Lindsay Perry raised questions about what the state was getting for its money. Of 118 companies whose executives attended these private forums, 23 had proposed “potential nonbinding investments and job commitments in Arizona,” they said.

According to the report, the cost of “social and entertainment events’’ for just the 2023 Super Bowl was nearly $2.1 million.

Watson, in her initial response to the audit, defended the expenditures.

“The CEO program really gives us an opportunity to really educate decision makers on the value proposition that we offer for businesses,’’ she said.

“What we want to do is position Arizona in the best possible way,’’ Watson said. “Utilizing the Super Bowl and other major events gives us an opportunity not only to talk about the business climate in Arizona but our quality of life.’’

But it was illegal, Mayes said, because, “The Gift Clause generally requires that the government receive proportional consideration for its expenditures.” She said the mere fact businesses might relocate here is insufficient.