Archive for the ‘Arizona’ Category.
I find that the local newspaper in most towns is generally a strong supporter of most every business relocation subsidy or tax incentive that comes along -- whether it be for Apple or an NHL team or a movie production, the local paper benefits from having more newsworthy activity in town.
But the AZ Republic actually ran an article this weekend questioning movie tax incentives, perhaps the only government subsidy dumber than buying sports stadiums for billionaires
States, including Arizona, that don't offer movie and television tax breaks usually are smart not to do so, a researcher contends.
Nearly all states have lured Hollywood productions at one time or another with special tax incentives, but a University of Southern California professor says such spending fails to deliver the long-term economic benefits promised by industry lobbyists and lawmakers.
“The subsidies are a bad investment," said Michael Thom, an assistant professor in USC's Price School of Public Policy, in a prepared statement. "States pour millions of tax dollars into a program that offers little return."
Arizona doesn't currently offer tax incentives for the industry but spent $23.7 million on subsidies between 2005, when the program started, and 2010, when incentives ended amid a state budget crisis.
Thom, who has led two recent studies on the topic, looked at job growth, wage increases, entertainment-industry output and other factors for each state. "On average, the only benefits were short-term wage gains, mostly to people who already work in the industry," he said. "Job growth was almost non-existent. Market share and industry output didn’t budge.”
The Arizona Republic reports that the Arizona Department of Water Resources has set six priorities for managing expected water shortages in the future. The six are listed in one of those annoying click-bait page-flipping things, so I will summarize them below:
- Resolve water disputes
- Pursue reclaimed water
- Expand monitoring (of the public's water use)
- Look at water transfers (between communities)
- Go for desalinization
- Find funding (for large scale projects)
What is missing here? Well I will give you a hint. This article was on the very same page (at least online) of the newspaper -- Phoenix has the cheapest water in the country!
If you live in Phoenix, you’re probably paying one of the cheapest annual water bills in the country, even with the rate increase that took effect this month, according to a recent national report on public water systems.
The February report by Food & Water Watch said the lead-tainted water supply in Flint, Michigan, was the most expensive in the country, with customers there paying $910.05 a year. It said Phoenix residents paid just $84.24 a year, then the lowest rate in the nation.
A city water department official said the rates could be a little misleading – rates jump for heavy users, one factor that has helped Phoenix keep water use down even as the number of water users has risen sharply.
But even after the 3 percent increase that took effect March 1, analysts say Phoenix rates are probably still among the lowest, if not the lowest, in the country for residential customers who don’t use large amounts of water in a month.
This is absurd. Why does the state agency need to go around spying on private water use and begging for funding when price is such an obvious lever to match supply and demand. Raise the freaking prices! Are we drawing from lakes and groundwater faster than they can replenish themselves? Raise the dang price until demand falls to a sustainable level. As an extra bonus, this would help solve the funding problem, and have it solved by water users themselves rather than taxpayers.
By the way, I ask these questions but I actually know the answers -- government officials don't want to take the heat when the prices rise. They want to pander to the public and hand them populist goodies like cheap water, and then manage the inevitable water crisis with authoritarian actions like rationing and surveillance that increase their personal power.
And congrats to our newspaper: It has article after article, day after day, listing all the dire water shortages that face the area, and then they write this article with nary a mention that having the country's lowest water rates might be related.
No one loves local sports teams more than the local media. I think they know, but probably won't admit, that they would lose a huge chunk of their remaining readership / viewership for their news products if they did not have local sports to report on. So you will almost never, ever, ever see local media reporting reporting on the true cost (in terms of handouts of taxpayer money) to retaining pro teams.
My coverage of the Phoenix/Arizona Coyotes hockey team goes way back, including even to a mention in a George Will column. I won't repeat all of that. I just want to point to this article entitled "Glendale selects AEG to manage Gila River Arena; Arizona Coyotes' future unclear."
Glendale selected facilities-management company AEG Facilities to operate Gila River Arena, likely hastening the city's split with the Arizona Coyotes hockey team.
The telling thing about the article is that it never once explains to readers why this bid award might hasten the split with the Coyotes. They mention that the Coyotes chose not to bid on the contract. So why is this award a problem for them? Do they hate AEG for some reason? If you really were new to the issues here, you would have to scratch your head and wonder why the two issues were connected.
Oddly enough, everyone knows the reason, but the local media really wants to avoid mentioning this reason. Here is the elephant in the room no one will recognize: The Coyotes struggle to make money in this market, a fact made worse by the terrible location of the stadium at the far end of town from most of the potential corporate ticket buyers and wealthy people. As a result, the team languished in bankruptcy for years, in part because the NHL (who took over the team) refused to sell it at a reasonable market price.
They finally found a buyer who agreed to buy it for an above-market price, but did so only because there was an implicit promise by the town of Glendale to subsidize them the $100 million difference between the actual and market price of the team.. The Goldwater Institute called foul on this subsidy and got it stopped. So the town found a way around it, promising to award the team the stadium management contract for a price $8-$10 million a year above market rates for the service. The present value of this above-market pricing over the life of the proposed contract nearly exactly matched the earlier subsidy proposal Goldwater killed. Various folks cried foul again, seeing through this sham, and got that stopped.
So the reason this award of the stadium management contract to AEG is so devastating to the Coyotes is that this contract represented the last hope of exacting a hidden subsidy from the city. With this contract awarded to an arms-length third party at market rates, the last chance of making the Coyote's business viable on the taxpayer's backs seems to have escaped.
Update: I am hearing now that another reason the Coyotes are done in Glendale is that they think the city of Phoenix or Scottsdale will build them a new stadium. ugh. Will it never end.
I don't have much to add to this story, but I was simply thrilled Clint Bolick was named to the AZ Supreme Court. I have admired his work for years and I think most folks in AZ who know him consider him to be fair-minded and about as non-partisan as one can be in these times. I love the IJ, which he co-founded, and his work at Goldwater (particularly opposition to a bunch of crony subsidies for real estate and sports teams) has been terrific.
I was a little surprised at all the vitriol at the national level that came from progressive groups over this appointment. My sense is that he shares a lot more common ground with progressives than, say, many AZ Republicans would (compare, for example, Joe Arpaio or John Kavanagh). My only guess here is that his record is too good on helping the ordinary people progressives claim to help.
Update: Last part asked and answered:
Here’s a point worth pondering: Why is it that the so-called progressives, who incessantly say they’re concerned about the plight of poor people, never fight against the laws and regulations that take property from poor people and prevent them from engaging in honest businesses? Why is there no left-wing counterpart to IJ?
The answer, I submit, is that progressives are more concerned about preserving the myth that big government is the one and only friend of the poor than they are about the poor as individuals. Each time a lawyer like Clint Bolick wins a case that enables a poor American to gain when the yoke of government is removed from his shoulders, that myth frays a little more.
We pretty much had a full lunar eclipse tonight with clear skies. Of course my Nikon with the tripod and the 300mm lens had to have a dead batter, so I used the Canon Sx260 I had such good luck with at concerts. The results are grainy but pretty good for a pocket camera. This is about 5 minutes after the peak. No tripod, just sitting on top of my trash can in the driveway.
Here it was a bit before the peak
Modern pocket cameras use some sort of multi-shot HDR process to take low light photos. My Sony RX100-III does even better at night but does not have the zoom to do justice to the moon. It s a better camera, and I still intend to share pictures from my trip to Europe but just have not gotten around to it, but here is what the Sony saw:
Sort of apropos to this blog, the local coyotes went absolutely apesh*t right at the peak of the eclipse. Howling from every direction.
Local AZ water district offers manure share program.
** This post is the result of an email exchange with a reader where we joked about a blog Turing test. So this is my attempt to imitate Glenn Reynold's style. How did I do?
Problem: Long waits at the DMV
Solution: Triple the size of the waiting room
God forbid anyone would rethink an incredibly dysfunctional process.
When you hear that police pulled someone over for the totally BS charge of a "partially obscured license plate with only one light," can't you just assume the driver is probably black or Hispanic?
If I were a Mexican in Phoenix, I would do a full walk-around checking my vehicle before every trip. A visiting friend once asked me if the fact that Hispanics all seem to drive so slow was a cultural thing and I said that more likely, they know they will get busted for going even a hair over the speed limit.
When Kris Kobach says "In four different sections, the law [SB1070] reiterates that a law-enforcement official 'may not consider race, color, or national origin' in making any stops or determining an alien's immigration status," he is ignoring reality. The law asks police to make a determination (e.g. probable cause that one is an illegal immigrant) that is impossible for actual human beings to make without such profiling. It's like passing a law that says "police must drive their cars 30 miles a day but can't drive their cars to do so." The reality on the ground here in Arizona is that, illegal or not, Sheriff Joe Arpaio has been using racial profiling to make arrest sweeps for years, and his officers have become masters at finding some pretext to pull over a Mexican they want to check out (e.g. the broken tail light). Words in this law about racial profiling are not going to change anything.
Update: I forgot this story from 2008, which is a great example of what I am talking about here
Arrest records from crime sweeps conducted by the Maricopa County Sheriff's Office add substantial weight to claims that deputies usedracial profiling to pull Latino motorists over to search for illegal immigrants....
even when the patrols were held in mostly White areas such as Fountain Hills and Cave Creek, deputies arrested more Latinos than non-Latinos, the records show. In fact, deputies arrested among the highest percentage of Latinos when patrols were conducted in mostly White areas.
On the arrest records, deputies frequently cited minor traffic violations such as cracked windshields and non-working taillights as the reason to stop drivers.
"These are penny-ante offenses that (police) almost always ignore. This is telling you this is being used to get at something else, and I think that something else is immigration enforcement against Hispanic people," Harris said....
The AZ Republic has some of the first information I have ever seen on the nature of Phoenix light rail ridership. The first part confirms what I have always said, that light rail's primary appeal is to middle and upper class whites who don't want to ride on the bus with the plebes
Light rail has changed the demographics of overall transit users since the system opened in 2008, according to Valley Metro.
Passengers report higher incomes than bus riders, with more than a quarter living in households making more than $50,000 a year. Many riders have cars they could use.
The 20-mile system running through Phoenix, Tempe and Mesa recorded more than than 14 million boardings last year. Still, census data estimate less than one-third of 1 percent of Phoenix commuters — or about 2,000 people — use rail as their main transportation to work.
.0033% huh? If we built similar facilities to serve everyone, it would only cost us about $420 billion at the rate of $1.4 billion per third of a percent.
But I thought this next bit was the most startling. I always had a sneaking suspicion this was true but never have seen it in print before:
While the much larger bus system reaches most corners of the Valley, light rail connects specific destinations along a single line. Nearly half of light-rail riders are enrolled in college.
I must have missed this in the original sales pitch for the light rail line: "Let's pay $1.4 billion so ASU students can get to more distant bars." Note that by these numbers, students likely outnumber commuters 10:1. Doesn't bode well for light rail extensions that don't plow right through the middle of the most populous college campus in the country.
Postscript: They don't break out people riding to get to sporting events downtown, but sporting events make up most of the largest traffic days on the system. From my personal acquaintances, many people use light rail as a substitute for expensive downtown parking at sporting events, parking (often semi-illegally) near light rail stops and taking the train the rest of the way in. On the whole, its not very compelling as a taxpayer to be helping to subsidize someone else's parking. And from a municipal fiscal standpoint, it means that light rail fares may be cannibalizing (on a much greater ratio than 1:1 given the price differential) parking fees at municipal parking lots.
As background, I live in a town called Paradise Valley, Arizona. This town is perhaps most famous recently for installing surveillance cameras all over town hidden in fake cacti. Here is the one on my block. There are at least two others within walking distance of my house.
These cameras apparently have license plate reading ability and perhaps the ability to do facial recognition, and likely are funded by Homeland Security for the purposes of feeding data into a national tracking database. I say "likely" because the town of Paradise Valley under Mayor Michael Collins somehow appropriated these things secretly without any public discussion or debate.
So in this context, it was hilarious to see none other than Mayor Michael Collins piously intoning about the importance of privacy in the town of Paradise Valley:
Paradise Valley is considering an ordinance that would make it illegal to fly drones in town without a permit. Backyard hobbyists and law-enforcement agencies that may need to use drones during emergencies would be excluded from the proposed ban.
"Our residents move to Paradise Valley because they like the privacy," said Mayor Michael Collins, who presides over a community that counts celebrities, sports stars and Discount Tire founder Bruce Halle, the richest person in Arizona, among its residents.
What Mr. Collins apparently means is that he wants the government to maintain a monopoly on surveillance technologies. Libertarians like myself cringe at the notion that a monopoly on privacy-invasion should be granted to the government, the only institution in the country that can legally jail you, take your money, and even shoot you. Conservatives, who dominate this community, tend to be blind to this danger, saying that "if you aren't doing anything illegal, you have nothing to fear from surveillance." I will say, though, that some Conservatives have woken up a bit over the last several years on this with the IRS non-profit harassment and the Wisconsin John Doe investigations.
By the way, extra credit to the Arizona Republic for gratuitously publishing where a wealthy citizen lives in a sentence about privacy.
For years I have excoriated the City of Glendale, AZ (a western suburb of Phoenix) for its myriad subsidies of the Coyotes NHL hockey team. When Glendale finally had the chance to walk away several years ago, I (and many others) begged the town not to throw good taxpayer money after bad and re-sign some sort of subsidy agreement with the team. For you see, even after getting a stadium at taxpayer expense, the team still demands millions of dollars a year in operating subsidies to stay in town.
But the town insisted on throwing more taxpayer money at the group buying the Coyotes from the NHL out of bankruptcy. The problem was that there was a gap between the NHL's asking price ($200 million) and the team's value in AZ ($100 million). First, they tried to give them a direct subsidy, but the Goldwater Institute sued to stop that and won. So instead, the city buried the subsidy in a stadium management contract. Here is how I described this contract at the time it was signed:
The NHL came down to a price of $175 million, still $75 million or so above what the team is worth. The City had already sought arms-length bids for the stadium management contract, and knew that a fair market price for that contract would be $6 million per year. It ended up paying the buying group $15 million per year for the 15-year contract, representing a subsidy of $9 million a year for 15 years. By the way, the present value of $9 million over 15 years at 8% is... $75 million, exactly what was needed to make up the bid-ask gap. Again, I think the city almost had to do it, because the revenue stream it was protecting is likely higher than $9 million. But this is the kind of bad choices they saddled themselves with by building the stadium in the first place.
So only now that they have signed the contract and a private party has taken over the Coyotes based on the city's contract, Glendale is trying to unilaterally tear up the contract. They have some thin reed of a "conflict of interest" claim that is based on the overlap of payrolls for one guy between the City and the Coyotes by a couple of days. This seems like an absurd claim gen'd up just to try to solve Glendale's buyer's remorse. My gut feel is that it is never going to fly in court.
What a bunch of losers. You should never have signed the contract, but now that it is signed, you actually have an obligation to live by it, particularly since a private party paid $100 million extra for the team mainly on the strength of this contract.c If you want out, declare bankruptcy (which actually might not be too far away for the city).
No, I am not going to have a legal discussion here. But currently a judge is preparing to rule whether Joe Arpaio committed civil or criminal contempt of court when he (admittedly) ignored the judge's order on stopping his immigrant sweeps (and other issues).
Here is the practical difference for you and me: If convicted of civil contempt, we the taxpayer ultimately bear the punishment (in all past Arpaio losses of this sort, the County taxpayers picked up the bill for any fines and awards). If convicted of criminal contempt, Sheriff Joe might actually, for the first time ever, have to pay the price for his own lawlessness.
Postscript: Just so you can get a flavor of how Arpaio conducts his immigrant sweeps, here is an example:
Deputies from the Maricopa County Sheriff's Office raided a Mesa landscaping company early Wednesday morning, arresting nearly three dozen people suspected of being in the country illegally.
The raid on offices of Artistic Land Management, on Main Street just west of Dobson Road, happened about 4:30 a.m., according to one worker who was handcuffed and detained before being released when he produced documentation that he was in the country legally....
Juarez estimated about 35 workers were handcuffed with plastic zip-ties while deputies checked for documents. Those who could provide proof they were in the country legally were released, while others were put on buses and taken away.
People think I am exaggerating when I say this, but he literally goes into a business and zip ties everyone with brown skin, releasing them only if some family member can rush over and provide proof of citizenship.
My little town that in the Phoenix area is apparently setting up surveillance cameras all over town, hidden in fake cacti. This never once was discussed in any public meeting, and residents only found out about it when the cameras starting going up.
Residents were alarmed to see the cactus cameras popping up throughout the town over the last few days with no indication of what they were being used for as city officials refused to explain their purpose until all the cameras were installed.
Town leaders initially declined to even talk to local station Fox 10 about the cameras, with Paradise Valley Police saying they were “not prepared to make a statement at this time.” The network was similarly rebuffed when they attempted to get answers on license plate scanners that were being installed in traffic lights back in February.
Fox 10’s Jill Monier was eventually able to speak to Town Manager Kevin Burke, who admitted that the cameras were being used to “run license plates of cars against a hotlist database.”
When asked why officials had been secretive about the cameras, which are being placed on the perimeter of the town, Burke asserted that there was “nothing to hide” and that the cameras wouldn’t be activated until privacy concerns had been addressed.
“Shouldn’t that have been vetted before they even went up?” asked Monier, to which Burke responded, “It probably is fair.”
This appears to be part of the on-again-pretend-to-be-off-again DHS program to set up nationwide tracking of license plates. Ugh. Really gives a creepy Owrellian vibe to our town name of "Paradise Valley". More good news:
The American Civil Liberties Union subsequently revealed that the cameras were also using facial recognition technology to record who was traveling in the vehicle “as part of an official exercise to build a database on people’s lives,” reported the Guardian.
Our local Sheriff Joe Arpaio is quite a story. On the one hand, he shows a casual disrespect for civil liberties, goes on raids where he zip-ties every person with brown skin until their family can produce their birth certificate, and has tried to pin RICO charges on judges who ruled against him. He likes to haul folks off to jail whose only crime is speaking out against the Sheriff . He arrested newspaper reporters and editors who wrote critically of him. This is a man who in his paranoia invented an assassination plot (against himself, of course) and got the city to spend $500,000 protecting him. If his deputies want to see a defense attorney's working papers, they just take them. If he can't get a judge to release computer records, he has his posse storm into the County computer center and take it over at gunpoint. And don't even get me started on the Steven Seagal thing.
On the other hand, despite all this, he has been re-elected by safe margins many times, has actual groupies who fawn over him, and is considered by much of our retiree population as the last bulwark against a Mexican-immigrant-led road-warrior-style apocalypse. At most local art festivals and other public fairs, he has his own booth where he hands out his trademark pink underwear to his many admirers (he makes prisoners wear pink underwear to try to humiliate them).
Several years ago, upon losing some Federal civil rights suits, a judge ordered as part of the settlement a series of defined actions and prohibitions (e.g. Arpaio had to stop certain immigrant roundups). He ignored these orders pretty blatantly, and now is in court again. He has actually essentially admitted to civil contempt of court and is just hoping at this point to avoid criminal charges. And then it gets weirder:
An upper echelon that willfully defies the orders of a federal judge and may have committed perjury on the witness stand.
A county sheriff and chief deputy with enough chutzpah to "investigate" the U.S. Department of Justice, the CIA, and federal judges, all on the word of a Seattle scammer.
A bogus "investigation" into the wife of the aforementioned federal judge for something that's not even a crime.
This is just some of the ground covered during a four-day hearing before U.S. District Court Judge G. Murray Snow in which Maricopa County Sheriff Joe Arpaio and his chief deputy, Jerry Sheridan, tried mightily to save themselves from criminal-contempt charges in the ACLU's big racial profiling case Melendres v. Arpaio.
Sheridan and Arpaio already have conceded that they are guilty of civil contempt, admitting they did not comply with Snow's December 2011 preliminary injunction in the case, which ordered the MCSO not to enforce federal civil immigration law.
The pair also have copped to defying a direct order from Snow in May 2014 concerning the gathering of thousands of videos taken by deputies, which should have been turned over to the plaintiffs before the 2012 trial in Melendres.
All that's left is for Snow to find that there's enough evidence that Sheridan and Arpaio acted willfully, so he can turn over the matter to another judge and the U.S. Attorney's Office for possible prosecution.
Yep, the best way to defend oneself against contempt of court is to... have all the other parties in court investigated. Oh yeah, and the CIA. Nothing says "mental health" like a local sheriff investigating the CIA. And don't forget, this is the same guy who used my tax money to take is cold case team and dedicate them for months to investigating Obama's birth certificate.
I think it was Tyler Cowen who linked to this photo spread on surviving examples of Soviet architecture. A few of the buildings are almost compelling.
This was one example, in Bratislava
But you don't have to go to Bratislava to see something like it. You can find something similar in Mesa, Arizona -- this is the city hall.
Kudos to the photographer for getting the shadow on the concrete pylon on the right to be positioned almost perfectly to fill out the missing part of the building. I actually don't mind the Tempe building, it looks good in context, more public sculpture than building (particularly since this is likely a really inefficient building, with minimal floor space for the money spent to build it).
For some reason, it appears that building hotels next to city convention centers is a honey pot for politicians. I am not sure why, but my guess is that they spend hundreds of millions or billions on a convention center based on some visitation promises. When those promises don't pan out, politicians blame it on the lack of a hotel, and then use public money for a hotel. When that does not pan out, I am not sure what is next. Probably a sports stadium. Then light rail. Then, ? It just keeps going and going.
The city-owned Sheraton Phoenix Downtown Hotel has lost so much money — more than $28.2 million total — that some city leaders say the hotel must be put in the hands of the private sector.
They also worry that the hotel, Arizona's largest with 1,000 rooms, could harm other projects in the downtown core.
When Phoenix leaders opened the Sheraton in 2008, they proclaimed it would be a cornerstone of downtown's comeback. They had one goal in mind: lure big conventions and tourism dollars. Officials argued the city needed the extra hotel beds to support its massive taxpayer-funded convention center a block away.
The city-owned Hilton Baltimore convention center hotel lost $5.6 million last year — a worse performance than 2013 despite its close location to Camden Yards and the Orioles' playoff run.
It was the seventh consecutive year that the hotel has underperformed financially, according to an audit of financial statements presented Wednesday to the city's Board of Estimates. Under the deal's initial projections, the hotel was supposed to be making $7 million in profit by now — pumping that mone into the city's budget....
The hotel has lost more than $70 million since it opened.
I am sure that politicians in both cities called the lack of a hotel a market failure. But now we see that it was a market success. All the companies who chose not to build a hotel with private money obviously knew what they were doing, and only the political benefits of pandering the the public at large and a few special interests in specific made it seem like an attractive investment to city politicians. Which is all pretty unsurprising, since hotels have pretty much been built off every exit ramp in this country, so there seems to be no private inhibition towards building hotels -- just towards building hotels in bad locations.
Kudos to Jeff Gibbs for finally bringing to the pages of the Arizona Republic what strikes me as the most economically obvious, but least mentioned, solution to future water shortages: Price.
I am always amazed that the media will credulously run stories against "corporate welfare" for oil companies (which usually mostly includes things like LIFO accounting and investment tax credits that are not oil industry specific) but then beg and plead for us taxpayers to subsidize movie producers.
I wish I understood the reason for the proliferation of government subsidies for film production. Is it as simple as politicians wanting to hobnob with Hollywood types? Our local papers often go into full sales mode for sports team subsidies, but that is understandable from a bottom-line perspective -- sports are about the only thing that sells dead-tree papers any more, and so more local sports has a direct benefit on local newspapers. Is it the same reasoning for proposed subsidies for Hollywood moguls?
Whatever the reason, our local paper made yet another pitch for throwing tax dollars at movie producers
Notwithstanding a recent flurry of Super Bowl-related documentaries and commercials that got 2015 off to a good start, Arizona appears to be falling behind in a competitive and lucrative business. The entertainment industry pays well, supports considerable indirect employment and offers the chance for cities and states to shine on a global stage.
Seriously? I am sure setting up the craft table pays better than catering a party at my home, but it is a job that lasts 2 months and is then gone. Ditto everything else on the production. And I am sick of the "shines on the world stage thing." Who cares? And is this really even true? The movie Chicago was filmed in Toronto -- did everyone who watched Chicago suddenly want to go to Toronto? The TV animated series Archer gets a big subsidy from the state of Georgia. Have they even mentioned Georgia in the series? Given the tone of the show, would they even want to be mentioned?
When government subsidizes an industry, it is explicitly saying that resources are better and more productively invested in the subsidized industry than in other industries in which the money would have been spent in a free market. Does the author really have evidence that the money I would have spent to improve the campgrounds we operate in Arizona is better taken from me and spent to get a Hollywood movie shot here instead? Which investment will still be here 6 months from now?
Arizona is one of 11 states that don't offer tax incentives, primarily in the form of income-tax credits, and that's the core of the problem. There's also no state film office to help out-of-state crews obtain filming permits, locate vendors, hire temporary staff and so on.
Arizona's tax incentives expired after 2010 and the film office closed in the wake of a recession that hit the state especially hard and necessitated tough spending choices. Although bills to revive those programs have been introduced, they're not given high odds of success in the current session as the governor and lawmakers struggle to close $1.5 billion in deficits over this year and next.
"Right now, there's nobody to call, the phone isn't being answered and nobody responds to e-mails," said Mike Kucharo, a local producer and director who serves as the state-government liaison for the Arizona Production Association, an entertainment trade and networking group. "We need a film office."
Yeah for us! While all the lemmings in other states bid up the price of a few politicians being able to get their picture with Hollywood types on a production set, we have chosen not to play. Good for us. Only an industry insider clown with a straight face could say that we need a taxpayer-funded film office. Really? Do we need a taxpayer-funded florist office to attract flower sales?
Years ago I wrote an article calling sports team subsidies a prisoners dilemma game, where the only winning move was not to play. The NFL has 32 teams, mostly in the largest cities. Without subsidies the NFL would have ... 32 teams, mostly in the largest cities, and taxpayers would have saved billions of dollars. The same is true for film:
Indeed, the number and size of incentives escalated from just two states offering $2 million in combined incentives in 2003 to 40 states offering $1.2 billion just six years later, according to the Tax Foundation.
So subsidies have gone up by over a billion dollars a year, and yet roughly the same films are being made. This is one of the best examples I can think of where politicians are using taxpayer money to increase their personal prestige. The AZ Republic should be embarrassed they are out front actively encouraging this behavior.
Postscript: For all of its flaws in teaching real-world relevant business topics, the Harvard Business School was very good, at least when I was attending it, at teaching business strategy. My memory may be fuzzy here, but I am pretty sure that "40 other groups have all jumped into this activity and have ramped up their spending by a factor of 50 in just six years and all 40 competitors are really focused on winning almost irregardless of the price they pay" is not a very good pitch for investing money in a new field.
Postscript #2: All of this is a wonton violation of the AZ state Constitution, though of course big government advocates are really good at totally ignoring Constitutional limits on government power. Here is what our Constitution says:
Section 7. Neither the state, nor any county, city, town, municipality, or other subdivision of the state shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual, association, or corporation, or become a subscriber to, or a shareholder in, any company or corporation, or become a joint owner with any person, company, or corporation, except as to such ownerships as may accrue to the state by operation or provision of law or as authorized by law solely for investment of the monies in the various funds of the state.
Update: From the Manhattan Institute, film tax breaks return 30 cents for every dollar spent
Similar to most targeted tax breaks, movie production incentives routinely fail to deliver on the economic promises made by their proponents. Supporters frequently claim movie incentives create jobs and lead to net gains in tax revenue. However, data from several states find movie production incentives generate less than 30 cents for every lost dollar in tax revenue.
Providing tax breaks specifically to the film industry is an example of government working to choose winners and losers in the marketplace. States could attract almost any industry if they paid for a quarter to a third of its expenditures, but such a policy would be fiscally unsustainable. A better system would be to lower state tax rates for everyone, encouraging economic growth.
Film is a particularly poor industry to subsidize because it does not create long-term employment and other lasting economic benefits for states. Even though a well-made film might boost tourism, productions only offer short-term employment and the workers are highly specialized. Production and workers can easily move from one location to wherever better deals are offered.
In all the states we operate in, sales tax registrations are open-ended. This means that once you register for a sales tax license, you keep it without having to do any sort of renewal. However, there are penalties for not reporting every month on an active license, so there are pretty strong incentives to report a closed license as soon as one is not using it. In effect, your monthly report is your renewal.
For some reason, Arizona has decided that it needs to put businesses through an annual renewal process for sales** tax licenses. I have no idea why. Even California does not make folks jump through this hoop. Anyway, I chuckled at the name they assigned to this change: "TPT Simplification Program." Because everyone knows that adding an extra paperwork step each year is a simplification. I guess it simplifies the process of keeping their employment numbers up at the Department of Revenue.
** AZ actually call its sales tax a "transaction privilege tax." Since I do not consider voluntary business transactions between two individuals to be a "privilege" that can only be granted by the state, I refuse to use the term.
My son is taking some kind of politics course in Rome (Italy) and the discussion in class yesterday was on Joe Arpaio and immigration.
Phoenix businesses add hundreds of jobs every week. However, the only jobs that every get subsidized are in sexy businesses. That is because the subsidies themselves make zero sense, from an economic or public policy standpoint. The point is not to create jobs, but to create press releases and talking points for politicians and their re-election campaigns.
And there is little that is sexier to politicians spending taxpayer money to get themselves re-elected than solar and Apple computer. Which brings us to this plant in Mesa (a suburb of Phoenix), which I am calling the Graveyard of Cronyism.
This plant was built by First Solar to build solar panels. I would have to quit my day job and work full-time to figure out all the ways this plant was subsidized by taxpayers -- special feed-in tariffs for First Solar customers, government tax breaks for solar panel purchases, direct government subsidies and grant programs for solar panel purchases, the DOE loan guarantee program for solar... etc. In addition, the City of Mesa committed $10 million in infrastructure improvements to lure First Solar to the site. I can't find what economic development incentives there were but there must have been tax abatements. In addition, the company was promised a further $20 million in economic development funds from the County, but fortunately (unlike most such deals) the funds were tied to hitting employment milestones and were never paid. First Solar never produced a single panel at the plant before it realized it had no need for it.
More recently, Apple and sapphire glass manufacturer GT Advanced bought the empty plant from First Solar. And again there was much rejoicing among politicians locally. Think of it -- Two great press release opportunities for politicians in just three years for the same plant! I never feel like we get the whole story on the development deals offered for these things but this is what we know:
Brewer and the Arizona Legislature approved tax breaks related to sales taxes on energy at manufacturing plants. The state also put the Apple/GT plant into a special tax zone that pays a 5 percent commercial property tax rate. Most Arizona companies pay a 19 percent rate this year and an 18.5 percent next.
[In addition,] Apple was slated to received [sic] $10 million from the Arizona Competes Fund for the Mesa factory. The Arizona Commerce Authority — the privatized state economic development agency which administers the $25 million sweeten-the-deal fund along with Gov. Jan Brewer — said neither Apple nor GT Advanced (Nasdaq: GTAT) have received any money.
Well, it turns out that artificial sapphire sounds really cool (a pre-requisite for crony deals) but it is not so great for cell phones. Apple went another way and did not use the technology on iPhone 6 -- not just for timing reasons but because there are real issues with its performance.
So a second crony buys the plant and does not even move in.
What's next? I am thinking the best third tenant at the sexy-crony nexus would be an EV battery plant, or even better yet Tesla. It is too bad Fiskar motors went out of business so soon or they would be the perfect next crony fail for this site.
Three of the visitor areas we operate -- Manzanita Campground, West Fork / Call of the Canyon Day Use Area, and the Grasshopper Point Day Use Area -- are finally being allowed to reopen October 1, 2014. If you are in the area, please come visit and enjoy the fall foliage and the beautiful weather.
Apparently Phoenix does not rank so well among cities in terms of parks. I find these surveys next to worthless, since they tend to reflect the biases and preferences of the authors. If the authors really like public pools, your city better have a lot of those or they will be ranked low.
For those considering the Phoenix area, here are three dimensions on which our parks are fabulous:
- We have large wilderness areas and whole mountains right in the middle of the city. South Mountain park, Piestewa Peak (formerly Squaw Peak park) and Camelback Mountain are all right in the middle of town. The offer some of the best urban hiking and climbing I have ever encountered. I can't think of a city I have been in with anything similar -- Boulder Mountain park is kind of similar (and better) but it is adjacent to the town, not right in the middle.
- If you or your kids play soccer or baseball, we have some of the best sports fields options in the country. Soccer is a huge game hear for kids and adults, and we have lots of options, including a number of indoor locations for the hot summer time. Our baseball fields are unparalleled. I don't like the fact we have built so many spring training locations for professional teams with public money, but the one upside is that there are a lot of beautiful baseball fields available any month except March. My son has been playing on MLB fields since he was in 8th grade.
- We have tons and tons of golf. I am not a golfer, but we have over 200 courses in the county. This means competition. Which means reasonable rates. And they are all open to the public (I can only think of 3-4 courses in the area that are country club courses for members only). I can walk to two different, quality courses that have great rates, particularly after 1PM and during the summer time.
One other dimension related to recreation. I know places like Boulder and Portlandia have the reputation of being biking cities, but Phoenix is a pretty big biking town. No, we don't bike to work much due to the climate, but wide flat streets and large areas without much traffic and nice vistas (e.g. the Paradise Valley area) make it a popular biking area.
LMAO At the Nerve of Solar Companies. Please Don't Corrupt The Term "Free Market" By Trying to Apply it to Yourselves
Our public utility APS wants to enter the rooftop solar business. As a ratepayer and taxpayer, I have deep concerns about this because of the numerous ways this venture could end up with various hidden subsidies.
However, I find it simply hilarious that current rooftop solar providers, including #1 subsidy whore and crony capitalist SolarCity. Here is what trade group Arizona Solar Energy Industry Association wrote in an email to me today. I have highlighted some of the bits that got my blood boiling this morning:
In an unprecedented announcement that took the solar industry by surprise, Arizona’s largest utility, APS, announced that it intends to begin competing directly with Arizona solar installers. APS announced Monday that it is seeking permission to spend between $57 and $70 million -not including its profits- of ratepayer money to install solar on the roofs of homes in its service territory and to compete directly with solar installers of all sizes.
“The idea of our members who compete in the free market today having to all of a sudden compete with a regulated monopoly is frightening. How would you like it if the government just stepped in and started competing with your business?” said Corey Garrison, CEO of Arizona based Southface Solar and treasurer of Arizona Solar Energy Industries Association (AriSEIA). "APS has proposed subsidizing certain customers that allow it to put solar on their rooftops while the free market gets no more utility subsidy and actually gets charged for going solar."
It has been well publicized that APS spent much of the last year in a battle with the very industry it now seeks to dominate. Throughout 2013 APS urged the Arizona Corporation Commission to install a huge monthly tax on those who would put solar on their roof. It has also been reported that APS urged the Department of Revenue to institute a new property tax on rooftop solar panels that are leased to customers.
“After spending a year misleading the public with well-publicized lies and misdirection, APS seems to think this is a good time for it to be rewarded with an expansion of its monopoly franchise” said Corey Garrison
Unlike rooftop solar companies that must compete with each other on a level playing field, APS earns a guaranteed rate of return off of its assets including these proposed rooftop solar installations. If approved, APS would be permitted to advertise its solar product in its customer bills and to use its customer lists to market and sell, all with employees paid for by ratepayers. Unlike traditional, free market rooftop solar which is paid for only by the customer that installs the system, APS will be asking all its ratepayers to pay the cost of, and guarantee its profits on, each of the systems it installs under this program.
“This is a massive expansion of the monopoly into an area that is well served by the free market” continued Garrison, “what’s next; will APS ask to sell electric cars or ovens or some other set of goods or services?”
This is hilarious. The rooftop installers in AZ lost some of the subsidy from power companies (e.g. APS) over the past years but still get a myriad of subsidies for themselves and their customers. We will use one of the larger installers, SolarCity, as an example. This is from the SolarCity web site:
Federal, state and local governments offer incredible solar tax credits and rebates to encourage homeowners to switch to renewable energy to lower their energy usage and switch to solar power. The amount of the rebate subsidy varies by program, but some are generous enough to cover up to 30% of your solar power system cost.
The federal government allows you to deduct 30% of your solar power system costs off your federal taxes through an investment tax credit (ITC). If you do not expect to owe taxes this year, you can roll over your credit to the following year.
.... Some locations have additional incentives to make solar even more affordable. SolarCity will get the most for your project
SolarCity is committed to helping you benefit from every federal, state and utility rebate and tax credit available for your energy upgrade projects.
Navigating through government rebate programs on your own can be intimidating. SolarCity will identify all of the qualifying tax credit and rebate programs for your system and file the required paperwork for you. We will even credit you for the state rebate upfront so that you do not have to wait for the government to send you a check later.
This language is a bit odd, since in most cases SolarCity captures these credits for themselves and then passes on the savings (presumably, but maybe not) to customers via lower power costs, exactly the same model APS is proposing.
Customers, however, must sign a contract agreeing to cede "any and all tax credits, incentives, renewable energy credits, green tags, carbon offset credits, utility rebates or any other non-power attributes of the system" to SolarCity. The tax credits are passed on to its investors, which include the venture-capital firms Draper Fisher Jurvetson, DBL Investors and Al Gore's Generation Investment Management LLP.
The description by solar installers that they somehow represent the "free market" is simply hilarious, given the dependence of their industry on taxpayer subsidies (either of the installers or the customers). SolarCity admits that their business would actually never be able to operate in a free market:
SolarCity officials, including Musk’s cousins and fellow Obama donors Lyndon and Peter Rive, acknowledged the company’s dependence on government support in its 2012 IPO filing. “Our business currently depends on the availability of rebates, tax credits and other financial incentives,” they wrote. “The expiration, elimination or reduction of these rebates, credits and incentives would adversely impact our business.”
A more recent SolarCity filing with the Securities and Exchange Commission notes: “[The company’s] ability to provide solar energy systems to customers on an economically viable basis depends on our ability to finance these systems with fund investors who require particular tax and other benefits.”
Rooftop installers also have their business buoyed by government mandates that power companies pay residential solar producers 2-3x the going wholesale market rate for any electricity they put into the grid
SolarCity also benefits from "net metering" policies that 43 states, including California, have adopted. Utilities pay solar-panel customers the retail power rate for the solar power they generate but don't use and then export to the grid. Retail rates can be two to three times as high as the wholesale price of electricity because transmission and delivery costs, along with taxes and other surcharges that fund state renewable programs, are baked in.
So in California, solar ratepayers on average are credited about 16 cents per kilowatt hour on their electric bills for the excess energy they generate—even though utilities could buy that power at less than half the cost from other types of power generators.
This was the battle referred to obliquely in the press release above. The electric utility APS wanted to stop overpaying for power from these rooftop solar installations. Rooftop installers fought back. In the end, a fixed charge was placed on homeowners to account for part of this over-payment, an odd solution in my mind that seems to have ticked off both sides.
So the supposedly "free market" rooftop companies are competing successfully with regulated utilities because they got Federal, state, and local subsidies; are exempted from things like paying property tax on leased equipment that every other business has to pay; and get a mandate from the state that utilities have to pay double the market price for their power. Is it any wonder that a regulated utility, which is no stranger to cronyism and feeding at the subsidy trough, might want to get a piece of that action?
ASEIA, you are welcome to duke it out for first spot at the trough with APS, but don't corrupt the word "free market" by trying to apply the term to yourselves.