A Maricopa County Superior Court judge has ruled state lawmakers violated the state Constitution’s gift clause when they approved sending more than $15 million to a group that runs the Prescott Frontier Rodeo. The cash came at the request of two area lawmakers.
Howie Fischer of Capitol Media Services joined The Show to talk about the ruling and what it could mean for talks on the new state budget.
Full conversation
MARK BRODIE: Howie, how did we get to the point where a court is ruling on whether or not the state can spend money on the Prescott Rodeo Grounds?
HOWARD FISCHER: Well, back in 2023, when they were adopting the budget, the state was flushed with cash, and so they decided, well, we can either spend it on new programs or some one-time expenditures, or we can let everyone else decide within the Legislature how they want to spend it, and that includes the governor.
So for example, the governor went ahead and decided to spend her money, pool her money along with that of some Democrats for some housing trust funds. Some Republicans had their own particular ideas. We got a few roundabouts and pavings.
This one involves two Prescott area lawmakers who said, you know, the Prescott rodeo grounds need to be fixed up. And so we're going to allocate $15.3 million to an organization that runs the rodeo, the Prescott Frontier Days, so that they can use it to go ahead and fix up the fairgrounds. Sounds good.
Everybody was getting their share until a couple of folks who live up there, including a former Superior Court judge, said, “wait a second, you're giving state money to a private organization for a private purpose.”
And there's a provision of the Constitution that says you cannot make a gift of state funds, and generally speaking, it is a two-pronged test for that. Number one, does it serve a public purpose? Number two, does the state or the taxpayers get something commensurate in return?
So for example, school districts will use their money to pay some private organization, let's say for tutoring, if it's an area that they cannot do. Again, it's a public purpose and they're getting something in return, i.e. a service. In this case, the judge said, no, it fails on both counts. There's no public purpose here. And there's nothing commensurate that the taxpayers are getting in return.
And so we have the ruling that says, that's it, you cannot do that. And now we decide, does the money just go back into the general fund or what?
BRODIE: Well, so, yeah, what happens to that money? Do we have a sense of that yet?
FISCHER: Well, for the moment, the money goes back into the general fund. Now there are some measures out there, Sen. [Mark Finchem] and Rep. [Quang Nguyen] have some thoughts about, well, maybe there's another way to get the money to the cause. In other words, give it to the city of Prescott for certain public purposes, and then they can go ahead and use it for the fairgrounds.
Now where the line is between that and giving it directly to the Prescott Frontier Days is a little tricky on a legal perspective, but they think they can make it work. Of course they thought they could make the first one work, so, you know, put two attorneys in the room, I'll give you six different opinions as to whether something is legal.
And this all comes as we're trying to adopt the budget for the new fiscal year that begins on July 1, and there is some surplus there, and my guess is somebody will look for a way to put money for various public and or private purposes because we know that there is some sort of excess, although we don't even know how much, and we're not even sure that the House and Senate Republicans among themselves agree on how that should be divided up.
BRODIE: Howie, let me get to that in just a second, but I want to go back to the gift clause, and this is obviously not the first case in which judges have had to sort of sort out whether an appropriation or or some kind of policy violates the gift clause. How does this ruling sort of fit in with some of the other recent ones on that issue?
FISCHER: Well, there's a whole series of cases, as you point out, that suggest there is a line there. For example, the city of Phoenix was paying union members and some of their unions to work on union business, on city time, on the city payroll, and the court said, no, that is a gift. The city argued, well, there's a public purpose because it means for, for more smooth relations with the union and the courts weren't buying that.
We had years ago, going back to 2010, a deal where City North was building a garage and they were using public funds because they said, well, the public will get to use some of these spaces and the court said no.
More recently, we have the Arizona Commerce Authority. You may remember these CEO forms that they do. These go where they're inviting top people from corporations around the state to come to the Super Bowl, come to the Waste Management Open, and we will wine you and dine you and show you a good time because we think that maybe you'll bring your company here.
And that didn't go to court because Attorney General Kris Mayes stepped in and said, you do that again, and I'm gonna haul your tushees into court, and they backed down and now they're using private funds.
We also had a fight over the Omni Hotel in downtown Tempe about who is building that, who's building the parking garage. Again, same sort of thing as City North. That one ended up getting settled out of court with some sort of agreement, but there's a long history of saying, here are the, here are the guidelines, what don't you understand?
BRODIE: So Howie, let's get back to this year's budget … starting on July 1. And there's been some talk, as you have and others have reported that the Senate specifically is looking at some kind of similar idea as a couple of years ago where different entities get a certain amount of money that they can do with what they want.
FISCHER: Exactly. The Senate believes that there's going to be about $270 to $280 million of surplus. Now that's fascinating because the Democrats say we're $1.7 billion in the red. Depends on what you say has to be included.
But assuming, let's say $270 million, you take $90 million and you divide it up three ways. Senate Republicans get $90 million, House Republicans get $90 million, and then the governor and the Democrats get $90 million of course. You know, the Democrats from the minority, although again, the governor is involved in this.
That idea isn't flying really over with the House Republicans. Part of it is the question of what should we fund with our little mini slush funds, if you want to call them that. For example, there is a need, I think it's pretty well documented, for pay raises to keep DPS employees from going to other agencies.
Should that be left to the governor to use out of her fund, or is that a basic state function and so that quote unquote surplus isn't as large. You know, there are issues in terms of how much of the housing trust fund, should that be the governor's or someone else's? Should there be a rebate like several Republicans did several years ago, or is that something that we should look at? For example, there's some ballot measures to actually lower the state income tax rate anytime we have a structural surplus.
And so here we are at 9:06 a.m. … on June 2, saying, we got a budget to get out by July 1, actually probably earlier, because some lawmakers are leaving town before then. How do we put this together?
Now, will it happen? It always has. One year we did get into July 1, so everybody sort of squinted and the state government did not shut down, but you know, the, the deadline is approaching, and it's amazing how much a deadline, as you and I know, being in journalism, the editor yelling “deadline,” and suddenly, you know, everything clears up and we can get a story out.
