Prescott’s state budget contribution of $15.3 million to the rodeo sparked a lawsuit by two city residents and a legal rights group who allege the Arizona constitution prohibits such spending.
They are seeking a permanent injunction to stop the state from distributing funds on July 1, when the new fiscal year begins.
Howard Mechanic and former Yavapai County Superior Court Judge Ralph Hess, with the support of the Arizona Public Interest Law Center, a bipartisan legal advocacy group, filed a lawsuit in Maricopa County Superior Court last week.
The lawsuit alleges that the planned payments violated the law and Mechanics and Hess would suffer financial losses as taxpayers by sharing the “replenishment burden of unlawful and unlawful spending.”
Plaintiffs allege that the payment violated the state constitution’s “gift clause,” which prohibits government agencies from donating funds to private companies and individuals without directly benefitting taxpayers. According to the complaint, the budget item also violates the Constitution’s mandate that legislators must state the purpose in a separate bill if the spending is not intended for state agencies, public schools, or to repay state debt. It will be.
The grant is part of a long list of cash transfers embedded in the $17.8 billion state budget, signed last month by Democratic Gov. Katie Hobbs after personal negotiations with Republican congressional leaders. . Both Democrats and Republicans were allowed to allocate $2.5 billion of surplus funds to their respective priorities in a plan aimed at encouraging bipartisan support for the budget.
The funding of the rodeo stood out to critics who saw it as a prime example of budget pig barrel spending. It also came as an unwanted surprise to Prescott area residents, including mechanics and members of neighborhood groups, who were already skeptical of the rodeo’s expansion plans. The money would help speed up those projects, but opponents fear it would create more traffic and noise that would annoy residents.
State Rep. Quan Nguyen (R-Prescott Valley), who along with Rep. We believe that strengthening this will lead to an increase in taxes. Income and Tourism in Northern Arizona Cities.
After critics raised the issue of gift clause violations last month, Mr. Nguyen confirmed with House lawyers, who said they had reviewed the spending and given the go-ahead. Spokesmen for the Senate and House, who approved the budget before Hobbes signed it, agreed, saying all spending in the budget was checked for possible gift clause violations.
Nguyen declined to comment on pending lawsuits.
What the lawsuit alleges is unconstitutional
Danny Adelman, executive director of the Arizona Public Interest Law Center, told the Arizona Republic earlier this month that the center was investigating rodeo payments and considered them potentially problematic. Adelman did not return phone messages on Monday.
The complaint alleges that the state failed to meet two basic criteria of the gift clause. The gift must serve a public purpose, and the state must explain that the gift directly benefits the state. It funds rodeo nonprofit Prescott Frontier Days, Inc., but it doesn’t do either, says it doesn’t dictate how the money is used, and doesn’t ask for anything in return, the lawsuit alleges. are doing.
In fact, according to the complaint, the 2021 state Supreme Court opinion suggested that the state should have received assurances that “the value to which the people are entitled far exceeds what the people are paying.” ing.
Ron Owsley, chairman of the nonprofit that runs the rodeo, said last month that the money would be used for improvements such as improved seating and new restroom facilities, a move that would pay off state investment. However, he acknowledged that there were no written contracts or promises of interest relating to the receipt of money.
A presentation to the Prescott City Council by the nonprofit predicted increased tax revenue due to the expansion of the event, but a 2021 opinion note said the overall increase in tax revenue would not count as a direct benefit of gifts. It was revealed.
The fact that rodeo handouts are found to violate gift and appropriation laws could similarly affect other budget items that direct funds to corporations rather than state agencies. That includes $1 million to Turf Paradise, a for-profit racetrack. his $10 million to the non-profit International Dark Sky Discovery Center in Fountain Hills. and $5.6 million to the nonprofit Lowell Observatory in Flagstaff. In addition, he said $850,000 was budgeted for a company investigating the feasibility of an aerial gondola system as public transportation for Suncity.
“While we expect to prevail in this case, we also expect that reducing the number of gifts the state gives will have a positive long-term effect,” Mechanic said.
Here’s where to contact reporters:rstern@arizonarepublic.com or 480-276-3237. follow him on twitter@raystern.
