Arizona Receives Mediocre Grade for Enforcement of Job-Creation Measures in Subsidy Programs

Arizona PIRG Education Fund

A new report published today by Good Jobs First, a non-profit, non-partisan research center, examined how well states enforced their own requirements for job creation in their major economic development subsidy programs. Arizona received a ‘C’ grade in the report and ranked 12th among the states.

The study, Money-Back Guarantees for Taxpayers: Clawbacks and Other Enforcement Safeguards in State Economic Development Subsidy Programs, found that despite the fact that many economic development deals fall short on job creation or other benefits, Arizona and other states are highly inconsistent in how they monitor, verify and enforce the terms of job subsidies.

“Arizona’s policies for ensuring subsidies create jobs are all over the map. The one consistent factor for Arizona’s subsidy programs is the lack of online reporting for how well these policies are enforced,” said Serena Unrein, Public Interest Advocate for the Arizona PIRG Education Fund, which released the report in Arizona. “Disclosure of enforcement data is a prime indicator of whether a state is serious about dealing with companies that fail to live up to the job-creation promises they make when taking taxpayer-funded subsidies.”

The report is a companion to Money for Something, a Good Jobs First study issued last month on the performance standards built into subsidy programs. Money-Back Guarantees rates states on how well they enforce those standards. Both reports are online at www.goodjobsfirst.org. Many states fail to even verify that companies receiving subsidies are meeting their job-creation and other commitments, and many more have weak penalty policies for addressing non-compliance.

“With so many deals falling short on job creation, taxpayers need to know if their states are watching the store,” said Good Jobs First executive director Greg LeRoy. “This is the largest study ever performed of states’ use of clawbacks, rescissions, and other safeguards to protect taxpayers from subsidy abuse.”

Arizona does better than many states in the report, but still only received a ‘C’ grade in the report because of a lack of consistency across its entire portfolio of subsidy programs. Three of Arizona’s major subsidy programs were scored in the report, and on a scale of 0 to 100, its major subsidy programs receive an average score of 59. The Quality Jobs Program did well with a score of 80, while the Research & Development Income Tax Credit received only 38.

“It is ironic that some of Arizona’s biggest tax credit programs are for job creation and training, but the state only does a mediocre job of monitoring and enforcing our standards for creating jobs through our subsidy programs,” remarked Unrein with the Arizona PIRG Education Fund. “As the entity now responsible for disbursing many subsidy programs, the Arizona Commerce Authority needs to create and enforce strong standards for the subsidies.”

“Strong standards and strong enforcement are inseparable in making sure subsidy programs are not mere corporate giveaways,” added Philip Mattera, research director of Good Jobs First and principal author of the report.

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