Every election, it seems, politicians give lip service to the need for fiscal responsibility and a balanced budget.   But once they are in office, they lack the courage and resolve to actually achieve one.   It’s always politically more convenient to spend more than we take in, hide growing debt and liabilities through clever accounting tricks, and leave the consequences for someone else to clean up down the road.

But not this time.

In November, voters sent a clear mandate that they wanted to restore fiscal sanity to Arizona government.  They demanded that our leaders take on the looming budget crisis, show some accountability and get Arizona’s fiscal house in order.  Last week, Gov. Ducey and the Legislature accomplished just that.

Arizona was grappling with how to deal with a budget deficit of $520 million this fiscal year, and as much as $1 billion shortfall in 2016.  No more.  The recently passed budget eliminates Arizona’s structural deficit completely by 2017.  There are no tax increases to slow down economic recovery, and actually increases K-12 spending while directing more funding towards the classroom – making sure our education dollars are spent where they are needed most.  It’s no wonder why Arizona remains highly competitive in attracting new businesses to the state.

Just as important is how fiscal responsibility was achieved.  For years, Arizona’s annual budget has been strung together by a series of stopgap measures, accounting gimmicks, and fund sweeps of questionable Constitutionality. But those gimmicks ended this year, and Arizona is now living within its means for the first time in over a decade.


Overall the Ducey budget reduced government spending by 2.3%. In addition to spending cuts, meaningful savings were achieved through common sense government reforms, such as consolidating state agencies.  For example, merging the Arizona Department of Racing into the Department of Gaming has been long overdue and eliminates multiple overlapping and redundant expenses.

The budget included tax relief as well. In addition to indexing our income tax brackets to inflation, the approved package reduced taxes on small business by eliminating the job training tax. All Arizona employers are subject to the tax, which is applied to the first $7,000 in wages paid to each employee. The revenue generated by the tax goes into the “Job Training” fund, which is administered by the Commerce Authority and is primarily used by a few large companies to help subsidize their job training activities. So not only did the budget reduce the tax burden on small business, but ended a crony capitalist program in the process.

In just his third month in office, Governor Ducey was able to produce a balanced budget that protected taxpayers, put more money into the classroom and shrunk the size of government. By any measure, this was a great start to his administration and a great week for Arizona.

The Arizona Free Enterprise Club (Club) today strongly endorsed the budget deal reached by Governor Doug Ducey, House Speaker David Gowan and Senate President Andy Biggs as a bold step forward towards putting Arizona’s fiscal house in order.

“A lot of politicians talk about a balanced budget, but few demonstrate the leadership and courage needed to actually achieve it,” said Club President Scot Mussi.  “The plan the Governor and leaders of the House and Senate introduced today not only shows that they take fiscal responsibility seriously, but that they can protect taxpayers and classroom spending while doing it.”

The budget deal, if passed, will eliminate the structural deficit by 2017, our first balanced budget in over a decade.  The budget also prioritizes dollars to the classroom by increasing funding for K-12 and adding $135 million in new funding towards classrooms.  The plan also provides critical tax relief to small businesses and middle class taxpayers by indexing our tax brackets to inflation and eliminating the job training tax.

“Arizona cannot truly prosper and attract new businesses and jobs until it can show that it is committed to fiscal responsibility, dollars to the classroom, and protecting the taxpayer,” said Mussi.  “This budget achieves precisely that, and will make Arizona a national model for government reform and accountability.”



One of the most popular programs on television today is also one of the most educational regarding the risky nature of venture capital investing. The show is called Shark Tank, and involves a very simple yet ingenious format where five wealthy investors listen to business proposals by aspiring entrepreneurs and then decide whether or not to invest their own money into the venture.

Now what if I told you that Arizona had its own version of the Shark Tank, except that in our version it was bureaucrats that determined which ventures to support and then gave tax credits to “qualified” investors? We do, except ours is called the Angel Investment Tax Credit Program. Under our version, wealthy investors apply to receive tax credits for making investments into “qualified” small business, as determined by the Arizona Commerce Authority (ACA). Since the tax credits go to the investor and not to the entrepreneur, the investor benefits regardless if the business succeeds or not.

Subsidizing investor risk is a really bad deal for taxpayers, but that has not stopped advocates from introducing HB 2011, legislation that will greatly expand the size of the Angel Investment program. The main argument in favor of expansion is that good ideas have a hard time finding investors and thus need the extra incentive. Often proponents will try to point to Angel Investment “success stories” where a qualified business has flourished after receiving an influx of venture capital.

Upon closer examination none of these arguments hold merit. The reality is that if a good idea exists, it will attract venture capital regardless of any tax credits provided by taxpayers. This is nothing more than ‘found’ money for the investor.

Arizona taxpayers subsidizing the investment risk of good ideas is the best case scenario for the program. Then there is the worst case scenario—tax credits flowing to investors who put money into bad ideas that should have never made it out of the starting block.  These could be proposals that initially appeared be a good investment but over time failed due to poor strategy, management or implementation. Or taxpayers could be subsidizing the worst pitches in Shark Tank history—that is up to the ACA to decide.

It is simply not true that wealthy investors need additional taxpayer assistance or that the government is better at determining “qualified” venture capital investments than the private sector. Additionally, as Shark Tank has proven, there are already private sector solutions for attracting venture capital. Arizona should get out of the venture capital business and reject HB 2011.

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The Arizona Free Enterprise Club is a free market policy and lobbying group dedicated to promoting a strong and vibrant Arizona economy.