Arizona Subsidy Backlash

In today’s Wall Street Journal (password needed for full article), new legislation would put some restraints on the practice of dolling out millions in subsidies to attract development. Under the proposal, sponsored by Sen. Ken Cheuvront, a Phoenix Democrat, Arizona cities would lose a dollar of state revenue for every dollar they offer as incentives. In the past five years, cities in the Phoenix metropolitan area have given more than $300 million in incentives to retail developers. Proponents argue that developers will move to other states or that localities will lose tax dollars. First, move to other states? Phoenix is one of the fastest growing areas in the country, if they can’t support development without subsidy we’re all in trouble. Even the Arizona Republic agreed in a March 24th editorial, “With the region’s growth machine at full throttle, success is a given.” Second, so you have to spend $100 million, in tax dollars, in order to raise tax dollars. Great logic.