Coyote Blog

I sat through a series of sessions held with legislators today in Utah, and I must say I was pretty impressed with the fiscal sanity that has ruled this state through the last 10 years, and saw it successfully through the recent downturn.  When tax revenues were up last decade, they were doing crazy, nutty things like actually building up their rainy day fund.  And they are already talking this year about contributing to rather than withdrawing from this fund.  They still do silly politician-stuff (the law to name a state gun comes to mind) but overall a good session, facilitated by a terrific, scrappy group called the Utah Taxpayers Association.  These guys had the governor, the Speaker of the House, the President of the Senate, and numerous legislators participating.  I am not sure our larger and much better funded Goldwater Institute in AZ could do as well.

As an added bonus, I found myself sitting with a talking to Billy Casper, two-time winner of the US Open and Master Champion.  Turns out Mr. Casper is in roughly the same business I am, lending his name and time to a large firm that privately manages public golf courses.

Bonus Utah Observation:  You would expect a state with a large LDS influence to have oddities in its alcohol laws, but other than state-run liquor stores (which can be found in a number of other states, alas) I observed nothing too odd.  What I had not thought about was coffee.  There are very few Starbucks here, due in large part to LDS prohibitions on caffeine.  I know a lot of software firms moved here -- I wonder how they even function without large supplies of Mountain Dew Code Red?

Oh, and I know you don't think BBQ in Utah, but Pat's is freaking awesome.  My competitor who is based on the area was nice enough to buy me lunch.  And just in time, as about an hour later it was announced I had just won a large contract from him.

No, that headline is correct -- some crazed hacker has not taken over Coyote Blog.  Having been relentlessly critical of government organizations in general and the DMV in particular, I think fairness demands I post exculpatory evidence when I have it.

This morning we thought my son lost his driver's license (later found).  Dreading the all day trip to the DMV to get it replaced (and no, nothing has changed my opinion that that experience sucks), we checked online for the procedure.  It turns out that we could have applied for a new license over the Internet, and, best of all, if we got the application in by 3:00 today we could have had the license in our hands by noon tomorrow, on a Saturday no less, via express delivery.  That's better than my credit card company does.

Yes, such service is a virtual necessity given how central the government has made the driver's license in so many routine activities (except voting of course, that would be racist!).   But it is still a breath of fresh air to see any state institution match their service to such necessities.  Now, if we could only get the passport process sorted out, but that one is just getting worse.

The AZ Republic, which still prints a couple of unsigned editorials in the paper every day, has decided that it does not like having anonymous comments.  Their solution is to have all commenters use their Facebook id.  Because it is so much harder to create a fake Facebook persona than it is to put a fake name on your comment.

Postscript-  Apparently "anonymous gutter talk" triggered the change.  The decision to tie into Facebook was a natural, I guess, because everyone knows the level of discourse is so high there.

From the famous Onion 9/11 issue, this seems amazingly precient considering Senator McCain's proposed law to allow the President to indefinitely detain just about anyone he thinks might be a terrorist

U.S. Sen. John McCain (R-AZ), one of Congress' decorated war veterans, tried to steel the nation for the possibility of a long and confusing conflict.

"America faces a long road ahead," McCain said. "We do not yet know the nature of 21st-century warfare. We do not yet know how to fight this sort of fight. And I'll be damned if one of us has an inkling who we will be fighting against. With any luck, they've got uniforms of some sort."

"Christ," McCain continued, "what if the terrorists' base of operation turns out to be Detroit? Would we declare war on the state of Michigan? I suppose we'd have to."

Michigan was an interesting choice -- I wonder if they knew at the time the prominence of Muslims in Michigan or if it was just a random choice?  Certainly, though, they had McCain nailed.

I mentioned earlier that maybe somewhat different rules of due process were required when the enemy is not wearing, you know, uniforms.  Again, the Onion was first, from the same article

Secretary of Defense Donald Rumsfeld said the war against terrorism will be different from any previous model of modern warfare.

"We were lucky enough at Pearl Harbor to be the victim of a craven sneak attack from an aggressor with the decency to attack military targets, use their own damn planes, and clearly mark those planes with their national insignia so that we knew who they were," Rumsfeld said. "Since the 21st-century breed of coward is not affording us any such luxury, we are forced to fritter away time searching hither and yon for him in the manner of a global easter-egg hunt."

OK, so the Eastern narrative on Arizona is that it is full of a bunch of wacked-out xenophobic conservatives.  And sure, we have our share.  But the NY Times delves into an issue that, living here, I had never even heard of

The massive dust storms that swept through central Arizona this month have stirred up not just clouds of sand but a debate over what to call them.

The blinding waves of brown particles, the most recent of which hit Phoenix on Monday, are caused by thunderstorms that emit gusts of wind, roiling the desert landscape. Use of the term “haboob,” which is what such storms have long been called in the Middle East, has rubbed some Arizona residents the wrong way.

“I am insulted that local TV news crews are now calling this kind of storm a haboob,” Don Yonts, a resident of Gilbert, Ariz., wrote to The Arizona Republic after a particularly fierce, mile-high dust storm swept through the state on July 5. “How do they think our soldiers feel coming back to Arizona and hearing some Middle Eastern term?”

Presumably Yonts also uses some numeric system other than arabic numerals for his math as well.  Seriously, I could mine any community and find some wacko with some crazy idea.  Good journalists are supposed to have some kind of filter on these things to determine if they really are some pressing regional issue.  I live here and I have not heard one word about any such controversy.  But it fits the NY Times caricature of AZ, so they ran with it.

In fact, I think "haboob" has caught on pretty fast because it is a fun sounding name and it is something that is unique to AZ vs. other states.    After living on the Gulf Coast and in tornado alley and on the west coast, it is kind of nice to live in a place where the worst natural disaster you get is a dust tsunami that makes you have to go out and wash your car.

We get dust storms from time to time here (though not as often as, say, in Eastern Washington, at least from the short experience I had there).  Last night we had a big one, and as usual every surface is covered in dirt.  While it was going on, it looked like a London fog, but with dirt instead of water.

What made this one different for me is that I got to see it roll in from the south.  It was an amazing sight.  It looked like a scene from Steven King's the Mist, or perhaps from the bottom of a volcano slope watching a pyroclastic flow coming at you.  It reminded me of standing in the streets of Manhattan on 9/11 and watching the cloud of debris coming at us after the first tower fell.  Here is a picture from the AZ Republic of the storm rolling in from the south like a giant tsunami.

Here is a video of it rolling in, which is really cool, if you can ignore the end-is-near typical style of local reporting that has to blow up every odd event into a catastrophe demanding that one tune in at eleven.

I have argued many times that publicly-funded stadiums are a huge part of sports profits and team valuations.  For example, here in Glendale AZ, the town's stadium subsidies represent over a third of the value of the Cardinals and almost 200% of the value of the Coyotes.

As some of you may know, the NBA is heading into a protracted labor negotiation, with both parties acknowledging that the economics of the game have turned against owners.  Henry Abbot at ESPN argues that a large part of that economic change has been increasing taxpayer reluctance to subsidize sweetheart stadium deals for teams

Public money for stadiums has become scarce, and I have to believe that's part of the owners' pleas for financial relief from players. Huge moneymaking buildings for free or cheap have been no small part of what makes owning a team a no-brainer. Now teams in need of stadiums -- like the Kings and whatever team may one day relocate to Seattle -- face tough economics. Getting either deal done requires some kind of miracle. And in that context, if you ever fantasized about a world where taxpayers didn't contribute so much to buildings -- even if it meant players earned a little less -- well, your time is now.

To his latter point, I hope he is right.

on this blog of how Glendale, Arizona has been throwing wads of taxpayer money at the Phoenix Coyotes hockey team and at any rich person who might be willing to buy the team.  The city of 225,000 citizens spent nearly $200 million on a stadium, promised to hand a buyer of the team $100 million to help with the purchase, plus hand the new buyer a stadium contract worth about $100 million over five years.  While this all plays out, Glendale paid the NHL $25 million last year to help cover the team's losses and has agreed to pay another $25 million this year.

Wow.  This is just amazing, written all in one place.  But its not just hockey that the small corporate-state suburb on Phoenix wants to subsidize.  Here is the latest recipient of largess:

Bechtel Corp., one of Glendale's largest employers, has agreed to stay until 2018 after city officials offered the company about $1 million in incentives.

By next year, the global engineering and construction company, with the city's financial help, will move from north Glendale to a new, vacant building not far from the city's sports district called the Glendale Corporate Center....

Under the agreement, Glendale would give $576,000 over the next two years to Bechtel for its costs to outfit the building shell for offices.

The incentive package also includes a waiver of $50,000 in city permit fees and a job-retention incentive of $1,250 per employee, up to $400,000. Each eligible employee must earn a salary of at least $50,000 per year.

Glendale offered a sports perk as well.

Bechtel can use the city's suites, both at Camelback Ranch Glendale and Jobing.com Arena, for free twice.

LOL, Jobing.com arena is the hockey rink the city built, so it is giving tickets from its subsidized hockey club to its subsidized engineering firm.  The article includes the usual consultant figures who reliably take money from cities to report on all the indirect benefits and revenues and economic activity that result from their subsidies.

However, these are not the first subsidies paid to Bechtel by Glendale

The corporation first came to Glendale in 2002. Bechtel moved to Talavi Corporate Center from Phoenix after Glendale promised $1 million in incentives. The staff at the time was expected to grow to 500 from 300.

Bechtel's staffing is only at 320 today, not 500, but this failure to actually grow jobs after getting subsidies for job growth is pretty typical of these deals.    My interpretation of this is that this is yet another move to get more tenants around its sports complex, to raise the stakes and apparent costs if the hockey team moves.  Glendale will cry that they can't lost the hockey team, think of all the tenants in the surrounding real estate, when it was the city itself that spent money to put all its eggs in this one basket.

The only funny part of the article is the Talavi real estate folks.  They were thrilled to gain a new tenant in 2002 due to the city's relocation subsidies, but now suddenly think such subsidies are unfair.

Bechtel's landlords at Talavi aren't happy about the move.

"We were actually a little surprised to hear Glendale was offering incentives," said Damon Elder, spokesman for Daymark Realty Advisers, which was negotiating a lease extension with Bechtel for Talavi's owners.

"We would think the city would be fair-minded with all of their corporate citizens. . . . I don't know why the city would be pitting one location against another."

For those of us who simply think of ourselves as residents of the Phoenix metropolitan area, or even broader just as Americans, we are surprised about the earlier subsidy as well, wondering why taxpayers of a small suburb are paying big bucks to move businesses back and forth a few miles across the town line.

But of course, this is not the worst example. A few years ago, Phoenix tried to spend $100 million in subsidies to move a Nordstrom and a Bloomingdales one mile and one freeway exit (out of Scottsdale).

By the way, Glendale's economic development director has made it official, we live in a corporate state:

"[government relocation incentives are] just a modern, Fortune 100 corporate expectation," Friedman said. "If you have a top-notch, world-class company in your community, your absolute goal should be to make sure they are successful and are content in your community and want to remain."

From the AZ Republic

Arizona police officers accused of misconduct will soon have more protection.

Gov. Jan Brewer has signed six bills, backed by police unions, that spell out procedures for internal investigations.

Great, because it was not already hard enough to take action against bad cops in a system where all the insiders - police and prosecutors - generally close ranks to defend them from scrutiny.

The new laws are not all bad -- at least one gives protections to internal whistle-blowers, something that is needed in a police culture that has an effective law of omerta against cops who call out other cops for bad behavior.  My guess, though, is that this rule will be used by unions who want to harass police management, rather than to protect street cops who testify against other street cops.

Defenders of the law said

Police unions weren't asking for anything more than the due process an arrested citizen receives, said Larry A. Lopez, president of the Arizona Conference of Police and Sheriffs.

"Just because we wear uniforms, we're not relegated to a watered-down version of constitutional rights," said Lopez, a Tucson officer.

I have said a number of times that this is not quite true.  Police are given powers to use force against other citizens that the rest of us do not possess.  This necessitates a kind of scrutiny and oversight by the state that would not be appropriate or legal for the average citizen.  For example, police simply do not have the privacy rights in conducting their jobs that the rest of us do.  We have seen too many times that when we give police broad discretion, special powers, and no oversight (or even a nudge and a wink guarantee against oversight), bad things inevitably happen.

If you are confused about what I am talking about, go read Radley Balko's archives.

Electing law enforcement officers is a terrible idea, but like most of the country, we do it here in Arizona.  We shouldn't be surprised, then, when Sheriff's try to pump up their image by portraying themselves as the last bastion against an invading horde.

When it was over, Sheriff Paul Babeu issued a news release declaring that Pinal County is "the No. 1 pass-through county in all of America for drug and human trafficking."

It's a line the sheriff has used countless times - most recently on Thursday in testimony before the U.S. Senate Committee on Homeland Security - as he criticizes the federal government for failing to secure the border.

There's just one problem: There is no data to support the assertion.

In fact, an Arizona Republic analysis of statistics from local, state and federal sources found that, while sheriff's officials do bust smugglers and seize pot, Pinal County accounts for only a fraction of overall trafficking.

The newspaper also found that other headline-grabbing claims by Babeu are contradicted by statistical evidence or greatly exaggerated.

Babeu's County, for example, does not even touch the border.   And crime rates in AZ have fallen faster over the last 10 years than the national average, right during the period of high illegal immigration.

I wanted to leave Glendale's proposed $100 million subsidy of the purchase of the Phoenix Coyotes hockey team by Matthew Hulzinger behind for a while, but I had to comment on something in the paper yesterday.

The Arizona Republic, which is an interested party given that a good part of their revenues depend on having major sports teams in town, had an amazing editorial on Tuesday.  Basically, it said that Goldwater, who has sued to bock the bond issue under Arizona's gift clause,  needed to stop being so pure in its beliefs and defense of the Constitution and that it should jump down in the political muck with everyone else.

I encourage you to read the article and imagine that it involved defense of any other Constitutional provision, say free-speech rights or civil rights.  The tone of the editorial would be unthinkable if aimed at any other defense of a Constitutional protection.  Someone always has utilitarian arguments for voiding things like free speech protections -- that is why defenders of such rights have to protect them zealously and consistently.  The ACLU doesn't get into arguments whether particular speech is right or wrong or positive or negative -- it just defends the principle.  Can't Goldwater do the same?

My thoughts on the Coyotes deal are here and her.  Rather than dealing with the editorial line by line, which spends graph after graph trying to convince readers that Darcy Olsen, head of the Goldwater Institute, is "snotty,"  here are some questions that the AZ Republic could be asking if it were not in the tank for this deal

• How smart is it for the taxpayers of Glendale to have spent $200 million plus the proposed $100 million more to keep a team valued at most at $117 million? (several other teams have sold lately for less than $100 million)  And, despite $300 million in taxpayer investments, the city has no equity in the team -- just the opposite, it has promised a sweetheart no-bid stadium management deal of an additional $100 million over 5 years on top of the $300 million.
• The Phoenix Coyotes has never made money in Arizona, and lost something like $40 million last year.  Why has no one pushed the buyer for his plan to profitability?  The $100 million Glendale taxpayers are putting up is essentially an equity investment for which it gets no equity.  If the team fails, the revenue to pay the bonds goes away.   The team needs to show a plan that makes sense before they get the money -- heck the new owners admit they will continue to lose money in the foreseeable future.     I have heard folks suggest that the Chicago Blackhawks (Hulzinger's home town team) are a potential model, given that they really turned themselves around.  But at least one former NHL executive has told me this is absurd.  The Blackhawks were a storied franchise run into the ground by horrible management.  Turning them around was like turning around the Red Sox in baseball.  Turning around the Coyotes is like turning around the Tampa Bay Rays.  The fact is that the team lost $40 million this year despite the marketing value of having been in the playoffs last year and having the second lowest payroll in the league.  The tickets are cheap and there is (at least for now) free parking and still they draw the lowest attendance in the NHL.  Part of the problem is Glendale itself, located on the ass-end of the metro area  (the stadium is 45 minutes away for me, and I live near the centerline of Phoenix).
• If taxpayers are really getting items worth $100 million in this deal (e.g. parking rights which Glendale probably already owns, a lease guarantee, etc) why can't the team buyer use this same collateral to get the financing privately?  I have seen the AZ Republic write article after article with quote after quote from Hulzinger but have not seen one reporter ask him this obvious question.  I have asked Hulzinger associates this question and have never gotten anything but vague non-answers.  A likely answer is what I explained yesterday, that Hulzinger is a smart guy and knows the team is not worth more than $100 million, but the NHL won't sell it for less than $200 million (based on a promise the Commissioner made to other owners when they took ownership of the team).  Hulzinger needed a partner who was desperate enough to make up the $100 million the NHL is trying to overcharge him -- enter the City of Glendale, who, like a losing gambler, keeps begging for more credit to double down to try to make good its previous losses.
• Glendale often cites a $500 million figure in losses if the team moves.  Has anyone questioned or shown any skepticism for this number?  My presumption is that it includes lost revenue at all the restaurants and stores around the stadium, but is that revenue really going to go away entirely, or just move to other area businesses?  If your favorite restaurant goes out of business, do you stop going out to eat or just go somewhere different?
• We hear about government subsidies to move businesses from other countries to the US, or other states to Arizona, and these tend to be of dubious value.  Does it really make sense for Glendale taxpayers to pay $400 million to move business to another part of the Phoenix metropolitan area?
• Why do parties keep insisting that Goldwater sit down and "negotiate?"  Goldwater does not have the power to change the Constitutional provision.  Do folks similarly call on the NAACP to "negotiate" over repeal of Jim Crow laws?  Call on the ACLU to negotiate over "don't ask, don't tell"?  This may be the way Chicago politics works, with community organizers holding deals ransom in return for a negotiated payoff, but I am not sure that is why Goldwater is in this fight.  The Gift Clause is a fantastic Constitutional provision that the US Constitution has, and should be defended.
• Jim Balsillie offered to buy out the team (and move it to Canada) without public help and to pay off $50 million of the existing Glendale debt as an exit fee.  Thus the city would have had $150 in debt and no team.  Now, it will be $300 million in debt and on the hook for $100 million more and may still not have a team in five years when, almost inevitably, another hubristic rich guy finds he is not magically smarter about hockey and can't make the team work in Arizona.   Has anyone compared these two deals?  Private businesses cut losses all the time -- politicians almost never do, in part because they are playing with house money (ours).

Over the last few weeks I have been following the story of the city of Glendale, AZ, in order to protect a previous $200 million public investment in our hockey team, proposing to issue another $100 million bond issue to help subsidize the purchase of the hockey team out of bankruptcy.

The real furor began when the Goldwater Institute, a local libertarian-conservative think tank, said they were considering suing over the bond issue because it violates the gift clause of the Arizona Constitution, which basically bans municipal governments from providing direct subsidies or lending their credit to private institutions.  The gift clause has been frequently breached in the past (politicians do love to subsidize high-profile businesses), but of late Goldwater has successfully challenged several public expenditures under the gift clause.

I won't rehash the whole argument, but I found this bit from Senator McCain interesting

He called on the Goldwater Institute, a Valley watchdog that intends to sue to block the deal, to sit down and negotiate to keep the team

The buyer Matthew Hulsizer and his staff have taken this position throughout the deal -- they have lamented that they are more than willing to "negotiate" with Goldwater, and they are frustrated Goldwater won't come to the table with them.

This claim seems bizarre to me. If Goldwater thinks the deal is un-Constitutional, what is to "negotiate?" I don't know Hulsizer or anything about him, but it strikes me that he is working from a Chicago paradigm, and is treating Goldwater as if it were a community organizer. In Chicago, community organizers try to use third parties to protest various deals, like the opening of a Wal-Mart or a new bank. These third-parties are nominally protesting on ideological grounds, but in fact they are merely trying to throw a spanner in the works in order to get a pay off from the deal makers, almost like a protection racket. The payoff might be money or some concession for the group (e.g. guarantee of X% jobs for this group in project, $X in loans earmarked for group, etc).

Everything I have seen tells me Hulsizer is approaching Goldwater in this paradigm.  Even going out and rounding up the most prominent politician in the state (McCain) to put pressure on Goldwater is part of this same Chicago paradigm.

Here by the way  is what Hulsizer is apparently offering

As one part of the deal, Glendale would sell bonds to pay Hulsizer $100 million, which the Chicago investor would use to purchase the team for $210 million from the National Hockey League.

Hulsizer said he notified Goldwater he would guarantee the team will pay Glendale at least $100 million during its lease on the city's Jobing.com Arena through $75 million in team rent and fees and by covering $25 million in team losses that the city promised to pay the NHL this season, which is included in the hockey team's purchase price.

"We need to move forward now," he said. "I expect that Goldwater and other people who have come out against this deal will hopefully recognize the benefits of it and will now use all of that energy and tenacity and aggressiveness to go out and help us sell these bonds and make hockey work in the desert forever."

Hulsizer said Goldwater had not yet responded to him.

By the way, I hesitate to trust the Arizona Republic to report such deal terms correctly, but if what is reported above is correct, the offer appears to be non-sense

1. What kind of guarantee is he offering?  Is it a guarantee by the corporate vehicle buying the team, because if it is, this is worthless.   The last team ownership group promised to pay the lease for 30 years -- what does that mean once they went bankrupt?  I am sure Borders Books promised to pay a lot of real estate owners money for leases, and many of them are going to end up empty-handed in the bankruptcy.  If this is a personal guarantee, that is a nice step forward, though not enough because....
2. The $75 million in rent is largely irrelevant to the new bond issue -- these rents support the old $200 million bond issue.  What they are saying is "issue a new $100 million bond issue for us and we will guarantee you can make 40% of the payments for the old bond issue."   So?  When Balsillie wanted to move the team, he didn't ask for an additional bond issue and agreed to pay off $50 million of the old one as an exit fee.
3. At the end of the day, if the $100 million is not a subsidy, not at risk, and fully backed by guaranteed cash flows, then Hulsizer should go out and get a $100 million private loan.  Period.

Unfortunately, this might be enough to get the deal through the courts.  Glendale will argue that for the $100 million, they will get $100 million paid against their existing bond issues that would not otherwise be paid if the team folds or leaves town.  This may fly with the courts, unfortunately, but it still sucks for taxpayers.   At the end of the day, nothing about this offer makes the $100 million bond issue any safer.   If the team goes bankrupt, it is lost.  That is an equity risk the city is taking with taxpayer funds, and equity risk for which we are getting no equity.  See here for full discussion of the risks and problems.

Postscript: The following is pure speculation, but I think it is close to correct.  The team is worth about $110 million at best (remember, it has never made money in AZ).  Forbes values it at $117 million but several similar franchises have sold for under $100 million lately.   The reason it is selling for $210 million is that the NHL, which bought it out of bankruptcy, guaranteed its other owners the league would not lose a penny on the team.   But the team has been racking up losses, and the accumulated cost to the NHL is now $210 million.  The NHL is insisting on a price that is $100 million north of where it should be.  In effect, the taxpayers of Glendale are bailing out the NHL for this crazy promise to its owners.

I can just see the negotiation.  Hulsizer, who by every evidence is a savvy financial guy, is not going to pay $210 million for an asset worth $110 million.  Glendale has way too many chips on the table to fold now, so it rides in and says it will contribute the $100 million difference.  In fact, the best evidence this is a subsidy is the difference between the purchase price and any reasonable team value.  Someone has to make up the ridiculous gap between the NHL asking price and reality, and Hulsizer is too smart to do it.   I have been calling this a subsidy of Hulsizer, but in fact this is really a subsidy of the NHL.   The NHL has Glendale by the short hairs, because Glendale knows (from the Balsillie offer, among others) that the only way the NHL can get a $210 million price is from a buyer who wants to move the team.

This, by the way, is EXACTLY the reason I opposed the original stadium funding deal.  Once they built the stadium, and then went further and lured businesses to develop around it, they were wide open to blackmail of this sort.

The problem with doubling down at this point is that the team has never made money and has no real public plan for doing so.  I have talked to NHL executives and none of them see how the turnaround is possible.  So how many years will it be before the new owners tire of their plaything and throw the team back into bankruptcy, so that Glendale will be in the exact same spot except $300 million, rather than $200 million, in debt.

Several days ago, I wrote how our local paper, the Arizona Republic, was engaging in a coordinated campaign to get the city of Glendale to subsidize the private purchase of our professional hockey team with a $200 million bond issue.  The logic of this is mainly to save the previous $180 million bond issue the city unwisely issued several years ago to build an arena for this same hockey time as well as the sweetheart commercial real estate deals it has cut adjacent to the stadium.   All in all, the city proposes to spend a cumulative $380 million of public money to hold on to an asset valued by third parties at $ 116 million.  And through all of this spending, taxpayers will end up with not a dime of equity in this asset.

At the time, I thought the campaign had been relentless, going on day after day with both editorials and news articles making cases to subsidize the team, and hammering the Goldwater Institute for actually questioning the legality of transaction.  I mean God forbid anyone would actually interpret the Arizona Constitution "gift clause" that says governments in the state cannot give money to private businesses as potentially barring Glendale from giving money to a private investor so he can buy the hockey team.

But when I called the campaign relentless, little did I know it would continue day after day through the rest of the week.  Every day we get a new article that is basically an editorial in disguise, with the opposing position, if included, down around paragraph 25.   Today's is just a masterpiece of such yellow journalism, which includes no opposing viewpoint at all, and includes this classic gem that is almost a caricature of itself:

Rick Myers and his wife have worked as part-time ticket-takers since 2004, the year after Jobing.com Arena opened and they visited for the first time.

"This arena is not brick and mortar, ice and air-conditioning. This arena is a family," he said.

Craig Van Kessel, a disabled military veteran, agreed.

He said six months after getting a job with the team, when he had major surgery, his co-workers called, sent cards and offered help. The team also donates prizes each year for a Western Amputee Golf Association tournament that Kessel helps organize.

If the team leaves, he said, it affects "us little people."

John Minor, a guest services employee, said he counts friendships among the fans he meets at the arena, while Kyle Olson, director of arena events, said he's taught his toddler to howl like a coyote.

Can I barf now?  Seriously, if you were doing a caricature of bad anecdotal arguments for a typical concentrated-benefits-diffuse-costs government program, could you do any better than this?  We are talking about $200 freaking million dollars here.

Nowhere in any of its editorials or news articles acting as thinly veiled editorials does the AZ Republic reveal that it is an enormously interested party to the transaction.  The Sports Section sells papers, and the presence of an additional major league franchise adds a hard to measure but most definite contribution to the paper's bottom line.

Postscript: The key issue that spurred this is that the city's bond issue is facing higher than expected interest costs.  The city and the AZ Republic are trying to lay the blame on this on Goldwater for stirring up bad karma.  But in fact there are at least six factors for why bond interest rates might be higher:

• The major bond ratings agencies recently put the city of Glendale on a credit watch list
• Sales tax revenues that pay for the bonds are way down in AZ and Glendale
• The city is investing $200 million in a $116 million dollar asset without getting any equity
• The city has a history of failed bond issues, as evidenced by the previous $180 bond issue they are trying to bail out with this one
• There is a general sense of wariness nationwide in government finances being overdrawn that may be spilling over into the bond market
• A local think tank has raised legal questions about the deal — legal questions that turned out to be correct in a parallel case.

Incredibly, our paper has spend over a week harping on just one of these, which to my mind seems the most trivial.

Postscript #2: And by the way, this team is in bankruptcy.  Where is the plan for how that will be avoided in the future?  Won't we be in the same spot five years from now, just with twice as much bond debt?

Quick bleg here -- if you have any contacts with organizations of homeschoolers in AZ, could you drop me an email?  Our small high school is, due to some random factors, short of baseball players.  We have a well-coached program on a nice field and play in the Arizona (AIA) 2A league against public and private schools.  Homeschoolers are eligible to play for us and we would love to find some dedicated players looking for this kind of experience.   Many of our kids make the starting lineup as Freshmen, so there is a lot better chance of getting good playing time here vs. other larger high school programs.  All positions are welcome but from a personal standpoint, since my son is first in the rotation, we could really use some pitchers so he doesn't need Tommy John surgery by the end of the year ;=)

I have this same problem all the time now in Arizona:

To understand how badly we're doing the most basic work of journalism in covering the law enforcement beat, try sitting in a barbershop. When I was getting my last haircut, the noon news on the television"”positioned to be impossible to avoid watching"”began with a grisly murder. The well-educated man in the chair next to me started ranting about how crime is out of control.

But it isn't. I told Frank, a regular, that crime isn't running wild and chance of being burglarized today is less than one quarter what it was in 1980.

The shop turned so quiet you could have heard a hair fall to the floor had the scissors not stopped. The barbers and clients listened intently as I next told them about how the number of murders in America peaked back in the early 1990's at a bit south of 25,000 and fell to fewer than 16,000 in 2009. When we take population growth into account, this means your chance of being murdered has almost been cut in half.

Its almost impossible to convince folks that AZ is not in the middle of some sort of Road Warrior-style immigrant-led wave of violence.  In fact, our crime levels in AZ have steadily dropped for over a decade, in part because illegal immigrants trying to hang on to a job are the last ones to try to stir up trouble with the law (charts here, with update here)

In Phoenix, police spokesman Trent Crump said, "Despite all the hype, in every single reportable crime category, we're significantly down." Mr. Crump said Phoenix's most recent data for 2010 indicated still lower crime. For the first quarter of 2010, violent crime was down 17% overall in the city, while homicides were down 38% and robberies 27%, compared with the same period in 2009.

Arizona's major cities all registered declines. A perceived rise in crime is one reason often cited by proponents of a new law intended to crack down on illegal immigration. The number of kidnappings reported in Phoenix, which hit 368 in 2008, was also down, though police officials didn't have exact figures. [see charts above, these are continuation of decade-long trends]

But over Thanksgiving my niece visited from the Boston area for a national field hockey tournament and her teachers and coaches had carefully counselled them that they were  walking into a virtual anarchy, and kidnapping or murder would await any teen who wandered away from the group.

I always have mixed feelings about party changes in Washington, because I have little faith the Coke party will taste much different than the Pepsi party.  But I am happy about divided government, so I will take that as a positive.

Unfortunately, while many of the Republican sweeps around the US were based on opposition to deficit spending, bailouts, taxes, and Obamacare (all issues I can readily agree with), victories in AZ came mainly in a wave of xenophobic anti-Mexican hysteria, with our governor (now re-elected) campaigning on crazy fantasy sh*t like Mexicans beheading people and leaving their bodies in the desert.  The Governor "reiterated her assertion that the majority of illegal immigrants are coming to the United States for reasons other than work, saying most are committing crimes and being used as drug mules by the cartels."

As predicted by skeptics of light rail, like myself, the Phoenix light rail system is starting to kill bus service.  This is a familiar pattern -- in most cities that have added rail, from LA to Portland, total transit ridership has fallen as light rail systems have been built.  That is because rail is so expensive, and its costs are mostly fixed (ie bond payments for construction costs) and absolutely inflexible (ie you can't shift routes).  Since rail costs far more, even orders of magnitude more, per rider than buses, this means that even with modest increases in total transit budgets, total ridership falls when capacity is being shifted to much higher cost rail.  Bus service is inevitably cut, because even if you close rail lines, the costs remain.

So here we are, in Phoenix.  The article is mainly about the regional transit coalition falling apart, which I have no opinion or interest in, but you can see what is going on anyway.

A bad economy has meant that building a regional bus system in the Valley is no longer a regional endeavor.

A half-cent sales tax was supposed to be the magic bullet that paid for transit and roads. But as tax revenues continue to shrink, cuts to the plan have become inevitable.

Avondale leaders say the toll includes the decimation of future West Valley bus routes and the end of the regionalism that Proposition 400 promised....

Paul Hodgins, capital-programming manager for Valley Metro, which operates the transit system,said every region took a 25 percent cut in transit dollars.

Here is what is going on, though the article only sort of alludes tangentially to this way down in the last 2 paragraphs.  Half of the transit dollars in the sales tax increase went to rail, and half to buses.  The rail money is almost all for debt service on capital spending which has already occurred.  This money has to be spent or the local authorities will default on their bonds.  The other half was for bus operations.

Now, there is a 25% cut in the sales tax dollars from this sales tax increase.  The half that went to rail can't be touched.  So the 25% cut results in a 0% cut in rail and a 50% cut in buses.  Further, since bus service carries a lot more passenger trips per dollar spent than rail, this 25% cut will end up affecting well over 50% of the total ridership that benefited from the sales tax funds.

It is clear from the article that folks probably understand this, but no one from the AZ Republic to the transit agencies are yet ready to admit it.  Expect the proposed solution to be in the form of more taxes rather than a rethinking of transit strategy.  Rail is an albatross, and I wonder how often it has to drive failures like this before people start recognizing it as such.

Via TJIC, Copblock releases links to police officers accused of committing crimes.  The list for just one week is ridiculously long, and surely would be longer if not for the law of Omerta among police that cause only a small percentage of their crimes to see the light of day.  Congratulations to Phoenix area police (including Mesa and Maricopa County) for making the list seven times.

- Phoenix AZ cop who was charged with murder, planted drugs on mentally challenged homeless lady

- Phoenix AZ cop given 2nd degree murder charge after shooting unarmed man to death

- Mesa AZ cop grabs 2 women by the neck and slams their heads together

- Maricopa County AZ sheriff sued for intentionally locking disabled woman in jail cell w/several men for 6 hours

- 6 Mesa AZ cops sued for tasing, kicking and beating man

- Maricopa County AZ sheriff ordered to fix unconstitutional conditions at jails in ACLU suit by 9th circuit court

- Phoenix AZ cop arrested on DV-related aggravated assault after witness called cops

Solid work for one week.

OK, so after the monks and coffins, here is the future licensing act ripe for abuse by industry incumbents to protect their position.

New state licenses required for anyone handling a mortgage application could help prevent a repeat of the bad loans that contributed to Phoenix's housing crash....

The law, passed in 2008, creates state oversight for people who take loan applications, gives consumers an avenue for reporting misconduct and establishes a fund to help repay borrowers who lose money because of unethical or illegal acts by their loan officers.

The law faces hurdles, as cash-strapped Arizona struggles to process thousands of new applications.

Still, advocates call it a success. Many of the risky - and sometimes illegal - home loans that helped lead to record foreclosures in Arizona might not have been made if the more than 10,000 unlicensed loan officers working then had been subject to more oversight.

How?  If people were selling illegal home loans before, they were already breaking the law and the state obviously was unable to enforce the law.  How is adding a piece of paper that must be applied for each year going to help?  My company has all kinds of silly licenses - liquor licenses, guiding licenses, health licenses, tobacco sales licenses, over-the-counter drug sales licenses, even egg licenses - and in not a single case does the issuer of these licenses exercise any sort of oversight of our operations.  If they get their extensive paperwork (so workers have an excuse to retain their jobs - after all someone has to process the paperwork) and their check, that is generally the sum of interactions with these organizations.

Now, some of these licenses were hard to get in the first place, but not for any reason of my character or ethics or business model.  They were hard to get because their issuance has been co-opted by incumbent businesses in the state who use the process to limit competition.  Liquor licenses are a great example - in places like Shasta County CA and Lake Havasu City AZ, we had a real problem getting the liquor license over opposition from existing businesses.

This is almost mindless naivete:

"Loan-officer licensing is long overdue in Arizona," said Felecia Rotellini, who for five years served as superintendent of the Department of Financial Institutions, the state agency regulating the mortgage industry. She is running for Arizona attorney general.

"A lot of bad loans wouldn't have been made if we had it before," Rotellini said. "It gives me peace of mind for consumers to know we have licensing now."

The author of the article just throws the following statement out there without any source, as if it was an axiom with which we all would agree

In Arizona, the housing boom and crash were partly fueled by loan officers, how they operated and how they were paid.

In fact, the author's incredible confidence in licensing is undermined in this adjacent statement:

Mortgage brokers, who run firms that connect borrowers with the best loans, have long been regulated by the Department of Financial Institutions.

Brokers employ loan officers, who work directly with borrowers, collecting their Social Security numbers and financial information to determine whether they qualify for a loan. Loan officers usually recommend types of mortgages and lenders.

These officers, sometimes called originators, weren't subject to state scrutiny. They worked under the licenses of their brokers, much the way an apprentice would work for a licensed contractor. Previously, that oversight was considered sufficient.

So the firms these guys worked for were licensed, but the individual employees were not. But if that licensing of firms, which after all is the level where loan practices and compensation policy are set which supposedly are at fault, how does licensing individual employees help? This is a typical political step that a) gets some state organization more money and power, b) generates one sound bite in a news cycle for some politician to tell voters that they care and c) does zero for consumers.

At the end of the day, the real cause of the housing boom was easy credit, and yes loan officers participated in this given that their commission-based incentives caused them to want to make every loan possible.  But this incentive outcome would not have been some kind of insight to the people and system that employed the loan officers.  In fact, everyone from the loan officer to the Congress wanted easy credit, and to blame one link in the chain of delivering this credit to consumers is madness.  Going forward, there is absolutely no evidence that the government is going to reduce its history of promoting easy credit, as evidenced by any number of federal loan modification and lending programs over the last 2 years.  So the likelihood that a government regulatory agency could have somehow headed off the bubble and its bursting is just silly.  The government was a party to it.

In the long run this mechanism will almost certainly be co-opted by current loan issuers as a way to limit competition, much as real estate agents and lawyers and funeral home directors already do.  As a minimum, this is a way for mortgage brokers to outsource some of the cost of running background checks and such on their employment candidates onto taxpayers.  In fact, I wonder who was behind this law in the first place?

Backed by mortgage brokers and real-estate regulators, the law quietly went into affect on July 1

From the AZ Republic

Once Tempe officials determined the fish that remained in Tempe Town Lake would not survive a possible rescue mission, they decided to dispose of them in what they deem to be the most natural way possible: by feeding them to an alligator.

Hundreds and possibly thousands of fish were left in small pools scattered throughout the 220-acre lake after one of its dams breached Tuesday night and sent nearly a billion gallons of water cascading down the normally dry Salt River.

For a while I have been asking where the so-called immigrant-driven crime wave is in Arizona, given that crime rates have fallen much faster in AZ than in other parts of the country.

Tom Maguire argues that the overall drop in the crime rate in Arizona over the last decade or so hides a possible increase in crime rate in rural areas, which I suppose he might argue is due in part to Mexican immigrants.  Check out his data, it does in fact show an increase in the crime rate outside of MSA's (metropolitan areas) though the data is mute on causes.  One potential cause is simply mix shift -- it is clear from the enormous drop in population in these non-MSA areas that some areas classified as non-MSA in 2000 have been reclassified MSA in 2008.  So the comparison is not apples to apples, and some of the shift (or even all of it) could be the changing mix of areas in the metric.

To the extent the rural numbers are driven by immigrants, my sense it is due to the violent well-armed drug gang flavor of immigrants, a group not particularly intimidated by SB1070, as most of them are not spending their time at Home Depot in day labor recruiting areas waiting for the next Sheriff Joe roundup.

If you have worked in a large corporation, you probably have witnessed some end of quarter or end of year sales push, to buff up the current period's results.  People who buy cars often get the advice to buy at the end of the month or year to take advantage of this motivation.  A great example of this was in the book Barbarians at the Gate, where RJR would load the channel at the end of each quarter with tons of extra inventory to buff up quarterly profits.  Of course, this just creates the incentive next year to load the channel even more to top the previous quarter's profits that were pumped up by loading.

All of this is both rational and irrational.  From a shareholder standpoint it is irrational -- the end of the reporting period is arbitrary and all the company is doing is shifting some sales a few days, rather than generating new ones.  It can even be negative for shareholders, as in the RJR case when loading caused inventory to sit on shelves for longer and get stale and thereby less appealing to customers.   For employees of the company, this can be entirely rational depending on their incentives.  While pulling sales forward to get a better grade or commission for this quarter feels good now, it can make the next quarter harder.  But who knows what will happen in the next quarter?  In a high turnover world, I could be in a new job or new company next quarter.  Anyone who has worked with corporate incentive programs knows that it is impossible to eliminate all the unintended consequences -- all one can do is minimize them.

But supporters of government superiority to private enterprise argue that this is exactly why government is superior, because it does not have these short-term focused goals.  HAH!

Politicians are among the worst at this.  It used to be they would do short term things to get elected, leaving the following election to take care of itself.  Now, they will take short term actions just to dominate the current news cycle.  Next week? That's an eternity, we have problems now.  Every single action taken over the last two years by both this and the previous administration and the current one relative to the economy have been totally short-term focused.  Let's bail everyone out.  Moral hazard?  That's the next administration's problem.  Just look at cash for clunkers, where the government paid $4000 for cars that blue-booked for $1500 all to pull September sales into August.  But they won the news cycle in August!

But the actual reason for my rant is a note I got from the Arizona Department of Revenue.  Apparently they have a program where large filers have to do a special report to pre-pay June sales tax** collections by June 29  (rather than by July 20 when they would usually be due).  As is so often the case, the law has been changed such that a special requirement for large filers had its threshold changed such that small-medium filers like myself also now have to play.  This is a sort of 13th report one must file (we file reports monthly) and the processing of it takes a lot of private time, plus the state has to hire a number of temps and pay overtime to receive this filing.

So why the special requirement?  Well, Arizona is on a July-June fiscal year, so June 29 is just about the end of their fiscal year.  And they are on a cash accounting basis (like most governments) so any cash that comes in the door, even if it is for a pre-payment of a future liability, counts as current period income.  This means that the state is spending a lot of overtime money shifting income by 21 days just to make its current period look better -- just like RJR or any other dynsfunctional private company.

But what makes this even more short term is that it only works once -- the first time.  It will make the first year this trick is applied look better, but then every year after will go back to being the same, with July losses to the prior year offset by June gains from the forthcoming year.  In fact the only way this game can work twice is if the threshold for pre-paying is lowered -- which is why I am having to fill out an extra form and pay a large bill 3 weeks in advance.  Arizona is looking for another one time gain.  And the larger the gain, the harder it will be to unwind this stupid costly process in the future.

** Footnote:  Actually we don't have a sales tax but a "transaction privilege tax."  However, that term gets me so infuriated, as it is based on the premise that private commercial transactions can be made only as a privilege granted by the government, that I refuse to use the term.  Right from the AZ DOR web site:  "the tax is on the privilege of doing business in Arizona."  Barf.  Don't let anyone tell you Arizona is a wild, libertarian, free market state.

Its pretty clear from this summary of the Obama administration legal brief that the Administration has no idea what its own immigration policy should be.  I don't agree with all of the author's statements (for example, I am not a fan of e-Verify, as it just reinforces to me that the government has gotten itself in the business of licensing labor) but its a pretty interesting summary of just how muddled the Obama administration is on this topic.  While I don't support our newest immigration law here in AZ, its easier to see why states like AZ feel the need to take some independent leadership on the topic.

In this brief, the Obama administration is challenging an earlier AZ state law that requires, as a condition to retain one's business license, that companies use e-Verify to check new employees legal work status  (here and here).  Unfortunately, Obama's head of Homeland Security (and thus all immigration-related activities) actually signed the law into being and the administration wrote a brief in favor of the law just 9 months ago, about the same time Congress reauthorized e-Verify without doing anything to strike down AZ implementation practices).  I am not much of a legal scholar, but states use compliance with Federal programs all the time as minimum requirements for retaining business licenses -- e.g. non-payment of Federal taxes can cause one to lose his state business license, but no one has ever argued that is an illegal intrusion of states on federal powers.  If the Feds want to argue all of these provisions are unconstitutional, fine by me.  Anyway, the article linked above is highly entertaining.

Postscript: Here is the e-Verify post one must post in his business to be legally compliant:

This is fairly Orwellian for those of us who believe that all people have the right to work, irrespective of the country they were born in, and this right does not flow from any national government and therefore does not stop or start at any border.

From the AZ Republic:

Zack de la Rocha has issued a statement on behalf of an organization called the Sound Strike urging music fans and fellow artists to boycott Arizona "to stop SB 1070," which he labels an "odious" law.

Among those artists joining de la Rocha's boycott are Conor Oberst, Kanye West, Rage Against the Machine, Rise Against, Cypress Hill, Serj Tankian, Joe Satriani, Sonic Youth, Tenacious D, Street Sweeper Social Club and Michael Moore.

So it turns out that at the local Best Buy here in Phoenix, Arizona, I find many examples of these folks' work still for sale.  Moore's videos, for example, still seem to be available for purchase.  Possibly their requests to have their merchandise removed from store shelves in Arizona have not reached the sales floor yet, but my guess is that these guys have absolutely no intention of actually pulling their product from Arizona stores.   My guess  (and please tell me if I am being unfair) is that most of these folks, at best, are committing to cancel tour dates that for most of these bands are not even scheduled yet.  This is about as much of a sacrifice as me promising to cancel my next date with Gisele Bündchen.  This kind of statement is the moral equivalent of Hollywood stars who decry global warming from the steps for their private jet.

I think folks know I am a proponent of open immigration, and so, as in the war on drugs, I don't condone adding more government powers to enforce a pointless prohibition.  But there are many folks here who have supported far more authoritarian legislation than the AZ immigration law.  For God sakes in Sicko Michael Moore wrote a long love note to Castro's Cuba.

Via the AZ Republic:

Rep. Jose Serrano is firing a brushback pitch at the state of Arizona for passing a strict new immigration law

Seeking Major League retribution, the Bronx Democrat will ask big-league baseball Commissioner Bud Selig to move the 2011 All-Star Game from Phoenix. Serrano will make his request to the commissioner in a letter to be sent later today.

I have made it pretty plain I don't like AZ's new immigration law, but this is silly.  While overly authoritarian, it is no more so than any number of cash confiscation or stop and search laws on the books in other states.  I am pretty sure Arizona could remain standing in a head-to-head fight between AZ and NY on whose laws are the most authoritarian.  A Representative of a city that bans trans fats, zones to exclude certain fast food restaurants, has proposed a salt ban and initiated a campaign against soft drinks needs to get his own authoritarian house in order.