State pro-business organizations are publicly funded, but privately controlled

Public-private partnerships further business interests in Arizona, Ohio, Wisconsin, Iowa and Florida, amid persistent questions about transparency, disclosure

By Nicholas Kusnetz, 6:00 am, October 23, 2013, Updated: 3:32 pm, October 23, 2013

The offices of the Arizona Commerce Authority are housed in downtown Phoenix at the Freeport-McMoRan Center, the gleaming glass headquarters of an international mining firm of the same name. The authority, which oversees state corporate tax incentives and grants worth hundreds of millions of dollars, is not quite a public agency, as its location two miles east of the state government complex suggests. It’s led by a board of directors run by the governor and Jerry Colangelo, who, after four decades as an Arizona sports and real estate mogul, is a local icon.  Sixteen other corporate executives also sit on the board, including Richard Adkerson, President and CEO of Freeport, to which the authority paid about $411,000 in state funds last fiscal year for renting the space.

There’s a name for this arrangement. The Commerce Authority is a “quasi-public” entity, or a public-private partnership. About 10 other states have also given control over lucrative corporate tax incentives to similar organizations, which are often run by the states’ most influential businessmen, generally at the pleasure of the governor. Supporters say these partnerships are more nimble than government bureaucracies and are insulated from the vagaries of electoral politics. But both liberal and conservative watchdog groups say the practice takes a government function already prone to mismanagement and obfuscation and makes the situation worse by giving oversight of business incentives to businesses themselves.