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Government Sponsored Corporate Welfare, Waste, Fraud and Abuse Within Arizona (Part One)

Written by Subject: Corruption

Recently, Dave Kopp wrote in response to one of my articles on Arizona’s cuts to public education and asked “…. would you care to mention exactly what percentage of the state budget is consumed by corporate welfare? …….Especially considering that public education consumes 55% of the discretionary budget?”  

Thanks Dave, your insightful question has provided me with an excellent idea from which to launch an investigative series on government sponsored corporate welfare, waste, fraud and abuse within Arizona committed by various government agencies. Further, I will be able to explore the question: Is there an offset of corporate welfare spending that could be directed into our children’s education without further encumbering the taxpayer?

Although we will not be able answer the percentage question that Dave set forth because of the State’s “unusual accounting practices,” we can keep a running tally on the hundreds of millions of dollars, or maybe even billions dollars of waste, fraud and corporate welfare which serves to cut into essential services such as education, where, I might add, there is significant waste, fraud and abuse as well. I believe that at the end of this series, we will all be shocked as to the informal aggregate total of government sponsored corporate welfare from just a brief sampling of my investigation. 

The Arizona Constitution bans giving subsidies to benefit a private business under the “Gift Clause.” The Equal Protection and Special Laws Clauses of the Arizona Constitution also prohibit subsidy deals to private enterprise with the use of public money.  

I decided to begin this investigative series with an examination into a version of government sponsored welfare which also results in something that just represents a general fleecing of the public that Libertarians just love to hate, namely, the photo radar scam. Pursuant to  A.R.S. §11-251.08, money from each photo enforcement ticket breaks down with the following distributions from each: $16.50 to statewide public campaign financing (i.e., socialism in action in Arizona’s electoral process), $13.48 to the Department of Public Safety, $25.17 to the Supreme Court of Arizona’s Administrative Office of the Courts, $29.70 to Red-Flex (i.e., the private photo enforcement company which benefits from this corporate welfare, Big Brother intrusion of Arizona’s taxpayer) and $96.65 to the State of Arizona’s general fund.  And I am fully aware that my friends from will kindly remind me that the photo radar fees were just raised. However, it is too early to assess the financial impact. However, let’s leave no doubt, the money being removed from Arizona’s motorists will be much greater, in next year’s revenue stream, than is being reported in this article.

Photo radar is being used, in part to pay down some of Arizona’s budget deficit. Clearly, legislators need the $100 million dollars of photo radar “fleece money” to fund their other, soon-to-be special interest projects contained in a budget which is over $3 billion dollars in debt.

Interestingly, auto insurance companies can increase the private insurance rates of motorists between $50 to a $1000 for each point assessed to an individual’s driver’s license depending upon the severity of the offense and the past driving record. Smelling big profits, the following insurance executives have lobbied the legislature to enact a point penalty system in photo radar cases:

Wendy Briggs, American Insurance Association

Lanny Hair, Independent Insurance Agents and Brokers of Arizona

·         Don Hughes, American Family Insurance


·         Don Isaacson, State Farm Insurance


·         Ellen Poole, USAA Insurance


·         Mike Williams, Arizona Highway Patrol Association


·         Redflex Traffic Systems of Australia


And if you smell a political gain in this fiasco for Arizona legislators, you would be correct. The $16.50 that lawmakers collect each time a photo radar ticket is issued on an Arizona highway, goes directly into their political campaigns. Further, politicians have a personal incentive to ensure that insurance companies have a sufficient profit motive incentive to further fatten the coffers of Arizona’s legislators in the next election cycle in order to defeat any attempt at banning this questionable practice.

Photo radar raises about $100 million dollars a year in Arizona. Is the public safer as a result of this fleecing of the driving public? There is no data to support this conclusion. However, what can be proven is that Red Flex is reaping in millions of dollars from this abuse as are the politicians ($10,095,771 in revenue for the clean elections fund for an average of over $76,000+ for an individual politician running for re-election) who have handed Red Flex this outrageous version of Arizona’s flavor of government sponsored corporate welfare.
In the next legislative session, the insurance companies will be lining up to get their piece of the government sponsored corporate welfare pie. How many more millions of dollars will Arizonans be fleeced out of in order to ferment this latest scheme government sponsored welfare in order to benefit the insurance companies? It is too soon to tell. However, noting that the big guns of the insurance companies are already engaged, the auto insurance industry must smell big profits and these profits will make Red Flex’s windfall seem meager by comparison.

The money expended by Arizona’s citizens in this massive version of government sponsored corporate and political sponsored welfare, within Arizona, almost equals the amount of money recently cut from K-12 education by the State Legislature. We have a choice, invest in something meaningful, which produces a real return on investment, or continue to be fleeced by programs such as photo radar, publicly funded political campaigns and future insurance company profits.

Is there fraud and abuse in public education funding and do critics of public education spending have a legitimate cause for concern (e.g., AFP’s Tom Jenny)? The answer is an unqualified yes. However, as the reader will come to learn in future articles, the waste and abuse of public education funds is a direct result of the actions, or inactions, from the Arizona State Legislature and their unwillingness to provide proper oversight over the disbursement of educational funding.

Photo radar is only a minuscule part of this picture as future parts of this series will quickly reveal that Arizona’s reputation as a “good ole boy” political state is very well deserved.

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