It’s the Pitts – January 2024

It’s Been A While

This has been far longer between missives for this site than normal – and much longer than I expected. I held off primarily as I was expecting to include info on the Arizona Wine Tourism Economic Impact Study I conducted with the Economic Policy Institute (EPI) research staff at Northern Arizona University (NAU) in 2023 for the Arizona Office of Tourism (AOT). This is the third such study we have done. It follows the ones we conducted in 2011 and 2017.

The final report was concluded and delivered to AOT at the end of September. At a long scheduled AOT Wine Stakeholders meeting on October 5th, I reported and presented several key elements from the study that AOT had specifically cleared to present at that session, to a group of Arizona winery owners and industry leaders. But AOT asked me to go no further and to say nothing further until they absorbed the data and issued their own press release. The study has yet to be formally published by AOT. I had planned to include the study results in this report, but I cannot do so until AOT publishes the study, making it available for public distribution.

As a result, I delayed posting this update to this site until now, expecting the data to be available for posting long before now. I will provide that data here and a link to the study as soon as it is published. I will say that a preliminary review shows a dramatic rise in the economic impact the Arizona wine industry is having statewide. And it’s not slowing down. New Arizona wine festivals are being added to the calendar regularly. Wineries continue to add attractions and activities to add new visitors. Vineyards are maturing and new vineyards and wineries are continually cropping up. And major operations like Maynard’s new seven acre Caduceus Merkin Hilltop operation in Cottonwood, which opened in October, will certainly raise the bar. Sorry about the TMI (I certainly wasn’t expecting the delay), but I think the data is important and I wanted you to better understand the delay.

FYI: I conducted an educational training tour here in October focused on the economic impact the wine industry is having on the Verde Valley region for the Arizona Association for Economic Development (AAED – I serve on their Board of Directors) as part of the organization’s professional certification course for economic developers in Arizona (something I’ve been working to develop for quite a while to broaden awareness of our industry statewide and to generate support for our continued growth). The tour was a great success with a busload of participating economic development directors from all over the state and with our new AAED Executive Director participating, as well. I have already been asked to conduct a series of such tours going forward. I will also be helping to coordinate an upcoming tour of the region in April for ASU’s Tourism Development & Management Program.

Opening of the 2024 Arizona State Legislative Session

Governor Katie Hobbs gave her State of the State address to open the 2024 Arizona State Legislative session (the Second Regular Session of the Fifty Sixth Arizona Legislature for those keeping track at home) on Monday, January 8th. This will clearly be a session with many challenges, not least of which is getting anything done following last year’s contentious, non-functional, seemingly unending, record-breaking (not in a good way) session. (Detailed below.)

As this is an election year, the normal theory would be that the legislators will work to conclude quickly so that they may begin campaigning for re-election. We’ll see if that’s possible anymore. The Governor noted that, while we had multi-million dollar budget surpluses in recent years, we are now facing a deficit expected to reach $850 million between now and the end of 2025. Some have estimated the deficit at $1 billion or more and growing – brought about by a tax cut late in Governor Ducey’s term lowering revenue coupled with an annual school voucher (ESA – Empowerment Scholarship Account) program cost that now exceeds $900 million annually, far above the projected totals when the program began, with no limits put in place and with little or no reporting requirements.

This is expected to cause legislators to tighten their belts regarding new programs and may slow the entire legislative and budget process. For scale, Arizona’s bi-partisan 2023 budget was $17.8 billion – and California’s expected deficit this year is $37.9 billion. Many bills were submitted prior to the formal opening of the session, including about 10 water bills and HB2048, our bill seeking approval for the Arizona Wine Trail Specialty License Plate as a fund raiser for the Verde Valley Wine Trail. It was formally read into the House session on January 8th and assigned to the Transportation & Infrastructure and Rules Committees.

One Day – Three Bills

Arizona finally achieved a close to the seemingly never ending 2023 Arizona State Legislative session that I reported on at some length last year on July 31st. After a final 47-day legislative recess, the legislators returned to action at the Capitol for a single day. During that one day, they passed three bills. SB1102 was the key, authorizing Maricopa County to hold an election in 2024 to authorize a 20-year extension of Proposition 400’s half cent sales tax to pay for Maricopa County regional transportation needs and projects for another 20 years.

The impact on us and everyone else in the state is dramatic. That tax is projected to provide about $1 billion per year for projects in the Maricopa County area for the 20 year period. Without that tax, the projects would have to be abandoned or the $1 billion for those projects would have had to come from the Arizona Department of Transportation (ADOT) regular budget and be syphoned away from other transportation projects around the state.

The second bill, SB1131, is designed to eliminate sales tax on long term residential rentals in Arizona beginning on January 1, 2025. (We will no doubt hear more about that in this year’s session.) The third bill, HB2670, will authorize the burial of Arizona National Guard members and reservists in veterans’ cemeteries and will make members of the new Space Force eligible for the same state services as members of the other branches of the military.

Prop 400 required serious negotiating on the part of the governor when it stalled earlier and when an inappropriate version of the bill opposed by Maricopa County and economic developers throughout the state had to be vetoed. She proved to be up to the task. The final vote was 43 – 14 in the House and 19 – 7 in the Senate. After passing the bills, the legislature did a couple of procedural things and adjourned sine die later in the day.

56th Legislature

The 56th Legislature broke many records, having been far and away the longest session in the state’s history, primarily thanks to the Senate’s leadership or lack thereof. The final report showed the session officially lasted 204 days (the state’s constitution calls for a 100 day session), although they were only involved in active meetings at the Capitol for 77 of those days. (They did, however, collect per diem for all 204 days.) 1,675 bills were introduced in total, with only 205 signed into law and 143 vetoed. With the multiple recesses and political manipulation, many bills never received a proper full hearing, including many of the almost 200 water-focused bills.

By law, all bills approved during the session other than those passed under certain special exceptions, take effect 90 days after the session formally adjourns. Therefore, the bills passed during last year’s session didn’t become effective law until October 30th. The other impact is that the legislators don’t get much of a break. As a general rule, as they did late in 2023, the committees meet during September and October to prepare bills for the next session, “dropping” (formally proposing) those bills in November for review prior to the January session official start up. The first of those bills began being introduced the week before Thanksgiving. I will be providing regular reports on activity in the legislature going forward in this space, with a special emphasis on any bills that have a potential to impact the Arizona wine industry, and our region in particular.

May I hereby wish you a belated HAPPY NEW YEAR!!!!!

May 2024 prove to be a happy, healthy, and prosperous New Year – and a step up for one and all!


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