When Gov. Doug Ducey ordered the Arizona Commerce Authority on July 2 to withdraw an offer of up to $1 million in incentives to Nike, he had no apparent legal authority to do so.
Unlike other state agency heads, Arizona Commerce Authority CEO Sandra Watson doesn’t answer to the governor. Instead, she answers to the Commerce Authority’s 19-person board of directors, which hires the CEO and sets the terms of her employment. The governor appoints nine members of the board, and the House speaker and Senate president each appoint four. Ducey and Watson are both voting members of the board of directors, and the governor serves as co-chairman.
As CEO, Watson is solely responsible for administering and awarding grants from the Arizona Competes Fund, often referred to as the state’s “deal-closing fund,” from which Nike had been slated to receive up to $1 million.
Even though Watson answers to the board of directors, not to the governor, she followed Ducey’s instructions to withdraw the Commerce Authority’s offer of an Arizona Competes grant to Nike for its planned manufacturing facility in Goodyear. The governor made the decision after Nike pulled a line of sneakers emblazoned with the Betsy Ross flag adopted by the United States in the 1770s from the market.
Nike’s decision was prompted by a request from former NFL quarterback Colin Kaepernick over his concerns that the flag represented an era of slavery in the U.S.
Nike has made its decision, and now we’re making ours. I’ve ordered the Arizona Commerce Authority to withdraw all financial incentive dollars under their discretion that the State was providing for the company to locate here. 7/
— Doug Ducey (@dougducey) July 2, 2019
Commerce Authority spokeswoman Susan Marie told Arizona Mirror that the Arizona Competes money was withdrawn “[u]nder Gov. Ducey’s direction,” and that, “We support this decision and agree.”
But neither Marie nor Watson would answer follow-up questions on why the ACA would withdraw the grant offer at Ducey’s direction.
The Ducey administration took a similar position. Spokeswoman Elizabeth Berry noted that Ducey serves on the Commerce Authority board, regularly attends its meetings and works closely with Watson, who serves as one of the governor’s senior advisors. But she didn’t comment on whether the governor believes he has any legal justification to make orders regarding Arizona Competes money.
“The ACA and the governor are on the same page with this decision and continue close collaboration toward future economic development and growth,” Berry said.
Ironically, when lawmakers replaced the old Arizona Department of Commerce with the Commerce Authority in 2011, an initiative spearheaded by then-Gov. Jan Brewer, part of the rationale was to take politics out of economic development decisions. A frequent criticism of the old Commerce Department was that it was too politicized. The public-private Commerce Authority, with a board comprised of high-level business executives, would be insulated from politics in a way the old department never was, its advocates argued in 2011.
Arizona Republic columnist Robert Robb noted the discrepancy in a recent column, questioning whether Ducey’s order on the Nike money contradicted both state law and the justification for creating the Commerce Authority in the first place.
“I’m pretty sure he doesn’t have the legal authority to order the Arizona Commerce Authority to do anything, much less award or withdraw incentives to a particular company. And if he does, the ACA is a con job that should be abolished,” Robb wrote on July 10.