By Bob Christie
Capitol Media Services
PHOENIX -- The Arizona Legislature violated the state constitution's Gift Clause in 2023 when it earmarked $15.3 million for the non-profit foundation that runs the Prescott Frontier Days rodeo, a judge has ruled.
The decision from Maricopa County Superior Court Judge Scott Blaney permanently bars state Treasurer Kimberly Yee from sending the money to the group. He wrote in the ruling released late Thursday that it was unconstitutional to give the money to the Prescott Frontier Days group because the appropriation "fails to require any consideration whatsoever in return for the public's $15.3 million.''
The money was included in the budget at the behest of two Republicans who represent the area, Reps. Rep. Quang Nguyen of Prescott Valley and Selina Bliss of Prescott.
They intended the foundation to use the money to help kick-start a $40 million plan to repair and renovate major parts of rodeo grounds at the Yavapai County Fairgrounds. But there was nothing in the appropriation saying that -- or any other specifics on how the rodeo group should use the money -- and no language laying out how the taxpayers benefited from the spending.
The rodeo site dates to 1913, and the current grandstand for what is billed at the "World’s Oldest Rodeo'' was built in 1933. The foundation wanted to rebuild it and add a host of improvements like modernized water, sewer and communications infrastructure.
But the money has been sitting in the treasurer’s account since the lawsuit was filed shortly after the Legislature and former Gov. Katie Hobbs included it in the state budget passed in 2023. Last year, the Legislature directed it to be returned to the general fund if the state lost the lawsuit.
The suit was filed by two taxpayers who live in Prescott, Howard Mechanic and Ralph Hess, who is a retired Yavapai County Superior Court judge. They charged it violated the Gift Clause because it "is not supported by any consideration, let alone a promise of significant direct benefits that serves a public purpose as required by … the Arizona Constitution.''
Mechanic and Hess were represented by Nicholas Ansel, an attorney with the Arizona Center for Law in the Public Interest. Their lawsuit also alleged the earmark violated the constitution’s appropriation clause, which says the main budget bill can only fund state departments.
Blaney said he didn’t even have to consider the appropriations clause argument because the proposed spending clearly violated the gift clause -- and in two separate ways.
Courts use a two-part test to determine if there is a violation, the judge wrote.
First, the spending must serve a public purpose. Second, Arizona government entities can't give money to anyone or any group if the value the state, city or town gets in return is less than what they pay.
"Indeed, although an expenditure need only fail one prong of the Gift Clause test to constitute a Gift Clause violation, the Rodeo Appropriation fails both prongs,'' Blaney wrote.
The ruling wasn’t unexpected.
Nguyen and state Sen. Mark Finchem, R-Prescott, have been working this session on competing versions of a measure to side-step the gift clause issue and again earmark the cash for the rodeo grounds renovation. But the proposal has stalled over the same concerns – how to legally appropriate the money.
Nguyen told Capitol Media Services that he accepts Blaney’s decision but still wants to try to find a way to get the state to pay for some of the renovations.
"Maybe better language. Maybe drafting better language,'' he said. "Maybe actually being very clear about the fact that we are going to use it for the rodeo grounds to improve the infrastructure, to improve the bathrooms, to improve the parking areas. There are a lot of things. So maybe we need to spell it out."
But as far as this year, he seemed resigned that it won't happen.
A new state budget must be enacted before the start of the 2026 fiscal year on July 1. And this year there’s very little surplus, so finding votes for the rodeo grounds upgrade money will be difficult.
"I think it's too late,'' Nguyen said. "We're talking about a brand new budget. But I'm not bitter. I'm not angry."
This all came about because the 2023 legislative session saw state coffers flush with cash.
Each each of the 60 representatives and 30 senators were given between $20 million and $30 million to spend as they wished.
Minority Democrats joined with Hobbs to spend most of their part of the surplus on K-12 schools. Some Republican used their cash to fund a tax rebate for parents.
Bliss and Nguyen, however, did was many other Republicans did – use their money for local projects.
Finchem was not part of the 2023 action dividing up the extra cash because he wasn't in the Legislature at then time. But now, as a state senator representing the area, he told Capitol Media Services Friday in a text message that the judge's decision was "predictable.''
"The court would not have taken the matter upon if it did not see merit in the filing,'' he wrote. "My bill would have made the matter moot by correcting the Gift Clause defect in the original bill.''
Finchem also noted rumblings among a few people in Prescott to use the money instead to clear out brush and trees in fire-prone areas surrounding the city. He said, however, that's not how budgets work and noted the money appropriated two years ago will now revert to the general fund and can't be redirected.
"Those funds would go to some other priority, and fire prevention is not one of those,'' he wrote.
"It would likely be eaten up by a Maricopa County program, like most taxpayer dollars are,'' Finchem continued. "Rural communities do not get the attention they deserve in the budget; we must fight for every penny.''
When Finchem first proposed his bill to salvage the funds in anticipation of an adverse court ruling, a pair of Prescott council members and Mayor Phil Goode testified for the proposal, although they were split on which of two versions they supported as a way to free up the funds. At this point, the bill is stalled and neither version is advancing
What they did agree on, though, was the need for the money.
Goode said Friday that his belief was that the initial appropriation "was a clear cut violation of the Gift Clause.”
And he said the Prescott Frontier Days $40 million plan was an overreach and he thinks the city can do the needed work – including rebuilding the grandstand, adding additional water and sewer lines and other improvements -- for the $15.3 million.
He also said the city can defend its use of any money to do improvements, since the rodeo grounds and the adjacent fairgrounds host multiple major events besides the weeklong rodeo throughout the year. He said the public would benefit from a safe and modernized facility.
"Our feeling was that $15 million would likely pay for most of those upgrades,'' Goode said.
He said he’s heard the Prescott Frontier Days may consider an appeal, but he considers it folly. And he repeated a number Finchem mentioned during the committee hearing last month, that the foundation has spent more than $250,000 on legal fees so far.
Jim Dewey, general manager of Prescott Frontier Days, said Friday it was "unfortunate that the city of Prescott and our community will not be able to utilize the dollars for necessary infrastructure improvements to support these historic public grounds.''
"We support the city in its future endeavors to improve the rodeo grounds and help to sustain what is truly a gem of central Arizona -- the 'World's Oldest Rodeo,' ''he said.
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