Goldwater Seeks to Stop Phoenix’s $28.5 Million in Illegal Subsidies

For the last five years, the city of Phoenix has illegally doled out more than $28.5 million of taxpayer funds to over 100 private organizations with little to no oversight, according to findings recently uncovered by several members of the Arizona Legislature. Now, the Goldwater Institute, on behalf of Phoenix taxpayers, has asked Arizona Attorney General Kris Mayes to put an end to the city’s unlawful spending spree.

Organizations like the Phoenix Film Foundation, Phoenix Pride Inc, Mexican Baseball Fiesta LLC, the Arizona Science Center’s Galaxy Gala, and many others received subsidies—sometimes simultaneously by multiple departments—under questionable labels like “Sponsorships,” “Grants and Subsidies,” “Emerg[ency] Assist[ance],” or “Miscellaneous.” The city has no lawful authority to spend public money in this way.

No Legal Justification—and No Tracking

When pressed to identify a legal basis for the spending, officials pointed only to an outdated ordinance that allows the city manager to settle claims against the city—an insufficient justification for these discretionary giveaways. Incredibly, the city claims that this policy gives department directors authorization to dole out $32,000 to any organization of their choosing. This effectively turns large portions of the city’s budget into a patchwork of slush funds that special interests can access in the sole discretion of a single city employee. Amazingly, the city “does not track donations by nonprofit status,” so it does not know exactly much taxpayer money has been funneled out through this opaque process.

If treating taxpayers as financiers for private entities—even controversial and ideological ones—sounds familiar, that’s because it mirrors what has been exposed throughout the federal government this year. For example, the U.S. Agency for International Development (USAID) was aptly described as “a slush fund for leftist priorities” after the White House exposed decades of waste and abuse in that agency. And the then-Elon Musk-led Department of Government Efficiency (DOGE) brought to light that Treasury officials “were instructed always to approve payments,” sparking new “payment categorization code” requirements for auditing purposes.

Arizona’s Gift Clause: A Constitutional Firewall

Fortunately, Arizona law protects taxpayers, at least when those laws are enforced. Cities and other local government entities may not spend tax dollars without clear legal authority. And the state constitution prohibits the government from subsidizing private organizations.

The Goldwater Institute has asked the Attorney General to investigate this abuse and take appropriate steps to protect Phoenix taxpayers. If the Attorney General declines to enforce the law, the Institute may pursue other legal protections in court. Goldwater will continue to defend taxpayers from public officials bent on dishing out public funds to private special interests.

You can read our letter to the Attorney General here. 

Click here and here to read more about Goldwater’s efforts to protect taxpayers from unconstitutional handouts. You can learn more about the Arizona Constitution’s Gift Clause here.

Parker Jackson is a Staff Attorney at the Goldwater Institute.