State lawmakers on Wednesday rejected the recommendations of their own auditors and voted to keep the Department of Commerce alive — and without any major changes.
The unanimous vote by the special House-Senate panel came after a long argument by Joe Yuhas, the agency’s deputy director, that the Auditor General’s Office does not understand the functions of the department. He said that is why the auditors concluded in September that most of the work done by the Department of Commerce could be eliminated or transferred to other agencies.
While lawmakers rejected the overall audit recommendations to eliminate some roles of the agency, they did agree that two functions should become more self-sufficient.
In one case the department was directed to begin charging fees to companies that want specific market research reports for international trade, a cost now borne by taxpayers. The other requires the agency’s job training program to operate solely on the money it gets from special sources and not from tax dollars.
A final decision on the future of the agency will be made by the full Legislature next year. But Wednesday’s vote suggests there will be little opposition, if any, to keeping the agency alive at that time.
The department marshaled a parade of city officials and business executives to explain to lawmakers why the agency is indispensable. And it did not hurt that several rural lawmakers insisted that the Department of Commerce is the only agency working to try to attract business to areas outside the state’s two metropolitan areas.
The agency, established in 1985, is charged with promoting economic growth. That includes attracting new businesses, helping retain existing ones and encouraging international trade.
But Auditor General Debbie Davenport said some of the agency’s services are duplicative at best and needlessly spend tax dollars.
That’s not true, Yuhas said.
He acknowledged there are a host of other local and regional groups promoting economic development such as chambers of commerce and special organizations in Tucson and Phoenix. But Yuhas said none of these groups help promote things like international trade.
Yuhas also told lawmakers there is a need for a statewide organization to coordinate efforts to land new business — especially those with high paying jobs. That is critical, he said, as Arizona’s per capita income is only 85 percent of the national average.
He said that job is made more difficult because Arizona has very few economic incentives to attract new companies.
"Only five states in the nation spend fewer General Fund dollars on statewide economic development efforts,’’ he said.
During the last year alone, Yuhas told lawmakers his agency assisted 52 companies to locate or expand in Arizona, including 14 in rural areas, creating 14,000 new jobs which were at a higher average salary than the current state per capita income.
"These are high-wage jobs for your constituents and high-wage jobs for the state,’’ Yuhas said.