Today I received a troubling email from Jeff Grant, Director of the Corporations Division of the Arizona Corporation Commission. On September 4, 2009, Governor Brewer vetoed SB 1025 that would have provided an additional $2.8 million in funding for the ACC’s Corporations Division. As a result, the ACC is underfunded by 40 percent and it’s ability to service the new and continuing businesses of Arizona will be severely degraded. Wait times for approval of new entities could exceed hundreds of days, which would delay the creation of new businesses and jobs in Arizona.
The Arizona Corporation Commission needs our help to contact our state legislative representatives and senators and ask them to fully fund the ACC immediately. Please take the action Jeff Grant recommends at the end of his email message.
Contents of Jeff Grant’s email to me of September 25, 200
My name is Jeff Grant and I’m the Director of the Corporations Division of the Arizona Corporation Commission. You are receiving this email because you were on a user group list that a former director, Dave Raber created to be able to communicate with you at various times. This is another one of those times.
Many of you may already know that we are facing a serious funding crisis. The attached document gives you the history behind this issue and provides you with the impacts to the Division if the fees we are currently collecting are not appropriated back to the Corporations Division.
As of today, when we issued payroll, my budget is now in the red. In order to to be able to pay our bills, serious cuts in staffing along with furloughs will have to be implemented.
We are looking at cuts and furloughs that will greatly impact our turnaround times. If the legislature doesn’t act to restore the $2.8 million in annual report fees to the Division’s $4.5 million budget, turnaround times, in just a matter of months, could explode to well into the hundreds of days for non-expedited documents and approaching 50 days for expedites.
We need your help. After reading the attached document, please call or email your legislator and the President of the Senate, Speaker of the House and Governor’s Office.
If you have any questions, you can reach me at 602-542-0776. Thank you for your help with this serious problem.
Jeff Grant, Director
Arizona Corporation Commission
The following was attached to Mr. Grant’s email message and it sheds more light on the reason there is a funding problem, what you can do to help prod the legislature to action and why it is important to restore the inadvertent funding cuts.
How the problem arose:
On Friday, September 4, 2009, the Governor vetoed SB 1025 (for reasons unrelated to the ACC), which included language that would have avoided the ACC’s funding problem. The Governor signed the general appropriation bill for the ACC, but that Bill did not include an appropriation from the general fund to the ACC.
Why? Until this year, the money to run the Corporations Division came from both the general fund (60%) and the public access fund. This year, the legislature, the Governor and the ACC worked together to shift the funding to come entirely from the public access fund.
Because the funding was being shifted from the general fund to the public access fund in SB 1025, the ACC agreed this fiscal year to have the Corporations Division appropriation shifted, from being reliant on both general fund and public access fund revenue, to being entirely funded by revenue from the public access fund. Roughly 40% of the Corporations Division funding would have come from the general fund and 60% from the public access fund, without this funding shift.
In order to accomplish the shift to entire dependency on the public access fund, SB 1025 provided that annual fees paid by profit and business corporations were to be redirected for deposit to the public access fund. When the Governor vetoed SB 1025, the action left no statutory funding mechanism to shift revenue from these fees to the public access fund from the general fund.
The good news is both the Governor and legislature agreed to the funding shift and support it. Unfortunately, without the statutory language to facilitate the funding shift, the Corporations Division lacks the funds to operate adequately.
Simply stated, $2.8 million in anticipated revenue for FY 2010 cannot currently be shifted to the ACC to help fund the operations of the Corporations Division without additional action by the legislature.
What you can do:
We urge you to call your legislator, and call the offices of President Burns—602-926-5993 and Speaker Adams—602-926-5495 ([email protected]). Please also call the Chairmen of the Senate and House Appropriations Committees—Senator Russell Pearce ([email protected]) in the Senate—602-926-5760, and Representative John Kavanagh ([email protected])—602-926-5170 in the House and call the chairs at the Senate and House Commerce Committees: Barbara Leff—(602) 926-4486 ([email protected]) and Michele Reagan—(602) 926-5828 ([email protected]). We have provided you with a link to the phone numbers and key bullet points below.
Here is a link to a directory of legislators in the Arizona Senate and House:
Here are some key points which help to emphasize the adverse impact this funding problem will likely have on customer service at the ACC:
- On average 4,700 corporations and limited liability companies are formed each month
- If the Legislature does not act to remedy the situation by September 30, 2009, those citizens wishing to start a business — businesses that employ people, pay taxes, buy property and provide products and services to the people of Arizona — will more than likely see a huge increase in processing turnaround times — by several weeks — by the end of October.
- As each month goes by, and if no legislative action is taken, processing turnaround times will continue to grow exponentially and the work queue of documents waiting to be examined and approved will explode.
- If the Legislature waits until the next Regular Session in January to address the ACC funding issue the effect will be devastating, because it takes 90 days from the end of the session for legislation to become effective (absent an emergency clause or special session); this would mean the ACC would not have access to $2.8 million in anticipated revenue to fund its operations for the entire fiscal year.
Below is a copy of the press release the ACC sent out on this issue.
Once again, I encourage you to please call and email your legislators and to also let legislative leadership know how crucial this issue is to the people of Arizona.
If you have questions concerning this issue, you can reach me at 602-542-0776.
I want to thank you all in advance for your help on this issue.