DALLAS — Boycotts in the wake of Arizona’s tough new immigration law could add pressure to the state’s slumping economy and further weaken revenue streams for sports and tourism bonds, industry experts said.
“The tourism industry was not considered or consulted in any process of developing this legislation, but is certain to experience the unintended consequences of the economic backlash,” Kristen Jarnagin, spokeswoman for the Arizona Hotel and Lodging Association, said of SB, 1070 signed into law by Gov. Jan Brewer last week.
The bill makes state and local officers responsible for enforcing federal immigration laws and it requires them to question anyone they suspect is in the country illegally. Anyone who cannot prove a legal immigration status can be arrested. Anyone who hires or harbors an undocumented alien could also be charged with a crime, including drivers who stop on the street to pick up day laborers.
While Brewer insisted that SB 1070 does not allow “racial profiling,” she added that “we must acknowledge the truth — people across America are watching Arizona, seeing how we implement this law, ready to jump on even the slightest misstep. Some of those people from outside our state have an interest in seeing us fail.”
Brewer, a Republican, also suggested that her Democratic predecessor in the governor’s office, Janet Napolitano, has failed to adequately guard the borders in her current position as U.S. Homeland Security secretary under President Obama. As Arizona governor, Napolitano vetoed a similar measure in 2006.
In a letter to Obama last week, Brewer called for federal troops to patrol Arizona’s border with Mexico and urged construction of a barrier. Brewer cited the unsolved murder of a Cochise County rancher as a key reason for the stepped-up enforcement.
Passed largely along party lines in the Republican-controlled Legislature, SB 1070 was denounced by the Democratic minority.
“The eyes of the world are on Arizona,” said Rep. Ben Miranda, D-Phoenix. “The costs in human and economic terms will be felt for a generation, if not more.”
Calls for boycotts began even before Brewer signed the bill, including one from U.S. Rep. Raul Grijalva, D-Tucson, who closed his local office after receiving threats.
New York civil rights activist Al Sharpton vowed that when the bill goes into effect in August he will to lead a march in Arizona with protesters who will not carry documentation, a move designed to provoke their arrest.
Among the first cancellations was the American Immigration Lawyers Association convention next fall in Scottsdale, costing the group its $92,000 deposit.
“We cannot in good conscience spend association dollars in a state that dehumanizes the people we represent and fight for,” said AILA president Bernie Wolfsdorf.
The Scottsdale Convention and Visitors Bureau warned that the legislation could hurt the state’s bid for future Super Bowls and other events such as college basketball’s Final Four tournament and the 2012 Republican convention.
“This bill will have unintended, damaging consequences on this industry sector that has a $3.6 billion economic impact on the city of Scottsdale,” said chief executive Rachel Sacco.
Among those denouncing the new law was New York’s Republican mayor, Michael Bloomberg, who pitched his city as an alternative for tourists and business travelers.
Other major convention cities can now use the legislation to lure business from Phoenix, which last year completed a $600 million expansion of its convention center and has struggled to cover $14.9 million of annual debt service in light of falling tax revenues.
Phoenix Mayor Phil Gordon, who opposed the law, said he has already heard from groups considering moving their conventions.
Despite protests at the state capitol last week, a recent Rasmussen poll showed that 70% of Arizona’s likely voters favor the new immigration law.
Among the strongest supporters is Maricopa County Sheriff Joe Arpaio, who has already conducted several immigration sweeps of businesses, including fast food restaurants. Arpaio faces 2,700 lawsuits, and the U.S. House Judiciary Committee called for the Justice Department to conduct a federal investigation of his enforcement tactics.
“Giving all of my deputies the ability to enforce all immigration laws has not proven to be any additional strain of resources like so many critics of the proposed state immigration law claim,” Arpaio said. “Their argument is a cop-out because they do not want illegal immigration laws enforced.”
Brewer directed local governments to have police and sheriff’s officers trained in federal immigration law, but the cost of the training, additional time required to research the immigration background of suspects, and resolution of lawsuits was not detailed in the law.
“The bill could have broader consequences on both state revenues and expenditures,” according to the fiscal note accompanying the legislation. “Lower levels of immigration would reduce participation in state-funded programs, which would then affect spending.”
According to the Arizona Office of Tourism, more than 65,000 Mexicans enter the state legally and illegally each day, spending more than $7.3 million.
In response to similar legislation in 2006, vetoed by Napolitano, Yuma County Sheriff Ralph E. Ogden produced a fact sheet showing that the county’s added law enforcement costs could reach $1.2 million per year with jail costs rising up to $96 million. Attorney and staff fees would increase by up to $1.6 million, and additional detention facilities would have to be built.
On the plus side, the bill’s fiscal note sees additional revenue from fines for violation of SB 1070, including levies up to $5,000 per day “for an entity that adopts a policy that impedes the enforcement of federal immigration laws.” However, budget analysts could not say how much revenue from fines might come in.
Perryman Group, a Waco, Tex.-based economic research firm, estimates that if the 460,000 undocumented aliens were to leave Arizona, the state would lose more than $26 billion in economic activity.
The last time Arizona faced an economic boycott, from 1990 to 1993, the state lost 170 conventions and $300 million because of its refusal to have a Martin Luther King Jr. holiday. After voters rejected another attempt to approve the holiday in order to qualify for the Super Bowl, a second attempt was successful. The National Football League Arizona Cardinals’ new stadium in Glendale hosted the 2008 Super Bowl, the second held in the state.
The immigration law could also complicate Arizona’s efforts to keep the Chicago Cubs’ spring training baseball facility in Mesa. The state Legislature is seeking a mechanism for issuing $84 million of bonds to finance a new stadium complex in the Phoenix suburb. While the measure passed in the House, it has stalled in the Senate, with disagreement about how to raise revenue for debt service.
“Major League Baseball might be keeping a close eye on the developments in Arizona,” noted Evan Weiner, a commentator on the business and politics of sports. “There will be a sports reaction to the legislation signed into law by Arizona Gov. Jan Brewer. It is just a matter of time before a powerful sports group reacts and it just might cost Arizona a big event if history is any indication.”
Like most MLB teams, the Cubs’ roster includes several players from Latin America, who would be required to carry proof of their immigration status while in Arizona to avoid the threat of arrest.
In other cities with large Hispanic populations, including Chicago, calls for boycotts of the Arizona Diamondbacks’ baseball games began circulating on the web after Brewer signed the bill. The Diamondbacks’ owner, Ken Kendrick, is a major contributor to Republican politicians.
Weiner also said that corporate sponsors of sports facilities such as Chase Bank, namesake of the Diamondbacks’ Phoenix stadium, could get pressure from boycotters. The annual Fiesta Bowl in the Cardinals’ University of Phoenix stadium is sponsored by Frito-Lay’s Tostitos brand.
As Mesa and the state seek to work out a deal with the Cubs by the July 1 deadline under a memorandum of understanding, Naples, Fla., continues its efforts to lure the Cubs to its “Grapefruit League,” the spring-training counterpart to Arizona’s “Cactus League.”
The Arizona Sports Tourism Authority, which has issued bonds for several Cactus League stadiums in the Phoenix area and also financed the Cardinals’ stadium in Glendale, has already suffered a downturn in revenue during the recession.
“The severe economic downturn affecting Arizona has sharply reduced tourism-related revenues in Maricopa County,” Fitch Ratings noted in a recent report on ASTA that upheld the agency’s A-minus senior-lien and BBB junior-lien ratings. “After registering flat revenues in fiscal 2008, the lodging excise tax and car rental surcharge recorded declines of 18% and 10%, respectively, in fiscal 2009 and double-digit percentage declines were budgeted for fiscal 2010.”
Created in April 2000 by SB 1220 and voter-approved Proposition 302, the sports authority has a 30-year authority to levy a 1% tax on hotel rooms and $2.50 fee on car rentals to support stadiums and sports facilities. With tourism and business travel in decline, ASTA’s expenditures for the last fiscal year were 110% of revenues, forcing the agency to tap $3.4 million from its reserves.
“We began FY 2009 with a lowered revenue forecast which, at the midpoint of the fiscal year, was lowered even further by 15% for the tourism revenues,” the authority’s annual report read. “The reality is that the decline has been even more significant and is projected to grow over fiscal years 2010 and 2011 by 5% per year.”
In Scottsdale, the affluent Phoenix suburb, city officials were already bracing for a strained budget to meet debt service on $154 million of bonds for sports and tourism-related projects. With the triple-A rated city facing a $6 million demand on general funds this year, the drain is expected to reach $16.6 million at its peak in 2020.
The Scottsdale projects are not producing sufficient revenue to cover municipal property corporation bonds that did not require voter approval, officials said. The bond debt includes $20 million for renovation of Scottsdale Stadium, which hosts spring training for the San Francisco Giants. San Francisco’s Board of Supervisors is among those considering a boycott call.
Meanwhile, Scottsdale’s good fortune in attracting the Colorado Rockies and Arizona Diamondbacks to a new stadium has left Pima County to the south holding the bag on $22.7 million of bonds that will no longer be supported by revenue from spring training games.
Without the seasonal income, about $3 million in annual debt service must come from the county’s general fund. Tucson, the county seat, will no longer host any spring training and is seeking new uses for vacant stadiums, including possible recruitment of Japanese baseball teams.