$3 million car program balloons to $420 million

The Associated Press
Saturday October 21, 2000

PHOENIX – Arizona legislators, meeting in a one-day special session Friday, imposed an immediate one-year moratorium on the state’s runaway subsidy program for vehicles burning alternative clean fuels, a program now projected to cost at least 140 times what was first expected. 

The program allows residents to use rebates and tax credits to purchase alternative-fuel vehicles at about half the price of conventional cars or to convert their cars. It was initially estimated to cost $3 million. Projections now say it will cost taxpayers $420 million or more if not stopped. 

“This is what I would call a budget obscenity,” said Sen. Chris Cummiskey, D-Phoenix, at a Senate Finance Committee hearing Thursday. “We’ve got a situation here where we’re on the verge of bankrupting the state.” 

The Legislature voted Friday afternoon to pass the moratorium bill, which would cover contracts signed beginning Friday to buy alternative fuel vehicles or convert conventional cars. Gov. Jane Hull signed the bill two hours later. 

In hearings Thursday, lawmakers questioned how the program could have been so far off the mark. 

The Legislature’s budget director said it wasn’t clear last spring how popular the generous tax credits and incentives would become. 

“We did not step back and say what was the overall effect,” said Richard Stavneak of the Joint Legislative Budget Committee staff. “We found out the magnitude of the problem at the same time as everyone else.” 

A Hull aide said the surge in interest did not become apparent until late August and that action was taken once the trend was confirmed in September. 

But some senators said lawmakers should look in the mirror before second-guessing, noting the bill was rushed through in the closing days of the session. 

“When we do these things ... we run the risk that these types of things will slip through,” said Republican Sen. Ed Cirillo. He said he was “extremely embarrassed” by the legislation and its problems. 

Hull and lawmakers said they hope to use the one-year moratorium to craft changes in the loophole-riddled program to salvage it, in hopes of getting clean-air benefits. 

Some of the changes being discussed would require subsidized vehicles to actually use alternative fuels – they aren’t now – and would limit subsidies to the manufacturers’ suggested retail prices, excluding expensive add-ons such as leather seats and stereos that now are subsidized.