As voters go to the polls today (Tuesday) to make their final decisions, the state legislature's alternative-fuel rebate program continues to give them plenty to ponder.
Against a constantly changing backdrop of new charges and fresh revelations, all but two of the legislators who took advantage of the program by purchasing one or more discounted vehicles have rescinded their orders. The two who haven't canceled their orders are representatives Debra Brimhall and Jake Flake who represent Payson and other communities in District 4.
Under the now-discontinued rebate program, the state pays the entire cost of converting a vehicle to propane or compressed natural gas, plus 30 percent of the cost of the vehicle itself. On a $30,000 automobile that costs an additional $10,000 to convert, the state would pay all of the $10,000 conversion cost plus another $9,000 on the cost of the vehicle.
The buyer would thus pay $21,000 for a vehicle that costs $40,000, and the program does not require that it actually be run on alternative fuel.
Brimhall (R-Pinedale), who now says she bought a used Ford Expedition and had it converted "long before" the alternative-fuel vehicle legislation was passed, accused the media of failing to educate the public about the real issues. She does not deny that she applied for a rebate once the program was instituted, but doubts that she will ever see the money.
"The people in my district have begged me to take on these battles," Brimhall said. "I am taking on the oil industry because I believe in alternative fuels.
"I put my passion on the line, and my intentions have been mistaken. If you really believe in taking on the major industries, then you take that risk."
Brimhall said she's offended that people who live in rural Arizona have no right to participate in a program aimed at cleaning the air in polluted metropolitan areas.
"It is ironic that rural people have made headlines in The Arizona Republic over this. We are trying to contribute to solving the problem, and we get beat up for it," she said. "I can't believe how many phone calls I get from people in my district who are frustrated by high gas prices. The people in my district are paying through the nose because of the low-income level here."
Brimhall claims that she voted for the program because every contract contains an escape clause.
"When you sign it, it says your application can be declined for any reason," she said. "That's the legislation I put my vote to."
She is apparently referring to a disclaimer signed by buyers of alternative-fuel vehicles that says the state can reject any or all applications if money is unavailable, Ted Ferris, deputy chief of staff for Governor Jane Hull, said. But, he said, that option would subject the state to a host of lawsuits from buyers who have made financial commitments.
Nevertheless, Brimhall thinks the program can still be fixed, and that adjustments are a natural part of the legislative process. And she vowed to stay the course.
"I will continue to fight ..." she said.
Flake (R-Snowflake) was unavailable for comment. However an aide in his office said he has canceled his order for a new pickup truck, but is keeping his Ford Crown Victoria. In an earlier interview, Flake said he would try to cancel the truck, on which he had not yet taken delivery.
Flake and Brimhall became the lone holdouts when Rep. Jean McGrath (R-Glendale) canceled an order for a propane-powered pickup truck last week. In a press release dated Oct. 27, McGrath said the action was taken "after learning of the high cost to the state due to the unforecast popularity of this program."
In other developments, Governor Jane Hull and House Speaker Jeff Groscost continue to blame one another for allowing the program, now predicted to cost the state as much as $485 million, to spiral out of control. Hull is accused of ignoring two early memos that suggested the program was ripe for abuse.
The governor is also accused of waiting 11 days after the program was clearly out of control before taking action, and of then announcing a plan that allowed a two-week window of opportunity before the program would be halted. During those two weeks, frenzied buyers pushed the cost to the state from $76 million to the projected $485 million.
Groscost, meanwhile, has decided to stand for re-election despite entreaties by party loyalists that his defeat could cause Republicans to lose control of the legislature. The speaker faces a state attorney general's investigation into possible criminal wrongdoing and a House ethics committee probe.
He is accused of quietly lobbying the Environmental Protection Agency to allow conversion kits to be installed on large vehicles, leading to orders for 20,000 vehicles under the program. Both the governor's office and the Joint Legislative Budget Committee, which estimated the program would only cost $3 million, claim they were not informed of Groscost's dealings with the EPA.
Groscost also is accused of holding a series of meetings in his Mesa neighborhood to explain the advantages of the alternative-fuel vehicle program, meetings that resulted in dozens of his neighbors and friends signing contracts for vehicles under the program. Some 39 vehicles have been ordered by residents who live within a quarter-mile of Groscost, including one neighbor who has applied for nine rebates.
But the most damaging accusations against Groscost include conflicts of interest and trying to profit personally from the program he was instrumental in creating. The controversy revolves around his relationship with Nathan Star, owner of AZ Star Alternative Fuels, one of the leading alternative-fuel conversion businesses in the state.
Groscost admits that Learner played a minor role in drafting the legislation, and after first denying that he purchased at least one vehicle from Learner, the speaker later admitted he did. Attorney General Janet Napolitano has opened a criminal investigation into the growing scandal, reportedly to find out whether Groscost got sweetheart deals from Learner and whether, in fact, they have a longstanding business relationship.
Finally, Groscost has been spending major dollars to jump-start his flagging campaign, expenses that don't show up on his recent campaign finance reports. By not filing accurate daily reports as required by Arizona's Clean Elections law, Groscost could be fined and ultimately disqualified from office.
State leaders are also now worried that lost sales taxes and motor vehicle fees may result in the loss of another $83 million on top of the earlier estimate of $485 million, and both Payson and Gila County will share in this additional revenue shortfall. Besides the rebates allowed on converted vehicles, the program exempts owners from paying sales tax and most motor vehicle fees.
Since cities and counties receive a portion of both of these revenue sources, they are waiting impatiently to find out the extent of the damage. Unfortunately, it could be a long wait.
Because of incomplete data from the Arizona Commerce Department, the actual numbers could take months for the Motor Vehicle Division to calculate. According to Byron Smith of the Arizona League of Cities, the final tally of the impact on cities will probably not be known for years.
Payson Town Manager Rich Underkofler acknowledged that the town receives revenue from those sources, but said the actual dollar loss is impossible to quantify at this time.