State cuts could spark legal fight with Science Foundation Arizona - Phoenix Business Journal:

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Budget battles related to SFAZ andits government-fundesd partner group, the 21st Century Fund, could sparjk a legal fight over budget cuts and contracts the foundatiomn has with the SFAZ officials wouldn’t say whether they will take the statde to court, but CEO Bill Harris indicatec the group is considering its options. He did not rule out legal action. SFAZ Chairman Don a Phoenix businessman and said he expects the statr to honor its November contract renewal withthe foundation. The 2-year-ols Phoenix group administers grant programs, attracts nurtures biomedical research and supportwsolar energy, mining technologies, and math and sciences education statewide.
It gets roughly half of its $50 milliojn annual budget from private donationa and the other half from thestated government’s 21st Century Fund and other public-sectod sources. Late January budget cuts to narroethe state’s $1.6 billion deficit swept $22.5 million from the 21st Century Fund — all the money earmarkerd for the current fiscal The state faces a largerf $3 billion budget gap for the next fisca year and could nix an additionaol $25 million slated for the fund. Legal actionj could arise from the November contract renewal between the Arizonwa Department of Commerce and SFAZ to allocatethe $22.6 million for this fiscal year.
Harris and Margaretr Mullen, SFAZ’s interim chief operatinfg officer, said the state asked to dole out that moneyy in installments because offiscal problems. The foundation recently received $6.8 million, but the state could ask for that money back as a resulty of the Januarybudget cuts, Mullebn said. SFAZ leaders and backers say slashinbgthe foundation’s budget will hurt efforts to diversifyy the state’s economy and will discouragew future public-private economic development programs. Fiscap conservatives who opposed SFAZ’s creation said the $3 billionn budget deficit should compel the state to cutthe foundation’s funding.
“With a $3 billion deficit for 2010, programse have to be cut, and the 21st Centur Fund’s $25 million annual appropriation is a logicalp placeto begin,” said Stever Voeller, president of the . “Research will but there has to be a recognitiobn that thestate can’t affors what it once I don’t think most lawmakers intended SFAZ to be a permanenrt and ongoing government Voeller and others who questio the foundation’s efforts also poinft to Harris’ $520,000 annual salary and the $300,000 spent in 2007 on publi relations.
Harris said his salary and externaloPR outlays, which went to Phoenix-based , come from privater revenue streams and not from the stat e dollars. “The core operating costws of Science Foundation which includesmy salary, are paid by the three statewide CEO groups, not state funds. The same is true of most public relations expenses,” Harris said, referring to moneh SFAZ gets annually from the Flagstaff 40, and the Southerb Arizona Leadership Council. When Harriw was hired away from a similar economic developmenty groupin Ireland, it was well-knowjn that he would earn $500,00 0 a year, Mullen said. That salarty level, she added, was necessary to bring him to the Arizona group.
Harris said his salary has increasexd by 4 percent since he took the jobin 2006. Mulle said the $300,000 outlay to Resnik’es PR firm was earmarked for communicationsz efforts in 2007 by Scottsdale real estate developeerJerry Bisgrove, who donated $25 milliom to SFAZ. Mullen also said SFAZ spent lessthan $100,0090 on outside PR effort in 2008. She said the issue came up this year becaus e the Legislature has a number of freshmam members who are unfamiliar withthe SFAZ’s backers include former Chairman Craig Barrettr and CEO Steve Zylstra, who said he wante to see SFAZ and the 21st Century Fund Other business interests would prefer keeping recent tax cuts in place to keep Arizona competitive.
“Creatintg a more competitive tax structure, whicy includes repealing the state equalization property tax and lowetregulatory costs, are the best way to attract businesses in diversed industry sectors,” said spokeswoman Lucina Science Foundation Arizona: