STATE CAPITOL, PHOENIX –   State Representatives David Marshall, Walt Blackman, and Quang Nguyen have requested a formal investigation under A.R.S. § 41-194.01 (known as an SB1487 investigation) into the City of Phoenix’s policy that allows unelected department heads to unilaterally give away up to $32,000 of taxpayer money to non-governmental organizations without City Council approval or legal authority.

The lawmakers submitted a detailed letter to Attorney General Kris Mayes calling for a SB1487 investigation, providing extensive documentation that Phoenix officials have used public funds to sponsor outside organizations and events through a so-called “Gift Policy” that was never approved by ordinance and appears to violate multiple provisions of Arizona law and the state Constitution.

“For months, Phoenix officials have stonewalled legislative oversight and refused to provide any lawful justification for allowing unelected bureaucrats to hand out taxpayer dollars as they see fit,” said Representative David Marshall, Chairman of the House Public Safety & Law Enforcement Committee. “Dozens of City officials and staff have been operating under the radar with no accountability, and it’s time for the Attorney General to step in.”

According to the legislators’ request, the City’s accounting system reveals mislabeled payments and expenditures labeled as “sponsorships,” “miscellaneous,” “marketing services,” “advertising,” and other unexplained donations to non-governmental organizations.

“The City’s own description of how this money is being spent makes clear that they’re not being honest in their financial reports,” Chairman Marshall added. “This is public money. It doesn’t belong to City staff. They can’t just funnel it to nonprofits and pretend that’s legal.”

At a minimum, the Gift Policy violates the following provisions of the Arizona Constitution and laws:

• Article XIII, § 2 of the Arizona Constitution and A.R.S. § 9-499.01, which prohibit city officials from exercising powers not granted by law;
• A.R.S. § 9-303(B), which limits the City Manager’s spending authority to what is specified by ordinance (in this case, only to settling legal claims, not discretionary gifts);
• The Arizona Constitution’s Gift Clause (Article IX, § 7), which bars public funds from being donated or granted to private entities without a direct and proportionate benefit to the public.

“This policy wasn’t approved by the City Council, wasn’t adopted by ordinance, and isn’t authorized by statute or the Phoenix City Charter,” said Representative Walt Blackman, Chairman of the House Government Committee. “It appears to be nothing more than an illegal slush fund for politically favored nonprofits—and that’s exactly what Arizona’s Gift Clause was written to prevent.”

“An abuse of public resources cannot go unchecked. We’re talking about millions of dollars spent with no legal authority and zero transparency,” said Representative Quang Nguyen, Chairman of the House Judiciary Committee. “This is exactly why the Legislature created the SB1487 process—to stop cities from operating outside the law. The Attorney General has a duty to investigate and take enforcement action immediately.”

The lawmakers’ submission includes extensive documentation, including correspondence between Representative Marshall and the Phoenix City Attorney, a legal analysis, and an exhibit of questionable transactions by City departments.

The full letter and exhibits can be viewed here: https://bit.ly/3YJ2s29

Under A.R.S. § 41-194.01, the Attorney General must respond in writing within 30 days.