Local opinion: Rio Nuevo not alone in 'crony capitalism'

“Crony capitalism” is how a state senator describes the Rio Nuevo District’s subsidies for business development in Tucson.

Sen. John Kavanagh’s assessment is a recognition that Rio Nuevo’s board of cronies supports a small circle of connected developers, giving them millions in tax breaks and subsidies. That’s despite most of those developers being wealthy and successful, certainly able to obtain financing without taxpayer subsidies.

So, yes, Rio Nuevo’s board members unquestionably practice crony capitalism.

As do the hypocritical Kavanagh and fellow legislative Republicans, the very people who tried to eliminate Rio Nuevo’s cronyism last month in their 2026-27 budget proposal. The governor vetoed it.

Lawmakers who criticized Rio Nuevo are authorizing paying for-profit companies hundreds of millions of taxpayer dollars to operate six of the 16 state prisons.

GEO Group Inc. and CoreCivic Inc. got $275 million this fiscal year and will get more in the next to run prisons. They benefit from lawmakers’ cronyism.

Arizona’s Joint Legislative Budget Committee reported that the state in the fiscal year ending June 30 paid GEO Group and CoreCivic $31,000 for each of 11,000 inmates they housed. That’s the archetype of crony capitalism, legislators awarding tax dollars to favored businesses rather than having the state run its prisons.

Originally, funding private prisons was pitched to save taxpayer money – business profit motives would make operations more efficient and less costly – but the rules have changed, and legislators now unabashedly support supplementing these businesses.

Included are contracts that guarantee payments for minimum numbers of inmates, so even if there are fewer prisoners, the state subsidizes GEO and CoreCivic for unoccupied prison beds. That’s irony: When there are fewer criminals, the state pays more, and that dissipates taxpayer savings.

Instead of these sweetheart deals for private-prison companies, legislators should heed court orders and adequately pay for inmate health care in 10 prisons the state itself runs.

Fourteen years of fruitless litigation led U.S. District Judge Roslyn Silver of Phoenix to put prison health care under a court-appointed official in February, saying the state “failed completely.” That was after Silver repeatedly ordered the state to improve inmates’ health care.

Instead, legislators made deals with private-sector cronies, leading to higher profits.

Here’s how that has worked, according to media reports about lawmaker Kavanagh, who accused Rio Nuevo of crony capitalism and practicing “kind of a scam.”

In March 2014, Kavanagh, as House Appropriations Committee chair, quietly added $900,000 to the prisons budget for GEO Group just before final voting.

The Arizona Republic reported on his surreptitious crony capitalism: “Kavanagh said GEO had been giving the state a ‘cut rate’ for emergency beds during the recession and, ‘now that the economy has come back, they want to get more money.’”

GEO had already agreed on payments, and state officials said no more money was needed, the Republic reported. Plus, the recession ended five years earlier.

Arizona’s final budget that year excluded the $900,000 additional payment to GEO.

In January 2020, Kavanagh met with one crony, a GEO Group lobbyist, for food and drinks, Phoenix NPR affiliate KJZZ reported. Later, people affiliated with GEO contributed to Kavanagh’s re-election campaign, as they had before and have since. Food, drinks, contributions – all legal crony capitalism.

In 2021, “Kavanagh joined his Republican colleagues and voted for a $43 million increase” in private-prison payments, KJZZ reported.

Crony capitalism has continued and is in the 2026-27 budget for private prisons, with millions in “one-time funding” for another year. Additionally, despite Kavanagh’s protests, legislators are allowing the Rio Nuevo District board’s continued cronyism.