DHS Extorts Higher Fees for a Rotten Licensing Racket

Arizonans for Prosperity

One of our taxpayer activists, Dorothy, wrote me an email (which I have pasted below), complaining about the huge increases in preschool fees that have been mandated this month by the Arizona Department of Health Services.

Here was my response:

Dear Dorothy—

Your daughter is dealing with a rotten government scam, from start to finish.

A lot of economists will tell you that the entire licensing scheme is a racket, and that nearly all of the useful and efficient regulation of child care centers is achieved through reputation, parental/consumer choice, and the tort system.

It is wrong for DHS to raise fees to astronomical heights to prop up a mostly useless licensing scheme.

Unfortunately, as you can see in this news article, the people who ostensibly defend the rights of children in Arizona have been barking up the wrong tree:


The child rights activists are demanding that the government spend more money to prop up the licensing scheme, when they should be working toward pulling the plug on the whole thing.

Thank you for writing to me. You have reminded me that I need to bring this matter up before members of the Legislature’s HHS committees.

For Liberty,


Here was Dorothy’s email to me:

Sent: Sunday, October 25, 2009 8:50 AM

Hi Tom,

I’m not sure if you can help shed any light on the below email my daughter received from the preschool (Bethany Learning Center) that her son goes to. Is this a done deal? Is there anything we can do besides writing letters, etc. the director suggests. This seemed to come out of nowhere – we hadn’t heard anything about it.

Any help or suggestions would be appreciated.


Dear Parents,

As most of you have either heard or read this past week, The Department of Health Services is planning a licensing increase for licensed preschools. The increase will be raised by 8,800 percent. For (Name of preschool withheld) our fee will multiply from $150.00 to $13,442.00 based on the sliding scale fee schedule. The proposal for the increase was made due to deep budget cuts. Unfortunately the escalation of this proportion is outrageous.

This increase in fees comes at a difficult time for preschool and child-care providers. We have all been hit hard with the recession. The implementation of these new fees with no time to plan or budget is too much too fast. We agree the rates are due to go up, however this is something that needs to be done gradually not overnight.

(Name of preschool withheld), as most facilities, is scrambling to figure out how this increase can be paid for. Ultimately these costs are likely to be passed on to families who attend each facility. The Department of Health Services is organizing a public meeting in Phoenix on Tuesday, October 27, from 5:00-6:00pm, for those of us affected by this increase to offer some alternatives to the proposed fee structure. If you are as concerned as I am about the increase in licensing fees, plan on attending the meeting so your voice can be heard.

As the Director of (name withheld) I would like to encourage you write a letter to Governor Jan Brewer letting her know that this is outrageous. It is a back door tax being imposed and it has the potential of putting facilities such as ours out of business. The governor signed this bill; she needs to be aware of the impact. In addition your concerned e-mails to the legislators letting them know that this fee structure will be devastating to child-care facilities will employ them to get involved. I have included the links to the e-mails of Will Humble – Interim Director of Department of Health Services; Bob Burns – President of the Senate; Kirk Adams – Speaker of the House; Nancy Barto – Chairperson of the Health and Human Services Committee; the Senate Appropriations Committee members; the House of Representatives Appropriations Committee; and Governor Brewer’s office.

Let me know if you have any additional questions.


(Name withheld)

Senator Burns: No More Moratorium

This just in from Senate President Burns. From a public relations standpoint, this could become a sore point for the focus-like-a-laserbeam-on the budget crowd, but it will also ensure that other bills get started and heard in a timely manner. I’m willing to bet there are a lot of legislators down at the Capitol who are not looking forward to going through the next session with the budget deficit still not resolved. By hearing non-budget related bills in addition to resolving the budget crisis, the next session’s workload may take the incentive out of being a “citizen legislator” at $24,000/year (plus per diem). Many of the Democrats are there as activists or because they see it as a “political hobby.” Yes, there are some conservative activists down there but I find little to disagree with them on public policy and the budget.

Here’s Senator Burns’ Memo:


Robert L. Burns
President of the Senate
District 9


TO: All Senators
DATE: October 29, 2009
RE: 49th Legislature, 2nd Regular Session

As we prepare for the upcoming legislative session, I believe it is necessary to outline the Senate schedule with regards to committee consideration of bills. While I maintain that the State’s financial condition is the most pressing issue and should remain a key focus, all standing committees will meet and take legislative action when session begins. I urge all committee chairs to use their discretion in placing priority on which bills advance through the process and are vital to the citizens of Arizona. I intend to coordinate with the Speaker on the schedule for next year, but I wanted to quell the rumors about the Senate order of business.

Federal stimulus money makes state budget deficit worse

By Tom Patterson
Goldwater Institute
State Rep. Kyrsten Sinema recently rebuked U.S. Sen. Jon Kyl in the pages of the East Valley Tribune for recommending that “stimulus” funding be terminated. The federal government, by spending $308 million on infrastructure in Arizona, is providing a “much needed economic boost” to the state, she claimed.

Nobody can say for certain what might have happened without this $767 billion handout. But economic downturns always work themselves out. Markets are inherently self-correcting. In fact, there is a strong possibility that the massive bailouts and market manipulations by the U.S. Treasury and Federal Reserve have lengthened and deepened our current recession.

But there’s another, more fundamental problem with the “stimulus” program. It isn’t paid for with real money. The federal government is simply sharing the use of its magic printing press with the states for a while.

Printing trillions of dollars to pay for today’s wishes is wretched economic policy. When the stimulus money runs out, states will be in worse shape than ever because of the program expansions required to obtain the stimulus funds. Sooner rather than later, states will be forced to face the bitter reality of a “near permanent reduction in state revenues that will force us to reduce the size and scope of our state governments,” according to Gov. Mitch Daniels of Indiana, writing in the Wall Street Journal.

Like many individual Americans, many states spent extravagantly in the good economic times of this decade, making no provision for the future. Arizona unfortunately was one of the worst offenders. Now, that future is here. States are banking on an economic rebound, but gross domestic product growth would have to average 7 percent, twice the historic average, for revenues to be restored to their previous level by 2012.

In response to declining tax revenues, more than half the states have raised taxes. But today’s mobile individuals and businesses simply flee states that try to sock it to them. Beneficiary states are like Indiana, where state spending has been severely reduced and the tax climate is business-friendly. This year alone, more than 30 businesses have moved from tax-and-spend states to Indiana.

Yet Arizona Gov. Jan Brewer still insists on protecting state spending as much as possible by raising taxes. But she’s just postponing the day of reckoning. There is no choice but to fundamentally reduce the scope of state government or face permanent economic decline. Daniels notes that “wishing for an improbably huge boom while chasing your own tail through self-destructive taxes won’t prove much of a strategy.” Is anybody listening?
Tom Patterson is chairman of the Goldwater Institute and a former state senator. A longer version of this article originally appeared in the East Valley Tribune.