Arizona Legislature Defied Voters To Change The Heritage Fund

Arizona voters approved Proposition 200 in 1990 with the belief that it would annually divert up to $20 million of Arizona State Lottery revenue to create and maintain two natural Heritage Funds, one administered by the State Parks Board, the other by the Game & Fish Commission. But since then, the Arizona Legislature has made drastic changes.

Old Arizona state capitol building, Phoenix, Arizona.
Old Arizona state capitol building, Phoenix (Jeff Burgess)

The biggest change was in 2010 when they terminated the State Parks Heritage Fund with the passage of budget bill HB 2012, purportedly to divert the $10 million of lottery revenue it received annually to more important purposes. This was despite that fact that Proposition 200 had stated that one of its primary purposes was to annually dedicate money to the fund that was “separate” from money “appropriated by the legislature.” (The Arizona Legislature partially restored the State Parks fund in the FY 2022 state budget bill with an appropriation of $5 million.)

SB 1212

However, prior to killing the State Parks fund, the Legislature had already changed the Game & Fish Heritage Fund in April 1995 when it passed SB 1212, a strike-all bill introduced by Sen. Larry Chesley, R-Gilbert. It expanded and blurred the definitions of the expenditures that were allowed from the fund. Proposition 200 had required that the $10 million of lottery revenue the fund received annually had to be used for specific purposes. The biggest portion, 60%, was required to be spent on sensitive wildlife habitat Identification, Inventory, Protection, Acquisition, and Management (IIPAM). And 5% was required to be spent for acquiring public access to public lands. SB 1212 added the words “maintenance” and “operations” to the descriptions of the allowable expenditures for these two categories. These words may have seemed innocuous, but they facilitated a significant change in the fund’s focus from protecting and acquiring endangered species habitat, towards increasing big game populations and providing subsidies to Arizona ranchers.

This was the Legislature’s first session after the “Republican Revolution” in the 1994 elections. Many of its members were supporters of the “Wise Use” movement, which promotes local control and commercial use of public lands managed by the U.S. Forest Service and Bureau of Land Management (BLM). (They call it stewardship.) Many had also been riled up by the Clinton administration’s public land regulatory reform initiative, known as Rangeland Reform ’94, that was being implemented by Interior Secretary, and former Arizona Governor, Bruce Babbitt.

There’s no doubt that the Arizona Game & Fish Commission understood their precarious political situation during this time. In January, for example, Republican Gov. Fife Symington had submitted a draft bill to the Legislature that would have, among other things, merged the Game & Fish Department with the Arizona State Land Department, and created a new agency called the Arizona Department of Natural Resources. Its director would have served at the pleasure of the governor, and the independent Game & Fish Commission would no longer have been needed. The bill didn’t get introduced, but the message had been sent. Then in March, Symington held a Land Policy 2000 Forum in Flagstaff to pander to Wise Use Movement supporters by proposing measures to assert state control over public lands in Arizona. He reportedly received a standing ovation at the meeting for criticizing environmentalists. The takeover of public lands didn’t happen, of course, but SB 1212 was a product of the political climate at that time.

Soon after the passage of SB 1212, the Game & Fish Department’s annual Heritage Fund reports to the Legislature began to leave no doubt that the agency understood the law’s intent. Beginning with the FY 1997 Heritage Fund Annual Report, the fund’s public access expenditure category began to include ranch access agreements, wherein ranchers were compensated for allowing the public to cross their private land to access adjacent public land. And the IIPAM category had a new subcategory of expenditures called stewardship. It included compensation for ranchers that entered into habitat improvement agreements. Furthermore, the report showed these habitat agreements were integrated into the Department’s Landowner Relations Program (LRP), which also uses Habitat Partnership (HPC) grants, along with other funds, to finance projects on ranches. In other words, SB 1212 broadened the legal definition of Heritage Fund expenditures so they could be used to help to increase the pot of money the LRP used to complete ranch agreements.

Another result of SB 1212 was a significant reduction in the Department’s release of public information about how the fund’s money was being spent. As per ARS § 17-298.C.7, the fund’s annual reports are only required to list and describe the grants that are issued. The money spent on ranch agreements, however, is only required to be summarized. Prior to SB 1212, the annual reports showed that most expenditures were grants. But starting with the FY 1997 report, more of the expenditures began to be in the form of project administration expenses, such as maintenance and operation expenses for ranch agreements.

The first Performance Audit of the Department’s administration of the Heritage Fund, issued in August 1996 by the state’s Office of the Auditor General, recognized this situation. It pointed out that grants made up only about 8 percent of all fund expenditures. It suggested that the Legislature should revise the fund’s reporting requirements to require the Department to “report annually on all Heritage fund program areas,” because grants and land acquisitions accounted for “less than 40% of the $10 million” the fund received each year. But the Department responded that it would prefer sticking with the existing situation, “rather than creating new and additional reporting requirements.”

The subsequent first decennial Performance Audit of the Heritage Fund in 2001 revisited this issue. It stated “the Department needs to improve its annual Heritage Fund performance report by including additional details about expenditures,” and pointed out that “no expenditure data is detailed at the project level.” It added that “it is particularly difficult to determine whether projects under IIPAM, the largest Heritage Fund program, are appropriate.” The audit even suggested convenient ways to present the information in the annual reports. But the Department’s response was, “The subject report has never been considered a report to the public. Its sole purpose has been to appraise the Legislature (pursuant to statute).”

There have been some examples of ranch agreements included in the annual reports, but they lacked important details. For instance, the FY 2007 and FY 2008 reports, which were issued during the administration of Democratic Gov. Janet Napolitano, were the only ones that showed the dollar amounts spent on individual ranch access agreements. Undoubtedly, there have been many other agreements that weren’t mentioned in any of the reports. In October 2002, for example, the Department’s LRP program manager at the time said that there were “230 or so” ranch agreements in effect.

By the time the second decennial Performance Audit of the Heritage Fund was completed in 2011, the Auditor General’s office had given up on suggesting that more information about non-grant expenditures should be included in the fund’s reports. And starting with the fund’s FY 2014 annual report, the Department began to provide even less information about the Heritage Fund money used for ranch agreements. Since then, the reports have mostly shown just the total number of agreements completed each year.

SB 1361

Ranch agreements funded with IIAPM money disappeared entirely from the Heritage Fund’s annual reports beginning with the FY 2018 report. But that doesn’t mean there weren’t any. In fact, the passage of SB 1361 in 2016, sponsored by Gail Griffin, R-Hereford, increased the amount of IIPAM funds available to complete them. It did this by reducing the amount of IIPAM funds required to be spent on acquiring sensitive wildlife habitat from 40% of the total IIPAM expenditure monies to just 20%. Since the IIPAM expenditure category gets $6 million of the fund’s annual $10 million of lottery revenue, SB 1361 increased the amount that was available for habitat improvement ranch agreements by $1.2 million a year.

The Department recently confirmed to me that ranch agreements are still being made with the IIPAM money, and that it was a conscious decision to quit including specific information about them in the fund’s annual reports.

Appropriateness of IIAPM Habitat Improvement Expenditures

The lack of information about the money spent on IIPAM habitat improvement ranch agreements makes it difficult to assess whether or not they provided a net benefit to the local wildlife, or were primarily ranch subsidies. The information in the annual reports certainly raises questions about the appropriateness of some of them. For example, the definition of “sensitive habitat” found in ARS § 17-296.2 describes threatened and endangered species habitat. This is what the IIPAM money is legally required to be spent for, but some if it is being spent on big game habitat. As mentioned previously, the fund’s FY 1997 Annual Report admits that some IIPAM money was used for Habitat Partnership Committee ranch projects, which are focused on big game species. The fund’s reports also indicate that IIPAM money was spent on salt to lure elk away from private lands and livestock salting areas. And they also show it was used to help grow food for elk on private pastures, and build elk-proof fences to keep them off private property. It’s difficult to see how these projects protected and managed sensitive wildlife habitat.

Moreover, the earlier reports indicate that many IIPAM projects often involved the construction of new livestock waters and fences. These “range improvements” are characterized as inherently good things – but that’s not always the case.

It’s often claimed, for instance, that new livestock waters always benefit the local wildlife. But many Arizona wildlife species are adapted to the state’s arid environment, and water is only one part of their habitat. Building livestock waters allows cattle to use new areas, which can adversely affect the wildlife habitat components of food and cover in those places. New livestock waters can also create spatial competition between cattle and wildlife, such as elk and deer, which prefer to move out of areas when cattle are present.

New livestock waters are also justified with claims that they will lure cattle away from riparian areas. But cattle are lazy, and many of them will continue to hang out in riparian bottomlands unless they are fenced out of them. Moreover, if a new livestock water is created by converting a natural spring into a watering trough, the spring’s existing riparian habitat can be reduced or destroyed. And even if a new livestock water can provide a net benefit to the local wildlife, the benefit disappears if the rancher only maintains the water when cattle are using the pasture.

New livestock fences don’t necessarily benefit the local wildlife either. For example, a new fence that creates a riparian pasture can help protect important habitat from livestock. But if the stream stretch is located in a larger pasture that wasn’t being grazed in order to protect the riparian area, the fence allows livestock to use the rest of the pasture, which increases grazing impacts on the surrounding uplands. This is what happened in 2002 when a $31,300 IIPAM Habitat award was provided to the M Diamond Ranch to build a new fence along West Clear Creek in the Coconino National Forest’s Buckhorn Grazing Allotment. According to a 2002 biological opinion from the U.S. Fish & Wildlife Service, the pastures where the fence was built hadn’t been grazed since 1994 in order to comply with the Endangered Species Act. It’s likely this isn’t the only time something like this has happened.

Livestock fences are usually built to create new pastures to facilitate the implementation of rotational grazing. This can certainly improve the condition of the grazed vegetation. But, like new waters, they bring cattle impacts to new areas, particularly if the new livestock management plan is used to justify an increase in cattle numbers, or conservative forage utilization limits aren’t enforced.

This is especially a problem when the new range improvements facilitate the implementation of  holistic resource management (HRM) grazing schemes, which can significantly damage wildlife habitat. HRM grazing plans are typified by high utilization rates, which can increase competition between cattle and wildlife for forage, and degrade watershed health and wildlife habitat – especially in dry ecosystems and during droughts.

The fund’s early reports also list IIPAM habitat improvement ranch agreements for “grassland restoration” projects. They typically involve killing mesquite trees in the desert, or juniper trees in the higher country. It’s claimed these are watershed improvement projects that restore grasslands from “invasive” woody vegetation. But there’s not much difference in erosion rates between healthy landscapes covered in woody vegetation versus those in grass. And there are questions about whether or not native trees should be considered invasive, especially in the context of ongoing climate change.

The primary objective of these grassland projects was supposedly to grow more grass for wildlife – not cattle. It’s true that elk also like to consume grass, and pronghorn antelope, another game species, prefers open grassland habitat. But there are numerous wildlife species that prefer habitat that has mesquite or juniper trees. Mesquite trees, for instance, are considered keystone plants of the Sonoran Desert ecosystem. It’s doubtful the primary goal of all of these projects was to improve wildlife habitat when you consider that it takes years for the land to recover from being torn up or sprayed with herbicides in order to kill woody vegetation – particularly when there’s a drought. Moreover, after the land has been stripped of its existing vegetation, it is very susceptible to catastrophic erosion during a heavy rainstorm.

Appropriateness of Public Access Expenditures

There are also questions about the use of the Heritage Fund’s public access monies which, as per ARS § 17-296.1, are required to be spent to provide “entry to publicly held lands.” For instance, the fund’s FY 2014 report mentioned the completion of a public access ranch agreement with the Navajo Nation, which owns the Big Boquillas Ranch located in northern Arizona south of the Hualapai and Havasupai reservations. The “Big Bo” is composed of about 491,000 acres of private land owned by the tribe, checkerboarded with about 238,000 acres of State Trust Land, making it the largest ranch in Arizona. It’s managed by Cholla Livestock LLC, which has a grazing lease with the tribe.

The agreement created a permit system administered by Cholla Livestock LLC wherein hunters would be able to pay the company a fee to access the ranch lands, and the Department would enforce ranch rules and Arizona hunting regulations. In 2016 the agreement was renewed, but the operation of the access permit system was taken over by Big Bo LLC, a new company owned by Cholla Livestock LLC. Furthermore, the new agreement provided $55,000 a year to the tribe and its lessee “for use as a cost share” for “mutually beneficial projects to provide water for wildlife and cattle.” The money has been provided in the form of $55,000 annual HPC grants, which were increased to $100,000 annually in 2018.

This access agreement, however, only applies to licensed hunters – which excludes the vast majority of Arizona residents. Moreover, the ranch doesn’t include any public land, nor is it adjacent to any public land. It’s comprised only of tribal lands that are checkerboarded with sections of state land – and State Trust lands aren’t public land. In fact, the State Land Department requires the purchase of a recreational permit to visit them. This probably wasn’t the only time the fund’s public access money was used for a ranch agreement that didn’t provide access to public lands.

Furthermore, most of the public access ranch agreements mentioned in the annual reports appear to be temporary, short-term agreements that must be renewed every few years, so ranchers are repeatedly compensated for allowing the public to cross their land.

The Troubling Lack Of Transparency

My questions about the Game & Fish Department’s administration of Heritage Fund ranch agreement expenditures couldn’t be answered by the available public records, so I began to submit public record requests. First, I wanted to acquire all of the fund’s annual reports. Some were posted to a page on their website, however, they only went back to state FY 2013. So on March 29, 2021, I submitted a public record request to the Department to ask for copies of all of the fund’s annual reports back to 1995. On May 7, 2021, they sent me copies of the reports from FY 1994 through FY 2011, but the reports for FY 1995 and FY 2012 were missing. The accompanying cover letter explained they were “unable to locate” the fund’s annual reports for those two years.

I then reviewed the available annual reports to try and identify as many ranch agreements as possible. It was obvious, however, that many agreements were missing from the reports. So on May 18, 2021, I submitted record requests asking for more information about all of agreements that were completed with Arizona ranchers from FY 1996 through FY 2020. I was soon contacted by phone by the manager of the Department’s Landowner Relations & Habitat Enhancement Program and he informed me that I was required by the Arizona public records law to ask for specific records that already existed, and my requests had asked for records that didn’t exist. He explained that was because the Department didn’t have a comprehensive list of all of the Heritage Fund ranch agreements, only the individual project records for each agreement.

I subsequently revised my requests to only ask for information about the specific ranch agreements named in the annual reports, and resubmitted them on May 24. One of the requests was for information about the IIPAM habitat improvement agreements named in the reports, and the other was for the named public access ranch agreements. On June 24 they provided me with a relative handful of records, including only 5 of the IIPAM agreement records I had requested, and only 4 of the 61 access agreements I asked for – although they did send me 26 recent public access agreements I hadn’t requested because they weren’t listed in the reports. The cover letter explained they were again “unable to locate” most of the records I requested. (The records that I did receive have been posted to this site.)

Their response was disappointing, but from other sources I had obtained a couple of Heritage Fund IIPAM money expenditure records for projects on ranches that didn’t involve habitat improvement ranch agreement contracts. One was a simple award letter, and the other was a collection agreement. I wondered if I might be able to obtain more records about IIPAM expenditures from the Department if I asked for project award letters and/or collection agreements, instead of ranch agreements. So I submitted another public record request on July 11 asking for those types of records for the IIPAM ranch projects named in the annual reports. As of the date of this post’s publication, I haven’t yet received any response.

Conclusions

It’s obvious the Arizona Game & Fish Department is reluctant to provide more public information about Heritage Fund non-grant expenditures. The September/October 2020 edition of the agency’s Arizona Wildlife Views magazine, for example, included a story about the Heritage Fund that only mentioned the fund’s grants.

Perhaps the agency is scared of somehow losing Heritage Fund dollars? The 1996 audit said the fund’s annual $10 million accounted for about 25% of the Department’s total revenues, and their 2020 magazine story about the fund said it still provided about 10% of their annual budget.

Whatever the reason, it’s disturbing that millions of dollars are being spent every year with very few details being provided to the public. Hopefully, some questions will be answered when the Office of the Auditor General completes their third decennial audit of the Heritage Fund in late 2021.

Note: The amount of money the Arizona Game & Fish Department receives annually from the Arizona State Lottery for the Heritage Fund can be less than $10 million a year if the overall lottery revenues for the year are too low. In FY 2000, for example, the Department only received $8.1 million.

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