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Tourism backlash over immigration law could cost Arizona bond rating, tens of millions

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Tuesday, May 11, 2010 15:07 EDT
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They come for the sun, the golf, the Grand Canyon and the Painted Desert.

But as tourists increasingly shun Arizona over the state’s new immigration law, their desertion is likely to spill some paint of their own: red ink stains all over state and local budgets.

Nineteen conferences have been canceled so far in Arizona as a result of the legislation adopted last month, according to a Moody’s Investors Service report Monday. The desertion — with threats of more to come on the horizon — casts a cloud over the state’s bond rating, according to the Moody’s outlook reported by Bloomberg News.

Arizona was among the states hit hardest by the home-mortgage meltdown, and threats of travel boycotts have only darkened the state’s financial picture. Tourism spending produced $1 billion in state and local tax revenue for Arizona in 2008, Moody’s said.

“Preliminary response to the immigration legislation has already had some impact on the state’s tourism/travel sector,” Maria Coritsidis, a Moody’s analyst, wrote in this week’s report from the ratings company. “A serious weakening of this important sector, however, could have a negative impact on the state’s credit, as it could lead to further weakening of state finances that have already been negatively affected by the recession.”

The cancellations thus far will cost the state only about $6 million in revenue, Moody’s said, but critics of the new law are swinging for the fences. The National Council of La Raza has threatened to boycott Major League Baseball’s 2011 All-Star Game, slated for Phoenix, and nearly 30 organizations have now joined the protest, CNN reported Tuesday. Some Congress members, including Sen. Robert Menendez (D-N.J.) and Jose Serrano (D-N.Y.), also have pushed for a boycott of the game.

“We’ve been very encouraged by the response,” Clarissa Martinez, director of immigration and national campaigns for La Raza, told CNN.

Direct-travel spending in the Grand Canyon State is about $19 billion a year, according to CNN.

The Phoenix area alone could take a $90 million hit in lost tourism revenue, not including the all-star game, the New York Daily News reported. Four major events in the city have been canceled.

“We have an image and public relations problem of what might be unprecedented proportions,” said Deputy City Manager David Krietor.

This is not the first time Arizona has felt the heat of travel boycotts stemming from human rights issues. According to USA Today, the state lost about 170 conventions from 1990 to 1993 from boycotts because of its decision not to approve a Martin Luther King Jr. holiday.

But Paul Senseman, a  spokesman for Gov. Jan Brewer, issued a statement to the newspaper saying that Brewer “is deeply concerned that the federal failure to secure our border has already harmed our tourism industry.”

Brewer signed Arizona’s illegal-immigration bill last month. The law makes it a misdemeanor to be in the U.S. illegally and requires local police to determine the immigration status of anyone suspected of being in the country without proper documentation.

 
 
 
 
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