With not a single Democrat in support, state lawmakers gave final approval Wednesday to a $538 million package of tax cuts proponents say will stimulate the economy.
The votes in the House and Senate came after extensive debate about whether there's proof that anything in the package will actually create a single job in the state. Even House Speaker Kirk Adams, R-Mesa, conceded there is no guarantee.
"But this much we know: By reducing taxes on business employers, on entrepreneurs, by getting competitive again, Arizona will finally, thankfully, be in the game,'' he said.
The package, which Gov. Jan Brewer is expected to sign Thursday also drew some Republican opposition. But the reasons were different.
Rep. Eddie Farnsworth, R-Gilbert, expressed concern about some of the provisions in the bill creating a new quasi-public Arizona Commerce Authority to replace the state Department of Commerce. He said this organization will have broad authority to provide "corporate welfare'' in the form of grants to companies to convince them to move here.
That refers specifically to a $25 million "deal closing fund'' which would be at the agency's disposal.
And Sen. Ron Gould, R-Lake Havasu City, objected to the entire process of rushing the measure through, from introduction on Monday to final approval Wednesday. Gould also said it was made clear by legislative leaders that GOP lawmakers were not permitted to try to amend the 214-page package to alter provisions they did not like.
The big-dollar item in the package is a nearly 30 percent reduction in corporate income taxes, phased in by 2018, that will cut the state rate to 4.9 percent. That is designed to give Arizona among the lowest rates in the nation among states that impose a corporate levy.
It also will let multi-state firms that sell most or all of their goods outside of Arizona use a tax-computation formula which would let them escape paying any state corporate income taxes at all.
Another section is designed to reduce business property taxes by 10 percent.
That comes with companion language to increase the amount of local school taxes on homeowners that are paid by the state. That is designed to ensure that the burden is not shifted from businesses to homeowners.
But that change, when it finally takes effect later this year, will require homeowners to watch for -- and mail back to county assessors -- a postcard swearing that they do, in fact, occupy the property. That is designed to crack down on cheaters who take advantage of current law which presumes that all homes are owner-occupied, leaving it up to county officials to find the rentals which do not qualify for the rebate of 40 percent of school taxes owed.
Adams said that $538 million price tag, an estimate by legislative budget staffers, is just a guess. He said it not only seeks to predict the economy in 2018 but also does not account for what he believes will be more business activity -- and, therefore more revenues -- that the change in tax policy will create.
Rep. Bruce Wheeler, D-Tucson, said he is "not convinced'' that a single new job will be created.
"The only certainty is that education will be cut,'' he said. And Wheeler said Arizona already is short-changing education, saying the state spends about $7,000 a year per student while it costs about $40,000 a year to keep someone in prison.
But Rep. Chester Crandell, R-Apache Junction, said there is no evidence that money given to schools actually improves outcomes. He said what's needed is education reform.
"But you can't enact solutions without money to back it up,'' responded House Minority Leader Chad Campbell, D-Phoenix.
Rep. Tom Chabin, D-Flagstaff, predicted even broader impacts.
"Tuition will be higher at our universities,'' he said. "Tuition will be higher at our community colleges. There will be fewer officers in the Department of Public Safety. There will be larger classrooms in our public schools and people, vulnerable people, will remain ill and some will die.''
But Rep. Steve Vogt, R-Tucson, said the state needs to do something to deal with the loss of close to 300,000 jobs since the end of 2007.
"For the last three years, we've been really, really hoping that the Arizona economy will turn around,'' he said.
"We live in a competitive world,'' Vogt continued. "And companies have shown that not only are they not afraid to pick up and leave a state but they will pick up and leave a country.''
Some of the Republicans who ended up voting for the bill did so despite some misgivings. Rep. Cecil Ash, R-Mesa, said he was disappointed that his colleagues have so far refused to look at reforming the sentencing laws to ensure that the state is spending money locking up only those who really belong behind bars.
azowl500 posted at 10:24 pm on Wed, Feb 16, 2011.
I hope this works, but think it is a mistake. To be successful I believe it would require companies to move here from other places. I used to run a company before I retired and would never recommend any company move here -- no matter what the tax rates are. Why would I bring my company to Arizona when minority employees can be hassled with the full support of the legislature, employees' children threatened by legislators hell bent on allowing guns in schools, a poor education system that prevents my company from recruiting sufficient quality graduates, and a feeling that the whole state government is at odds with the federal government, setting up a scenario where my company could end up in a state that eventually secedes from the Union. In general, the Arizona legislature is too unpredictable and extreme to trust it in controlling the competitive environment for my company. Sorry, but the reduced taxes will be nice for those who remain here, but no significant company with professional management will move here with this unstable state government environment..
Hotcopone posted at 12:02 pm on Thu, Feb 17, 2011.
azoel500 After reading your comment it's a wonder why you still are living here? With Your beliefs it wouldn't surprise me you were forced into retirement.
You obviously support illegals here in our state and you probably had many working for you if not all. Our leaders are giving us what the Constitution said we're entitled to. You, once again don't feel we should follow our Constitution and probably were a supporter of Obama since he doesn't like to follow the Constitution either.
Why would any company want to move here? You must be a very poor business man.
I believe you are so off base because it does encourage business' to move here for tax incentives and not being controlled by gov'ts such as many other states.
I suggest you move to DC and be close to your Mentor.
He's all for tax and spend and you must be too. Get a grip and do us all a favor and move out of state. I know IL is looking for business and revenue since they are great shape there. NOT !
ONLY Democrats feel our Gov't is unstable since they had a whipping this last go around and it's not gonna get any better for you guys next election either.
JGBHimself posted at 1:00 pm on Thu, Feb 17, 2011.
As the AZ leg speed tracks a "cut business taxes to create jobs bill" by Sen Pearce - author of the illegal immigrant bills - Tis he now providing jobs for "those people"?
AZPJ's Phoenix Morning Call also reports to U.S. an NPR article that the foreign born are gaining back jobs IN PHOENIX faster than those of U.S. born here in this country. Now, that IS funny.
Sen Russel Pierce is now going to be creating more jobs for The Foreigners, aka "Those People", than he will be for the rest of U.S.? If you cannot see the humor in that, you've really lost it.
JGBHimself posted at 1:05 pm on Thu, Feb 17, 2011.
The NPR article:
In Phoenix, Foreign-Born Workers Find Jobs Faster
http://www.npr.org/2011/02/17/133808191/in-phoenix-foreign-born-workers-find-jobs-faster?ft=1&f=133808191
wdgnas posted at 5:57 am on Fri, Feb 18, 2011.
The votes in the House and Senate came after extensive debate about whether there's proof that anything in the package will actually create a single job in the state. Even House Speaker Kirk Adams, R-Mesa, conceded there is no guarantee.
why not spell it it out in the bill? no jobs created, no tax relief.
that would be too simple. leave it up to the activist judges to do your job...
MyAIC posted at 5:02 pm on Thu, Feb 24, 2011.
Last Friday Governor Brewer signed into law a $538 million tax cut package. In its coverage of the signing, the Arizona Republic included this caption with a photo of the Governor holding up the hefty-looking document: “Arizona Gov. Jan Brewer and the GOP majority in the Legislature say they're confident the state can cut taxes and still balance the budget.”
Sounds a bit circumspect to me, given the Arizona government’s inability to balance the budget in any of the last four years (despite the fact that it’s their constitutional duty). And when the cuts (which the Joint Legislative Budget Committee estimates will cost the state $538 million over the next 10 years) are phased-in together with the expiration of the temporary one-cent sales tax increase in 2013, the fiscal noose around state government’s neck will surely tighten.
Here’s a suggestion to the Arizona legislature and Governor Brewer: Step 1, get the fiscal house in order. That means balancing the budget. If you can do it with tax cuts, by all means have at it. (But I’m doubtful.) Step 2, think about the most cost-effective ways that you can foster the development of sustainable, productive industries in Arizona that employ lots of highly-paid workers over the long term, across business cycles. That’s the path to a more prosperous Arizona.
http://www.arizonaic.org/blog/338-arizona-budget-crisis-tax-cut-bill