Arizona businesses won’t be getting tax breaks this year.
Senate President Bob Burns, R-Peoria, said Tuesday he doesn’t have the necessary backing to put a $950 million House-passed package of tax cuts up for a vote. In fact, Burns said there aren’t even the votes for a $650 million scaled-back plan.
At that point, House Speaker Kirk Adams, R-Mesa, decided to pull the plug on HB 2250, which he called the best hope for the state to create new jobs. Adams said he already had compromised and was unwilling to give up any more.
“He feels like that if he can’t get the entire package (of tax cuts) it won’t be effective,” Burns said of Adams.
“I couldn’t deliver the entire package,” the senate president continued. “So he said, ‘Let’s quit.’”
That move provoked an angry reaction from some senators.
“It comes across as a petulant, immature teen-ager who says, ‘I’m going to take my ball and go home,” said Sen. Carolyn Allen, R-Scottsdale.
Allen said the chances for a deal were still possible when Adams killed his own measure “if cooler heads could prevail.”
“But, no, he has to have it all,” she continued.
Adams, however, puts a different spin on the situation.
He pointed out the plan passed by the House had what eventually would amount to $950 million in tax cuts. Adams said he agreed to a smaller plan, with most of the tax cuts deferred for years.
“There was compromise, significant compromise, all in one direction,” he said. At this point, Adams said, there’s not enough left to make the dent he had hoped in the state’s jobless situation.
The problem, he said, is a “philosophical issue with tax reductions” among many Republican senators. Adams said it didn’t matter how much more he would have compromised.
“That probably is a bridge that we just can’t build together,” Adams said.
What may have been the final stake through the heart of his plan was the decision by Gov. Jan Brewer to oppose it. Instead, months after the House had approved the package, she responded with her own plan — one missing the key elements and cutting taxes by just $47 million a year.
The speaker said that some members of his caucus feel politically betrayed. He said they voted for Brewer’s proposal to ask voters for a three-year hike in state sales taxes, a package that, if approved next month, would raise $3 billion over its lifetime.
“The governor’s sales tax proposal never would have gotten out of the House were it not for the jobs bill,” he said. “It was an expectation.”
Central to HB 2250 is Adams’ premise, based on an economic study, that the state needs a more business-friendly climate to attract and retain jobs. Adams specifically sought to diversify the economy to move it further away from construction and growth.
The compromise package included a 28 percent cut in corporate income taxes and various changes in how some companies compute what they owe the state. It also scrapped the state property tax and shifted the cost of future local government and school district bond issues and overrides from businesses to homeowners.
That stalemate over HB 2250 also likely means lawmakers will not approve a proposal by the governor to abolish the state Department of Commerce and replace it with a quasi-public agency known as the Arizona Commerce Authority focused exclusively on economic development.
Under her plan, the authority would be governed by a board of directors, with the governor as its chair and 14 chief executives, business, education and community leaders making up the rest of the panel.
Brewer said the Department of Commerce has been ineffective in promoting economic development. She said part of the problem is political: Since its inception, the agency has been headed by gubernatorial picks, often times a political ally of the governor rather than someone with a business background.