Lawmakers talk tax breaks to boost economy - East Valley Tribune: East Valley Local News

Lawmakers talk tax breaks to boost economy

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Posted: Tuesday, June 17, 2008 7:43 pm | Updated: 9:03 pm, Fri Oct 7, 2011.

State lawmakers will consider a broad package of new tax breaks for businesses this week designed, at least in part, to stimulate the stagnant Arizona economy.

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The proposal being crafted for a Thursday hearing would give tax credits to companies that set up facilities in Arizona to manufacture components for solar products.

Other elements of the package include:

Providing an exemption from state and local sales taxes for construction projects located in certain "redevelopment" areas in cities.

Giving Pima County residents the chance to decide whether to hike taxes on restaurant bills, car rentals and hotel rooms to pay for improvements to spring training facilities.

Expanding existing tax credits given to companies that conduct their research and development activities in Arizona.

Rep. Michele Reagan, R-Scottsdale, who chairs the House Commerce Committee, said that with the exception of the Pima County provision, the measure would not raise taxes. What it would do, she said, is create immediate construction jobs as well as permanent employment.

Reagan said the tax credits - essentially a dollar-for-dollar break on what companies owe the state - are necessary to get companies to come here.

"We have lost the last 11 solar projects in this state (to other states) because we have no mechanism in place to attract solar work," she said.

Reagan said any company that wants the solar tax credit would have to make at least a $25 million investment in the state. The jobs would have to pay, on average, the equivalent of 150 percent of the average state wage, a figure Reagan said translates out to about $60,000 a year.

And companies would have to provide full health insurance to their workers.

Similarly, Reagan said that research and development jobs - the kind that would be stimulated by new credits for companies - pay an average of $74,000 a year.

And Reagan figures the redevelopment package will encourage developers to target urban areas with vacant lots and empty buildings by making it cheaper to build there than elsewhere.

She specifically has in mind the area south of downtown Phoenix, currently occupied mainly by vacant lots and warehouses. The idea would be to stimulate construction of a hotel, restaurants and movie theaters.

But Reagan said the language of the measure, which is still being crafted, would allow it to be used in other communities.

She stressed, though, it is not her intention to replace housing with commercial development.

At this point there are no figures on how many actual jobs the project will create.

The last-minute push for the package is raising concerns by some lawmakers.

"I don't understand when Republicans are going to learn that the difference between Republicans and Democrats is Republicans stand for the free market," said Rep. Andy Biggs, R-Gilbert. He questioned the advisability of having the state decide that some projects should get special tax breaks while others should not, rather than letting the marketplace decide which make fiscal sense.

But Biggs pointed out there is no actual language for lawmakers to review even though an aide to House Speaker Jim Weiers put out a press release.

"That sounds to me like the deal is done already," Biggs said.

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