The two years of the 50th Arizona Legislature will go down in the history books as the years when the Legislature hit reboot on the Arizona economy and turned what was a basket case into a best case.
Consider where we were in 2010. We had a structural deficit, which was about the worst in the nation. We had just lost 300,000 jobs in the Great Recession. We were essentially California with a smaller economy and drier weather.
The past two years have been marked by job-creating reforms in taxes, regulations, civil justice and education. Our budget is now in balance.
Arizona’s tax system is now a model for other states. The centerpiece of last year’s tax package was a 30 percent phased-in reduction of our corporate income tax rate. The package also included a phased-in 100 percent elective sales factor for manufacturers who produce in Arizona but sell most of their goods outside of our borders. The property assessment ratio for businesses will be reduced to18 percent. Our already best in class research and development tax credit was strengthened.
The centerpiece of this year’s reform is a phased-in 25 percent reduction of our capital gains tax. Also important was taking the treatment of net operating losses and moving us from worst to first: five years to a new 20-year policy. Also passed this year, a new law that provides for a 100 percent elective sales factor for service industries located in Arizona, a critical move given the trend of commerce moving to the Internet.
Arizona has also signified its commitment to attracting and retaining world-class manufacturing projects by allowing the government to share in the financing of necessary infrastructure for large, high-dollar projects that create a sudden and significant need for public infrastructure. And another element of the 2012 tax package expanded to other manufacturers a tax credit once only available to the renewable energy industry.
But tax reform is only part of the story.
When Gov. Jan Brewer first took office, she instituted a regulatory moratorium that put up a stop sign on new rules and regulations for business to navigate. The Legislature in 2010 followed with its own regulatory reform package that, among other things, ensured that new state rules weren’t more stringent than corresponding federal law.
Gov. Brewer and the Legislature continued cutting red tape in 2012 with the signing of HB 2744, which will ensure that new rules are grounded in sound science, and HB 2199, which encourages businesses to discover and correct environmental problems by providing limited administrative and civil evidentiary protections.
Arizona also now has one of the better legal environments, ensuring that businesses will spend more time on investment and innovation, not fending off bogus lawsuits.
Consider these legal reforms from the 50th Legislature: Appeal bonds reform, ensuring that defendants won’t go broke trying to appeal a decision; a move to the Daubert standard over the Frye standard to ensure that scientific evidence introduced in court cases meets stringent standards; a better juror compensation law so jurors won’t face economic hardship in doing their civic duty; a law to reduce landowners’ liability in trespassing cases; a bill to make it easier to recover attorneys fees in frivolous lawsuits; and a law to shield businesses from punitive damages in product liability cases when the product in question was made in accordance with all applicable government standards.
All of this represents an unprecedented commitment to fostering a legal environment that attracts jobs and businesses.
The best tax, regulation and tort environment will only get a state so far if it doesn’t have a ready pipeline of qualified workers ready to enter the workforce and contribute to the economy.
So on the education front, we are now assigning easy-to-understand letter grades in school assessments and have tightened standards with new dollars to make sure our third-graders are reading. Bills signed into law this year make it easier to get qualified STEM teachers into the classroom.
In the higher education arena, Arizona is now moving towards a performance pay model to reward universities for graduating students.
Meanwhile, Chief Executive Magazine says Arizona has a top-10 business climate.
The world is taking notice of the Arizona turnaround. The governor and Legislature deserve our thanks.
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry.
Mike McClellan posted at 11:01 am on Tue, May 22, 2012.
Hey, Glenn, you forgot one little thing that the Guv supported, the act that's brought in almost $1 billion in state revenue.
You know, the sales tax increase voters overwhelmingly approved in 2010?
You know, the one you supported?
The one detractors said would cost us "tens of thousands of jobs"?
The one that, after passage, seems to have had no effect on job loss, since Arizona's been in the top ten in job creation over the last 18 months?
All the tax reforms you mention here -- as you note -- don't go into effect for awhile. Yet the one "reform" -- a tax increase -- has not been the apocalypse its detractors predicted.
In fact, the Arizona economy has been in recovery mode, even, now, the housing industry slowly coming back to life.
I'm not saying the tax increase caused this, but it certainly didn't do the damage its detractors -- almost all your usual buddies, Glenn -- warned us of.
Accuracy posted at 11:48 am on Tue, May 22, 2012.
As Glenn Hamer said: “The world is taking notice of the Arizona turnaround. The governor and Legislature deserve our thanks.”
After Gov. Jan Brewer took office; By making structural budget changes to assure its future stability, Arizona's economic recovery is among the fastest in the country.
mnjcpa posted at 5:24 pm on Tue, May 22, 2012.
That's because Napolitano basically bankrupted Arizona before she left to be beside the country's #1 Big Spender. Just a tad bit of information that illuminates the issue a bit better.
samkat posted at 5:56 pm on Tue, May 22, 2012.
One thing about Hammer. He never met an illegal that he didn't like as long as John Q. Public picks up the tab for their medical needs and social benefits for themselves and their families. He would never ask the chamber members to pay the tab.
Mike, you have some good talking points but why not do a top to bottom scrub of all tax loopholes? I imagine we could make some significant tax savings by eliminating those special interest tax breaks.
mnjcpa posted at 7:40 am on Wed, May 23, 2012.
Here we go again on an assault on the private sector.
While Mike's at it, hope he includes all of the "social programs" aka "redistribution of wealth" rebates, credits, that amount to BILLIONS each year INCLUDING illegals given to people in the name of fairness or whatever.
EVERYONE should be paying taxes - not just a small segment of the population.
dustbowl11 posted at 3:28 pm on Wed, May 23, 2012.
Let's thank them by sending them into early political retirement. "New rules grounded in sound science"? Does this bunch even believe in science? The way they legislate, I doubt it.
Louiejr posted at 3:58 pm on Wed, May 23, 2012.
" If you don't pass a 1% sales tax we'll have to lay off cops and teachers ."
Whenever a politician plays that card a tax increase is guaranteed !
How nice that it fell on the backs of everyone . It's time to retire Gov with
your State Golden Parachute .
Mike McClellan posted at 6:20 pm on Wed, May 23, 2012.
Yeah, it's almost as bad as "any tax increase will kill jobs."
mnjcpa posted at 6:34 pm on Wed, May 23, 2012.
Spoken like America's #1 Job Killer, neither of which knows what it takes to create a job.
Arizona Willie posted at 7:28 am on Thu, May 24, 2012.
mnjcpa -- when income taxes were first instituted in the U.S. only landowners paid ( they were the equivalent of todays top 10% in income ).
They owned the plantations and farms as today's top 10% own industries.
The average person couldn't read or write and worked for landowners. Over 80% of the people were engaged in raising food.
Since then the concept of income taxes was stretched to bleed the common man, mostly to pay for our wars. The income tax was first extended to other than the rich to pay for a war and we have been in virtually a non-stop war ever since. WWI / WWII / Korean War / Vietnam War / Iraq / Afghanistan / war on drugs.
I don't believe there has been even a period of 10 years between wars. And that was only to re-supply so we could go to war again.
Why should everyone pay taxes when the original Income tax only taxed the rich?
Right wingers are always pointing to the Constitution and the " original intent " of lawmakers ... but you would forget all about the " original intent " of the Income Tax law, which was that only the wealthy should be taxed.
mnjcpa posted at 8:49 am on Thu, May 24, 2012.
Not sure your point AZWillie - but your comment that taxes are bleeding the "common man" is so far off it's laughable.
When you consider that almost half of America pay ZERO taxes and liberal politics and social issues are embedded in the tax code, it was never designed to do what it's doing - redistributing wealth. But that's exactly what our tax system has become.
It's the massive amount of entitlements that has got America to where we are today - exactly what you're seeing in Greece. Ahem....people that expect to retire in their early 50's, illegals that file taxes and get refunds without any obligation, and so on and so on that has America broke.
I'm all for a COMPLETE overhaul of the tax system - where EVERYONE pays in to the system not taking every last dime from the few left that pay tax to pay the pampered minority.