House endorses bill to entice clean energy firms

The state House gave preliminary approval Friday to legislation designed to convince renewable energy firms to locate or expand their operations in Arizona.

SB 1403 would give eligible firms a check from the state equal to 10 percent of what they spend on building a new manufacturing operation or a corporate office.

But the simple capital investment, though, would not be enough. At least half of the company's workers would have to be paid at least 125 percent of the state's annual prevailing wage of $37,050 a year. And firms would have to cover at least 80 percent of each worker's health insurance costs.

The legislation also would give qualified businesses an 80 percent break in their property taxes for 15 years. But that would require that half the workers be paid at least twice the prevailing wage.

Companies whose salaries are lower -- half the workers earning at least 125 percent of that prevailing wage -- could get the same break for just 10 years.

 Backers of the legislation say Arizona already is becoming the home to various solar power plants. But they said that the components are being made elsewhere.

Friday's vote came over the objections of several legislators who questioned why the state would be providing special tax treatment to just one industry.

Rep. Andy Biggs, R-Gilbert, said businesses have been arguing for years for a more favorable tax structure.

One of the big problems of convincing manufacturers to come here has been the state's high property tax. Not only are businesses assessed for tax purposes at twice the rate of homes, companies also pay property taxes every year on the value of every piece of equipment they have, from desks and chairs to presses and sophisticated computer fabricators.

 Biggs said SB 1403 gets around that with that 80 percent tax break -- but only for qualified firms. More to the point, he argued that once the solar industry gets what it wants, it takes the pressure off to enact "meaningful'' tax reform.

But other legislators defended the move. "We have companies that are going to provide high-wage, sustainable manufacturing jobs,'' said Rep. Rae Waters, D-Phoenix.

Rep. Daniel Patterson, D-Tucson, said his community needs the economic development he believes SB 1403 would create.

"It will help attract higher-wage, goods jobs to districts like mine on the south side of Tucson where we have a lot of available industrial space,'' he said. "We need new jobs.''

Rep. Nancy Young Wright, D-Tucson, said there is a potential to make much of southern Arizona "the Saudi Arabia of solar,'' saying there are large tracts of land near the Mexican border and on the Tohono O'odham Reservation suitable for solar power generation.

"I would hate to see us pass up the chance to become competitive with other states in the United States, and with other countries ... by passing up this chance that we have,'' she said.

Rep. Michele Reagan, R-Scottsdale, who chairs the House Commerce Committee, acknowledged Biggs' point that Arizona has a tax structure that is not friendly for manufacturers. But Reagan said if this model of incentives proves successful it could be expanded to include other manufacturing operations.

A final House vote will send the measure to the governor.