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Wed, Sept. 18

Arizona lawmakers begin special session on economy

PHOENIX (AP) - Arizona legislators began a special session Monday to consider business tax cuts and other parts of an economic development package that Gov. Jan Brewer and Republican legislative leaders said will encourage businesses to expand and relocate in the state.

The package includes property and income tax cuts, and targeted tax incentives for projects that create jobs. It also transforms the Arizona Commerce Department into a quasi-private authority focused on economic development and creates a $25 million deal-closing fund to help land projects. Because of the state's ongoing budget crisis, the package's major tax cuts don't begin to be phased in until 2014.

"This bill, while not perfect, is Arizona's best chance to grow tax revenues by putting Arizona back to work," said House Majority Leader Andy Tobin of Paulden, who has proposed comprehensive bills to create jobs in the past. "The jobs bill will begin to give budget certainty to companies."

Senate Majority Whip Steve Pierce of Prescott predicted both houses would approve the package before the end of the week.

"It's going to be good for all of Arizona," he said.

Pierce said he especially likes the tax reform portion of the jobs bill that will reduce the commercial property tax without shifting the burden to homeowners, offer tax breaks to businesses that hire new employees, and tax cuts to existing businesses.

An existing property tax rebate for homeowners would be increased to prevent a shift of the tax burden from businesses that would be paying less in property taxes. However, no corresponding protection is afforded to residential rental property.

Tobin, Pierce, Rep. Karen Fann and Secretary of State Ken Bennett will invite the state's 50 largest businesses and others to attend an open house May 6 at Tim's Toyota Center in Prescott Valley to learn about the new jobs bill as well as learn what the Prescott region and northern Arizona have to offer them, Tobin said. Local chamber CEOs and the center will co-host the event.

House and Senate committee hearings on the Arizona Competitive Package are planned for today, which could set the stage for action by the full chambers Wednesday. The special session called by Brewer is running concurrently with the month-old regular session.

"Arizona will stand in shining contrast to other states as we limit the growth of the public sector and restrain unnecessary regulation and stimulate the engine of free enterprise," Brewer said at a news conference Monday. She was flanked by Republican legislative leaders and economic development officials.

Republicans are offering their proposal as Arizona enters the fourth year of a budget crisis amid an economy left dragging by the Great Recession. The current $8.5 billion state budget faces a $763 million deficit, according to Brewer's January budget proposal, and a $1.1 billion shortfall is projected for the next fiscal year.

Brewer and her budget director said the package's provisions, once fully phased in by 2018, would cost the state $400 million in lost revenue. That doesn't take into account any new tax revenue produced by business projects attracted and expanded by the changes, they said.

"By moving forward and being competitive and bringing good companies into Arizona," Brewer said, "eventually it (the revenue impact) is going to cross over and be a benefit."

House Speaker Kirk Adams, R-Mesa, said revenue projections are too unreliable to make a firm projection on when new revenue would offset lost revenue.

However, Adams said the state has no choice but to try to attract new jobs in aerospace, solar energy and other industries to diversify its economy and reduce its reliance on homebuilding and real estate. Both of those industries were hit hard in the Great Recession.

"The gamble is doing nothing," said Adams, who championed a 2010 bill that shared some features with the new package. "This bill fundamentally changes the game."

House Minority Leader Chad Campbell, D-Phoenix, said he and other Democrats had just learned what the package includes and hadn't had time to study it in detail. However, he expressed strong reservations.

At a time when the state is struggling to pay for education, health care and other services, "to then turn around and to give new handouts to special interests just doesn't make any sense," Campbell said.

Courier reporter Joanna Dodder contributed to this report.

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