Last session, there was a vigorous debate at the Capitol regarding HB 2011, legislation that would have greatly expanded the venture capital tax credit program in Arizona. Proponents for the “Shark Tank” tax credit claimed that the credits were needed because of a lack of access to venture capital funds in Arizona.

The Club has argued for years that this is not true and that venture capital is available for good ideas. Now after some investigation into the subject, the Phoenix Business Journal has reached the same conclusion. Namely, the problem is not a lack of funding, but rather a perceived lack of good opportunities for investment. Providing tax credits doesn’t solve this problem, it only creates a new one by picking winners and losers among entrepreneurs and investors.

 

The Arizona Free Enterprise Club, along with over 50 other organizations and groups from around the country, is urging Congress to oppose the reauthorization of the Export-Import Bank. Primarily used to subsidize politically connected businesses to increase US exports, the bank is a poster child of the type of insider crony capitalism that has existed in Washington for far too long.

Despite the fact that the bank distorts the international trade market and costs taxpayers money (the Congressional Budget Office projects it will cost $2 Billion over the next decade), it continues to survive solely on the political strength of the few beneficiaries of the program. It’s time we stop picking winners and losers and let the free market determine who should succeed.

We urge congress to end the corporate welfare and oppose the reauthorization of the Export-Import Bank.

To read the letter sent to congress opposing the Bank, click here.

Every election, it seems, politicians give lip service to the need for fiscal responsibility and a balanced budget.   But once they are in office, they lack the courage and resolve to actually achieve one.   It’s always politically more convenient to spend more than we take in, hide growing debt and liabilities through clever accounting tricks, and leave the consequences for someone else to clean up down the road.

But not this time.

In November, voters sent a clear mandate that they wanted to restore fiscal sanity to Arizona government.  They demanded that our leaders take on the looming budget crisis, show some accountability and get Arizona’s fiscal house in order.  Last week, Gov. Ducey and the Legislature accomplished just that.

Arizona was grappling with how to deal with a budget deficit of $520 million this fiscal year, and as much as $1 billion shortfall in 2016.  No more.  The recently passed budget eliminates Arizona’s structural deficit completely by 2017.  There are no tax increases to slow down economic recovery, and actually increases K-12 spending while directing more funding towards the classroom – making sure our education dollars are spent where they are needed most.  It’s no wonder why Arizona remains highly competitive in attracting new businesses to the state.

Just as important is how fiscal responsibility was achieved.  For years, Arizona’s annual budget has been strung together by a series of stopgap measures, accounting gimmicks, and fund sweeps of questionable Constitutionality. But those gimmicks ended this year, and Arizona is now living within its means for the first time in over a decade.

 

Overall the Ducey budget reduced government spending by 2.3%. In addition to spending cuts, meaningful savings were achieved through common sense government reforms, such as consolidating state agencies.  For example, merging the Arizona Department of Racing into the Department of Gaming has been long overdue and eliminates multiple overlapping and redundant expenses.

The budget included tax relief as well. In addition to indexing our income tax brackets to inflation, the approved package reduced taxes on small business by eliminating the job training tax. All Arizona employers are subject to the tax, which is applied to the first $7,000 in wages paid to each employee. The revenue generated by the tax goes into the “Job Training” fund, which is administered by the Commerce Authority and is primarily used by a few large companies to help subsidize their job training activities. So not only did the budget reduce the tax burden on small business, but ended a crony capitalist program in the process.

In just his third month in office, Governor Ducey was able to produce a balanced budget that protected taxpayers, put more money into the classroom and shrunk the size of government. By any measure, this was a great start to his administration and a great week for Arizona.



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The Arizona Free Enterprise Club is a free market policy and lobbying group dedicated to promoting a strong and vibrant Arizona economy.