Monthly Archives: February 2011

Not all proponents of economic development are satisfied the new tools in Arizona’s tool box, courtesy of the the Jobs bill.

Senate Bill 1041 would expand the new tax subsidies for certain activities only a couple weeks since the Jobs bill’s passage (and since bills don’t become laws until 90 days since their passage, the Jobs bill isn’t even law yet).

The most egregious portion of the Jobs bill to us was the $3,000 tax credit given to employers for each new hire, PROVIDED THAT the employers:

  • Become certified by the Arizona Commerce Authority
  • Make a minimum of $5 million capital investment in urban areas
  • Create a minimum of 25 “qualified” new jobs (capped at 400 per company per year and an aggregate of 10,000 annually)
  • Pay the median wage in the county in which your business takes place
  • Cover 65% of the employee’s health insurance (types of plans not specified)

So, suppose you invest $4,999,999.  You’re out of luck.  Or if you create only 24 qualified jobs, or the wage you pay doesn’t meet the median, etc.

Furthermore, suppose you had to layoff employees during the recession, and now you’re in a position to hire them back.  Unless you meet all the criteria set above, you’re also out of luck.

SB1041 doesn’t speak to the minimum capital investment.  Is it gone?  Seems to be.  The new bill also seems to remove the caps.  We don’t like the credits to begin with, but at least the caps prevent an alternative fuels-like scenario in which throws away so much money, it takes legislative intervention to stop it.

But SB1041 would create what the Club helped keep out of the Jobs bill – a statewide enterprise zone.   This new zone would bestow lower property taxes on companies who meet the above criteria.   That might sound good at first blush, but the other property taxpayers in that jurisdiction would have to pick up the tab.  Commercial property taxpayers currently subsidize residential property taxpayers.  If SB1041 becomes law, taxes will go up for commercial (Class 1) and residential (Class 4).  To be sure, commercial property taxes are too high in AZ, but this is not how to go about fixing the problem.

The statewide enterprise zone was left out of the Jobs bill for a good reason.  It’s bad public policy.  It shouldn’t resurface.

The legislature passed the “Jobs” bill on Wednesday, 2/16/2011 and Intel announced plans to build a new fab in Chandler on 2/17/2011.  Economic development supporters are confounded and conflicted.

The editorial from today’s Wall Street Journal is excellent.

Kyl’s Consequences

How to be an effective Senator.

The U.S. Senate has 13 freshmen this year, and we hope more than a few of them have signed up for Jon Kyl’s seminar on how to make a difference in what can be the world’s most dysfunctional body. If it’s not a formal class, it should be.

Mr. Kyl, who announced yesterday that he won’t seek re-election in 2012, has been as consequential as any Republican in Congress over the last decade and a half. The Arizonan, who is now second in the GOP leadership, has made his mark the old fashioned way—by knowing what he is talking about.

He made an impression first by becoming an expert on defense policy and arms control. To the extent the U.S. can defend itself from ballistic missile attack, Mr. Kyl deserves much of the credit. More recently, he dug into the problem of America’s deteriorating nuclear arsenal, forcing President Obama to agree to modernize U.S. warheads if he wanted the Senate to ratify the New Start treaty last year.

After the departure of Phil Gramm in 2002, Mr. Kyl became the leading advocate of pro-growth tax policy on Capitol Hill. In 2005 he single-handedly won the extension of the Bush-era tax rates on investment through 2010, overcoming opposition within the GOP caucus and making December’s bipartisan deal for another two-year extension possible.

With much of the GOP focused on spending cuts above all else, Mr. Kyl’s concern for growth is needed more than ever. His career is proof that you can achieve more as a Senator if you do your homework than if you appear nonstop on cable TV.

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