Legislative Up-Date

Governor Brewer delivered the State of the State address shortly after the session opened. Brewer focused on the budget, laying out a three-point plan: further spending cuts, increased revenue and limitations on the future growth of government. She challenged legislators, saying “Spare us the profiles in courage; it’s time for a little less profile and a little more courage. Tell us clearly how you would solve a $5 billion problem over the next 17 months.” She briefly touched on job development, education and efforts to increase efficiency and cut waste in government.

The Executive budget was released on Friday, getting a generally positive reception from the Republicans and a predictably negative reaction from Democrats. To close the gap for the current year Brewer recommends additional budget cuts, rollovers, debt, fund transfers, salary reductions and borrowing from restricted funds as well as increasing revenue. Revenue increases would come from a temporary increase in the sales tax (TPT) and expanding TPT to include repair services. Brewer’s budget calls for an immediate emergency increase in the sales tax, which requires a two-thirds vote of each house, a long shot considering the Legislature could not muster a simple majority for referral to the ballot.

Cuts would come from eliminating the department of juvenile corrections, sending it back to the counties, eliminating funding for all-day kindergarten and KidsCare as well as eliminating behavioral health services. It’s a pretty dismal picture.

In December Speaker Kirk Adams commissioned local economist Elliot Pollack to provide recommendations to help Arizona create and retain high quality jobs in “base industries”. From that report and House leadership priorities emerged Arizona’s Job Recovery Act, introduced as House Bill 2250. “Base industries” are mining, manufacturing, a business that derives at least 75% of revenue from out-of-state sales and research and development of new products, processes or technologies.

Specific elements include: creating a new property classification with a 10 percent assessment ratio for companies meeting specific capital investment criteria, creating a “quality jobs” program that provides incentives for high paying jobs in base industry companies, creating a new job training program, reducing the corporate income tax, continued reduction of the business property assessment ratio, revamping the enterprise zone program, flattening the individual income tax, eliminating the state equalization tax and more.

The highest priority is of course the budget. All tax reform measures will be evaluated for immediate impact on the budget and how they will play out over the next several years as Arizona crawls out of the fiscal mess. Also look for legislation on regulatory reform, tort reform and job training.

Many of the House and Senate majority priorities are the same as those adopted in the ACE 2010 Statewide Legislative Agenda: Create a Structurally Balanced Budget, Create a Competitive and Sustainable Economic Development Environment, Encourage Regulatory Accountability, Maintain a Flexible, Readily Available & Competitive Workforce, Ensure Ample and Affordable Energy Supplies, Improve Access to and Affordability of Health Care Statewide, Secure Adequate Funding for Statewide Transportation Needs.

The West Valley Chambers of Commerce Alliance will be working with other chambers and organizations in the business community to help implement the agenda.

The Pulse - February Pulse

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