The House of Representatives has approved a bill to stimulate economic development by cutting taxes and creating new incentives for businesses, despite complaints from critics that the measure was rushed through before it could be understood completely.
Democrats who opposed the bill said legislative budget staff hasn’t even had a chance to analyze what impact the tax cuts would have on the state’s general fund. They said the bill was a “corporate bailout” because large companies will benefit most from the incentives and tax cuts.
It also will hurt homeowners by shifting more of the property tax burden to them because of the business property tax cuts, said Rep. Tom Chabin, a Flagstaff Democrat.
“It is very clear that homeowners today cannot sustain this kind of burden,” Chabin said.
But House Speaker Kirk Adams, who sponsored H2250, said the effects of the property and income tax cuts are “virtually none” in the immediate future, as they are phased in over several years beginning in 2011. He disputed the idea that the bill was rushed through.
“It’s been in the making for months and months,” Adams said.
The House approved the bill Jan. 28 by a 34-25 margin. It was opposed by all Democrats and Phoenix Republican Doug Quelland. The bill now moves to the Senate.
The vote on the House floor came three days after it was approved by the House Ways and Means Committee. Democrats on the committee attempted to prevent a vote on the bill, but a motion to hold it until a fiscal analysis was complete was voted down.
Republicans said the bill would create an environment that would attract businesses.
“Arizona is not competitive (with other states),” said Tucson Republican Frank Antenori. He pointed to states like Texas, Florida and Ohio that have very aggressive incentive policies and low taxes designed to attract manufacturing and high-tech jobs.
Arizona has based its economy on the housing industry for decades, Adams said. That makes the state particularly vulnerable to economic swings.
“It’s well past time that we get serious in this state about attracting jobs,” he said.
Main Points of the GOP Jobs Bill (H2250):
• Cuts the business property tax assessment ratio from 20 percent to 15 percent over five years, beginning in 2012
• Phases out the state equalization property tax rate over four years, beginning in 2011; it would be completely gone by July 2014
• Cuts the corporate income tax rate from 6.97 percent to 4.5 percent over four years, beginning in 2011
• Cuts the individual income tax rate by 10 percent over four years, beginning in 2011
• Doubles the amount of time a business can pay reduced property taxes in an Enterprise Zone from five to ten years
• Creates a new Arizona Job Training Program for employers who will create new high-wage jobs. Funding for the program will come from a portion of the withholding tax revenues from new high-wage jobs
• Creates the Arizona Opportunity Fund, which allows the state to award grants to build infrastructure or otherwise attract high-wage jobs to the state. It will be funded by money appropriated by the Legislature federal stimulus money
• Creates the Arizona Quality Jobs Program, which would provide quarterly cash rebates to companies that bring new high-wage jobs to Arizona. It would be funded by a portion of the withholding tax revenues from new high-wage jobs