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Senate panel OKs ‘jobs’ bill on 5-2 vote

After a lengthy hearing attended by dozens of lobbyists for business groups and various individual corporations, a Senate panel today approved a heavily amended bill that aims to spur job growth through tax cuts to all businesses and tax credits for companies that create new high-wage jobs in Arizona.

House Speaker Kirk Adams, who sponsored H2250, said capital investment will create jobs, which have been in short supply in recent years. Since late 2007, the state has lost nearly 300,000 jobs and the unemployment rate hovers above 9 percent.

But critics attacked the bill, saying it merely gives money to corporations with no expectation that new jobs will be created.

“Ninety-eight percent of this bill is broad-based giveaways to corporations, regardless of whether they create any jobs,” said Dana Wolfe Naimark, a representative of the Arizona Budget Coalition, a group that supports education and social services, referring to the tax cuts.

Sen. Ken Cheuvront, a Phoenix Democrat, said it’s the wrong time to make deep tax cuts, considering the economic problems Arizona has faced in recent years. The state has had to cut spending on programs for low-income residents and children in order to slice billions of dollars from the state budget during the past two years.

“Doing a tax-cut-bill in a crisis seems not to be very prudent,” he said.

Some Republicans, meanwhile, are clamoring for deeper cuts that are implemented immediately, not phased in over five or more years, as the bill would do.

“I don’t think this goes far enough, fast enough,” said Sen. Russell Pearce, a Mesa Republican.

The changes to the bill, including striking an income tax cut for all Arizonans, were the result of negotiations between House and Senate GOP leaders. Although the measure was a caucus priority for House Republicans, Senate President Bob Burns and others voiced concern the tax cuts would be a drain on the state’s general operating fund during a time when revenues are already down dramatically.

Other changes include delaying the implementation of property- and income tax cuts for businesses so they don’t take full effect until after a temporary sales tax increase is set to expire. That one-cent tax increase goes before voters in a May special election and, if approved, will expire in 2014.

The bill passed the House of Representatives in January, but was held in the Senate until recently as lawmakers tackled large budget deficits in the current and upcoming fiscal years.

Legislative budget analysts said the bill will cost about $650 million annually when it is fully implemented in 2018. That is far less than the $942 million annual price tag the Joint Legislative Budget Committee gave the original version.

The bill was approved by a 5-2 vote along party lines; Republicans voted for the bill, while Democrats voted against it. After a constitutional check by the Senate Rules Committee, it will advance to the floor for consideration by the full body. If it is approved in the Senate, H2250 would still face a final vote in the House.

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