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Despite strong criticism, jobs bill passes

(Photo by Ryan Cook/RJ Cook Photography)

The Senate passes the jobs bill late Wednesday, after contentious debate. (Photo by Ryan Cook/RJ Cook Photography)

The jobs bill, announced on Monday and debated fiercely since, has passed the Arizona House and the Senate, even as many legislators acknowledged its flaws.

Both the House and Senate passed the bill Wednesday, with the votes almost perfectly hewing along party lines. One Republican in each house voted “no,” joining the lockstep Democrats.

Comprising mostly tax cuts and corporate incentives designed to lure businesses to Arizona, the bill was fast-tracked through the Legislature after Gov. Jan Brewer unveiled it and simultaneously called a special session to consider it.

Under the bill, the corporate income tax rate will drop by nearly two percentage points. The decrease will begin in 2014 and drop in steps until it bottoms out at 4.9 percent in 2018.

Other provisions of the bill include: Commercial property taxes will decrease beginning in 2013; agricultural property taxes will decrease beginning in 2017; manufacturers will be exempt from sales taxes for goods sold in other states beginning in 2014; tax exemptions will increase for business equipment beginning in 2012; a slew of job-creation tax incentives will replace the state’s enterprise zone program when it expires this year; and beginning in 2014, homeowner rebates will increase to offset an expected rise in residential property taxes.

Democrats balked at the bill, arguing that there’s no guarantee it will create jobs or bring businesses to Arizona and questioning how tax cuts of $538 million will affect the budget. The $538 million is the revenue loss the general fund will absorb by the time all the tax cuts are fully implemented in 2018.

Republicans, however, held up the bill as an important economic-recovery step that will improve the state’s business climate by lowering the tax burden.

Opponents asked how the state will pay for $538 million if the increases in businesses and employment aren’t enough to fill the hole in tax revenue. Many predicted that it would mean deeper cuts to education.

“We have a jobs program already. It’s called our university system,” said House Assistant Minority Leader Steve Farley, D-Tucson, said in the House. “We’re here in a special session looking at a half-billion dollar hit to our general fund, and very few other places to look besides education for cuts.”

Though many Democrats questioned the effectiveness of tax cuts in creating jobs, most Republicans defended the supply-side theory of economics. Republicans like Rep. Carl Seel, R-Phoenix, pointed to the tax cuts targeted at solar-manufacturing companies as evidence that such initiatives are effective; Democrats countered that targeted tax cuts were different from across-the-board cuts.

Sen. Leah Landrum Taylor, D-Phoenix, said she has counted about $3 billion in tax cuts that have been given away in the last several years. “I have yet to see where it truly has helped,” she said.

In the House, Rep. Eddie Farnsworth, R-Gilbert, was the lone Republican defector.

He said some provisions “gave (him) heartburn.” He criticized the requirement that homeowners opt-in to receive their tax credit, the lack of oversight for the newly-created Arizona Commerce Authority, and the delay before some of the tax cuts kick in.

“With the strong Republican majority in the House and the strong Republican majority in the Senate, and the Republican governor we have, I have to say, with all due respect to all parties involved, I’m disappointed that this is the best we can do,” he said.

Sen. Ron Gould, R-Lake Havasu City, also voted against the bill, questioning why there was such a rush to push the bill through, especially when some provisions don’t take effect for several years.

The argument that there was not enough time to consider the bill was a common one, but House Speaker Kirk Adams, R-Mesa, said such comments are usually a last-ditch effort by critics to derail the bill.

A few Republicans, like Rep. Ted Vogt, R-Tucson, said they wished the tax cuts would take effect earlier.

But Rep. Jack Harper, R-Surprise countered that big corporations don’t move from one state to another overnight, and planning the cuts to begin a few years down the road provided a realistic schedule for a business considering such a move.

Many Republican supporters, including Adams, the primary sponsor of the House version of the bill, acknowledged that it wasn’t perfect, but quickly followed up by saying it was a good start.

12 comments

  1. This is not really a jobs bill. It’s Redistribution of the Wealth, Brewer style. Take from the poor and give to the rich. This is one hard-hearted individual.

  2. This is not really a jobs bill. It’s Redistribution of the Wealth, Brewer style. Take from the poor and give to the rich. This is one hard-hearted individual.

  3. As usual, the liberal intelligentsia are completely wrong. History has demonstrated that tax cuts increase employment, and result in increases in taxes paid to the state coffers.

    The concept that “big business will not react quickly” is falsified is demonstrated by the mass exodus of corporations fleeing California in great numbers due to Jerry “Moonbeam” Brown having been elected once again as governor of CA, taking their competent employes with them. They are relocating to cities/counties where taxes and business regulations are the least.

    What the state of AZ really needs to do is de-legislate laws that are harmful to large and in particularly small businesses, and cancel reporting requirements that are of no value to anyone.

  4. “History has demonstrated…???????”–Larry OldTimer (My father died of that disease, so no jokes!)
    Where were you living, Larry? About a decade ago Republicans gave tax “incentives” to massage parlors. Yes, that’s right. Have you been visiting a lot more of those? I haven’t seen anyone who’s smart demonstrate (not demagogue) that the past 20 years of tax breaks have paid off–except to the economic bubble-makers. i.e., land speculators, and that’s how we got in the deep hole Arizona’s in–even compared to most other states.
    Please demonstrate with nonpartisan proof that the tax incentives have benefitted us ALL. You can’t; that’s why no tax giveaway bill-writer has ever included an accountability follow-up study to these contributor pay-off bills! Dem or Republican. Sure, you can quote the right-wing think tanks…but, no tanks…er, thanks.

  5. ONCE AGAIN, Arizona is behind the times. The Deep South did this twenty years ago when what was left of manufacturing was still pretending America was a good place to make stuff. With the drop in the quality of education, the rise in gun ownership, the high poverty rate, the kicking of 280,000 people off Medicaid, the Tucson Murders, the racism, and the increase in income inequality people will start thinking Arizona is a lot like Mississippi but with a DRY heat.

  6. Last Friday Governor Brewer signed into law a $538 million tax cut package. In its coverage of the signing, the Arizona Republic included this caption with a photo of the Governor holding up the hefty-looking document: “Arizona Gov. Jan Brewer and the GOP majority in the Legislature say they’re confident the state can cut taxes and still balance the budget.”

    Sounds a bit circumspect to me, given the Arizona government’s inability to balance the budget in any of the last four years (despite the fact that it’s their constitutional duty). And when the cuts (which the Joint Legislative Budget Committee estimates will cost the state $538 million over the next 10 years) are phased-in together with the expiration of the temporary one-cent sales tax increase in 2013, the fiscal noose around state government’s neck will surely tighten.

    Here’s a suggestion to the Arizona legislature and Governor Brewer: Step 1, get the fiscal house in order. That means balancing the budget. If you can do it with tax cuts, by all means have at it. (But I’m doubtful.) Step 2, think about the most cost-effective ways that you can foster the development of sustainable, productive industries in Arizona that employ lots of highly-paid workers over the long term, across business cycles. That’s the path to a more prosperous Arizona.

    http://www.arizonaic.org/blog/338-arizona-budget-crisis-tax-cut-bill

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