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.