The 50th Arizona Legislature has boldly staked its claim to being the most pro-small business Legislature in Arizona’s history. On issue after issue, legislators advanced measures to relieve the tax and regulatory burdens on the engines of our economic recovery, Arizona’s small businesses. Even in instances where lawmakers mistakenly pursued bad policy, they did so with the right motive in mind – creating more jobs.
Here are 2011’s top ten legislative victories for the small business:
1. Broad-based business property tax relief: Passage of then-House Speaker Kirk Adams’ “jobs bill” (HB2001) included historic business property tax relief that, when fully implemented, will mean a 28 percent reduction in the business property tax assessment ratio. Our business property tax burden was the fourth highest in the nation back in 2006 when we began to lower the Class 1 assessment ratio from 25 percent. When the 18 percent Class 1 ratio is realized in 2016, Arizona’s business property tax burden will rank in the low- to mid-20s among the 50 states. Moreover, Gov. Jan Brewer’s courageous veto of SB1041 upheld the principle of broad-based business property tax relief over the allure of constitutionally-dubious schemes that pick winners in the tax code.
2. Corporate income tax rate cut: HB2001 also slashes Arizona’s corporate income tax rate by 30 percent, to 4.9 percent when it’s fully phased in by 2017. We should not discount the enormously positive signal this sends to out-of-state enterprises looking to relocate to more business-friendly states. Our corporate income tax and business property tax rates are no longer in question due to our protracted budget crisis. Instead, Prop. 108’s protection against tax increases effectively locks in not only stable and predictable rates – it locks in significantly lower rates. That certainty is the best economic development tool we could create to spur a broad-based economic recovery.
3. Health Savings Account incentives: Newly elected House Majority Leader Steve Court’s HB2556 creates income tax credits for small businesses for the premium paid on a high deductable health plan and for contributions to employees’ health savings accounts.
4. ‘Bounty hunter’ audit ban: Sen. Steve Yarbrough’s SB1165 reverses the emerging trend of cities contracting with “bounty hunter” auditors on a contingent fee basis to audit businesses collecting sales tax receipts.
5. Local regulatory bill of rights: Sen. Lori Klein’s SB1598 establishes a Regulatory Bill of Rights to ensure fair and open regulation by local governments.
6. Union preference prohibition: Rep. Michelle Ugenti’s HB2644 prohibits state entities, counties, cities and towns from accepting federal money for a construction project if accepting it requires them to give a preference to union labor.
7. Employer protections & labor relations: Sen. Frank Antenori’s SB1363 restricts unlawful picketing, trespassing and defamation by labor unions against a business.
8. Closing agreements reform: Rep. Jack Harper’s HB2202 enhances the criteria for declaring an “affected class” for the purposes of determining whether an extensive misunderstanding or misapplication of tax laws.
9. IRS conformity policy: Rep. Jack Harper’s HB2332 waives any interest or penalties for unpaid taxes when the state fails to conform to a revised IRS code in time for the taxpayer to accurately file their annual tax return.
10. Civil appeal bond limits: Sen. Al Melvin’s SB1212 provides some relief for businesses in civil lawsuits by limiting the amount of the bond that must be posted against a judgment during the appeals process.
Though the list could go on this session included its share of disappointments. Unfortunately, Brewer vetoed Antenori’s SB1322 requiring managed competition for city services, and Sen. Nancy Barto’s SB1593 allowing out-of-state health care insurers to issue their policies without Arizona’s mandates.
Still, these setbacks cannot diminish the 50th Legislature’s overwhelmingly positive record on small business issues. The 7,500 Arizona members of the National Federation of Independent Business thank Brewer and our lawmakers for this session’s impressive achievements on behalf of small business and look forward to building on them next year.
— Farrell Quinlan is state director for the National Federation of Independent Business in Arizona.