The state’s economic development director on Tuesday proposed that Arizona explore using publicly issued tax-exempt bonds to ease the flow of private investment dollars into business expansion projects into the state.
Arizona Commerce Authority President Don Cardon broached the idea during a meeting of the authority’s board of directors.
He said the idea could encourage economic development in the face of a tight credit market that makes it difficult for normally credit-worthy businesses to get loans.
Cardon said companies getting loans from bond sales — and not the state — would be liable to repay the bonds, which could be issued by existing county industrial development authorities.
“It would be different if we were saying let the state issue debt to promote business,” Cardon told reporters later. “That would not be appropriate.”
Gov. Jan Brewer approached the bonding idea cautiously when asked about it after the meeting. She said it warrants consideration “slowly and deliberately” and that she wants to protect the state.
“Putting the state at risk,” Brewer said when asked if the proposal has any potential downsides. “Does it? That’s what we have to take into consideration.”
Whether the bonding idea will fly at the Legislature is an open question as many legislators have resisted past proposals for public borrowing, whether for infrastructure projects such as Phoenix convention center’s expansion or for balancing the budget.
And there was clear indication of disconnection between Brewer and some Republican lawmakers on another economic development issue: whether the state should do more to cut business taxes than the reductions included in a package approved in February legislation.
Brewer vetoed a subsequent bill to provide property tax breaks to new business projects, and a legislative backer of that measure told Brewer and other Commerce Authority members on Tuesday that lawmakers were disappointed by the veto.
Lawmakers want to readdress the issue, said Rep. Tom Forese, R-Gilbert.
Cardon earlier said Arizona is now well-positioned to attract business projects and that it should use restraint in providing incentives.
It’s important to be competitive but minimizing the state’s investment helps the state get bigger return on the investments it makes, he said. “You have to have that balance.”