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Look what I did!

Lawmakers to focus on boosting the economy and getting re-elected

Lawmakers to focus on boosting the economy and getting re-elected

With Arizona’s jobless rate hanging stubbornly at 9 percent, next year’s election will come down to one issue that trumps all others: jobs.

And as dozens of lawmakers gear up for the campaign season — including the 25 freshmen elected last year — they know that voters will be expecting them to do something about it.

That’s why many lawmakers are already sharpening their proposals aimed at spurring job growth in the state, mostly through tax cuts. Amid the flurry of legislation expected to be introduced in 2012, much of it is sure to conflict.

Some want targeted tax cuts, others are pushing a flat tax and still others want to lower the amount of taxes a business pays for equipment purchases.

And even though many of the measures may not get out of the Legislature — or if they do, may run into the veto stamp — lawmakers want something to bring back to their districts to hold up as evidence of fighting for the taxpayer.

“The bill might fail, but that’s OK. They can still go back to their constituents and say ‘I sponsored legislation to create jobs in Arizona,’” said Republican lobbyist Mike Gardner, a former lawmaker. “People want to go back to their constituents and say, ‘Look what I did.’”

The tactic is already being played out on the campaign trail.

Senate President Russell Pearce, who faces a Nov. 8 recall election, has reinvented himself in campaign mailers, touting his success in passing corporate tax cuts, but neglecting any mention of the immigration policies for which he is best known.

And former House Speaker Kirk Adams, now running for Congress, has likewise trumpeted his sponsorship of last session’s Arizona Competitiveness package — legislation that phases in a raft of corporate tax breaks — as proof positive that he can help create jobs.

“Good public policy needs draw a lot of enthusiasm from the Legislature,” said lobbyist Don Isaacson. “Sometimes it’s the environment, sometimes it’s immigration, sometimes it’s tax cuts. This year is certainly the season of job creation.”

It will be up to legislative leadership and committee chairmen to sort through and prioritize the bills that are expected to be filed.

“Everybody wants to be able to run on, ‘Well I got such and such passed,’” said Sen. Rick Murphy, R-Peoria. “You’re going to have a significant number of members who want to take credit for stuff that gets passed, and leadership will have to juggle that.”

• • •

Murphy is in the camp of lawmakers who think the most important thing to do is to eliminate or lessen the burden of the business personal property tax — a tax on equipment purchases.

It’s a strategy that Senate Majority Leader Andy Biggs,

R-Gilbert, will be spearheading with help from the Arizona chapter of the National Federation of Independent Business. They’re building support for what’s being called the “Small Business Job Creation Act,” a 2012 ballot measure that would dramatically reduce business personal property taxes.

On the other hand, there’s a push for targeted cuts like those in last session’s Invest Arizona bill, which would have given big property-tax breaks for major business investments. The bill got plenty of support from the Legislature but was vetoed by Gov. Jan Brewer. House Speaker Andy Tobin,

R-Paulden, an ardent supporter, has picked it up and is using it as a framework for a ‘jobs bill’ he said he will bring up next year.

“We’re working on amending that to where it still has teeth but adding to it things that would bring more of our members on board,” he said, adding that he will be seeking input from Brewer’s office, as well.

On the opposite end of the spectrum, there’s the flat tax proposal proposed by Rep. Steve Court, R-Mesa, which made it through the House last session before dying in the Senate.

Even without a flat tax bill, several lawmakers have said they would support a policy that benefits all Arizona businesses, not just those that can fill out a checklist of criteria.

Taken together, the proposals and their sponsors have the potential to clash next session, when everyone’s clamoring for the limelight as they gear up for election season.

“Legislators who work hard and develop creative and effective solutions are the ones who win elections,” Isaacson said. “There’s a certain amount of jockeying that goes on to make sure their name is associated with that.”

• • •

But others caution that the discussion around economic development policy should not be limited to tax cuts alone.

Kristin Borns, senior policy analyst for Arizona State University’s Morrison Institute for Public Policy, said making tax cuts to spur economic growth may backfire if the loss of revenue means the school system suffers.

“There are more pieces to a community puzzle when you’re looking at economic development,” she said. “You have to think about whether the infrastructure is there, or about the K-12 school system. Those all need to be part of the discussion.”

The school system is particularly important, she said, if Arizona wants a diverse economy that requires an educated workforce. And social safety net programs like childcare credits, which have been eliminated due to the fiscal crisis, are important to keep people in the workplace rather than having to stay at home.

Political strategist and media consultant Chip Scutari echoed Borns’ comments. Although the tax cut playbook, perfected decades ago by Ronald Reagan, may have inspired many people like him to become Republicans, he urged today’s lawmakers to come up with fresh ideas.

“Sure, proposing tax cuts makes for great election-year sound bites, but show me something new and innovative,” said Scutari, a former state Capitol reporter. “Instead of a hodge-podge approach to tax policy, legislators should step back and figure out what has worked and what hasn’t. I hope every lawmaker chats with a savvy business leader in his or her district.”

He added that he believes legislators will find that businesses are more concerned about the sunset in about two years of Proposition 100 — a 1-cent sales tax, which could expose education to more severe cuts.

“Trust me, there will be strong support for some sort of broadening of the tax base — which could include taxing services — because it could be a dedicated funding source for education,” Scutari said.

• • •

Gardner said the U.S. Supreme Court’s decision earlier this year to strike down Arizona’s matching funds provision from Clean Elections means some lawmakers who previously ran with public money may opt to run traditionally funded campaigns.

That means the business community, which is influential in campaigns, could have more sway when it comes to business-friendly legislation that promotes lower taxes.

“When people are suddenly back out on the street trying to raise those donations as opposed to getting a large group of $5 donations (to qualify for public funding), I think that’s a different phenomenon,” said Sen. Steve Yarbrough, R-Chandler. “I think the influence of the business community and donors that have the capacity to make big donations will increase as a result.”

And Yarbrough will be tasked with the chore of vetting those tax bills. As chairman of the Senate Finance Committee, any bills with a significant impact on the tax code would be funneled to him, and he would have to decide which bills to hear and when.

It’s something he said he’s both looking forward to and dreading.

“I enjoy the challenge of digging through and trying to understand these things,” Yarbrough said. “But on the same token, there’s a little bit of dread because there’s likely to be people you like and respect who really want their bills heard, and you’re going to have to tell some of them, ‘no.’”

Yarbrough said that next year’s election will make those decisions even tougher, and that there is a greater potential for ego clashes.

There is still another step that may render tax bills moot.

In her veto of the Invest Arizona bill last session, Brewer made it clear that she was not open to any tax cuts until after the temporary tax increase passed under Prop. 100 expired. As spokesman Matthew Benson later put it, Invest Arizona, or SB1041, “violated her cardinal rule of no structural tax reform before 2014.”

• • •

Lobbyist Stan Barnes pushed back against the cynicism that the slew of measures aimed at economic development is all to impress the voters, arguing an election year makes no difference.

“The bills that seek to reboot and jump-start Arizona’s growth curve are not born out of a re-election desire,” he said. “They are driven by the genuine, deeply held philosophical belief of the Republican majority that this is what they need to do now.”

Similarly, other factors including the need for donations from the business community are theories that Barnes said don’t hold water.

“Those theories work in the vacuum of a political science classroom,” he argued. “But in the real world of the Arizona Legislature of 2012, that is not the reality. The reality is the deeply-held philosophical drive to do something about unemployment.”

Leadership in the House and Senate are taking a similarly optimistic approach.

Tobin said he has spent most of his summer meeting with members of his caucus and discussing their ideas for the upcoming session, including their plans for job creation.

“We have a lot of members with a lot of different points of view, but they’re all centered on the same solution, which is how to make Arizona more competitive in the tax code and job creation,” he said. “What we’re doing from my office is we’re trying to coordinate everyone’s idea to create the best possible jobs bill.”

In the Senate, Biggs said he’s looking forward to next session precisely because everyone has been working on their new ideas. It will trigger an in-depth discussion of the different approaches to the tax code and job creation, and he said he has confidence that ultimately his caucus will come to an agreement about the best policy.

However, he cautioned that in order to do so, his fellow senators would have to check their egos at the door.

“At some point, people have to set aside the idea that they pass policy to get re-elected,” he said. “My position is, I don’t care who gets the credit for it, as long as we get the policy.”

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