Bottom Line

A to-do list for the Legislature before the end of session
April 10, 2017

A to-do list before the end of session

  Glenn Hamer

  April 10, 2017               


Committee hearings are over. Budget talks are heating up. Bills are moving through the last stages of the legislative process.

As the end of the legislative session draws near, it’s worth taking a look at where the Arizona Chamber of Commerce and Industry’s top priorities for 2017 stand.

Over the next few days, Glenn Hamer will take a look at a to-do list Arizona’s job creators are encouraging the Legislature to accomplish before adjourning for the year.

Legislative to-do list day 1: Adopt a budget with Results-Based Funding for K-12, research infrastructure for higher education, smart tax reforms, and that protects transportation funding.


Results-Based Funding

The Arizona Chamber in January joined 18 other major business groups in the state on a letter stating our support of Governor Doug Ducey’s K-12 education budget, which calls for $114 million in new funding to Arizona schools.

Most notably, the governor’s budget proposal features a critically important innovation that was originally endorsed as part of his Classrooms First Initiative Council: Results-Based Funding.

By directing additional dollars to Arizona’s highest quality classrooms and schools, with an emphasis on those schools that are beating the odds and closing the achievement gap, school leaders can provide greater access to more students and families at the best schools we have in communities all across Arizona.

Results-Based Funding offers Arizona the fastest opportunity to grow excellence for more students now. The research is clear that trying to fix low-performing schools gets fewer kids into high-quality classrooms than simply growing already great ones. Growing high quality schools also improves teacher retention – even in high poverty neighborhoods. The governor’s call to provide $37 million in additional resources to Arizona’s highest performing schools will sustain and grow amazing schools in communities from Nogales to Tucson to Ahwatukee. It’s time. Let’s get this done.


Research infrastructure for higher education

Gov. Ducey’s budget calls for a creative mechanism to generate the financial resources to back $1 billion in bonds for research infrastructure at the state’s universities.

The governor’s plan for universities to reinvest the millions they generate in sales tax dollars into capital infrastructure will address the pent-up demand for maintenance projects as well as new research and educational assets.

And it’s a smart reform, too. Arizona is one of only six states whose universities remit sales taxes to the state.

Returning those dollars back to university projects makes sense, particularly when you consider the massive wealth-generating capacity of leading-edge research facilities.


A competitive tax code that encourages job creation

Gov. Ducey throughout his tenure as governor has worked to make Arizona’s tax code more competitive.

He and the Legislature in 2015, for example, helped to prevent a backdoor tax increase by pegging the state’s tax brackets to inflation, which ensures that a raise in pay won’t just push an Arizona taxpayer into a new tax bracket, but will actually put more money in their pocket.

That thinking extends to this year’s call to index the personal income tax exemption to the cost of living as well. Currently at $2,100, an exemption tied to inflation would similarly help avoid a hidden tax increase while also putting Arizona on par with the other 19 states in the country that maintain the same policy.

The Quality Jobs tax credit, which encourage companies to bring long-term, good-paying jobs here, was included in the 2011 competitiveness package, but is slated to expire in July. It should be extended for another eight years.

The Research & Development tax credit , which encourages R&D activities in the state, including those at a state university funded by a private business, will become less advantageous to companies after 2017. The Legislature should maintain the current credit percentages of 24 percent on the first $2.5 million of qualifying expenses of qualifying expenses and 15 percent beyond that to ensure our most creative minds keep innovating here.

The Legislature should also pass legislation to improve our manufacturing environment by adopting legislation that will accelerate depreciation for personal property classified as Class 6 that is used in a manufacturing application. This reform encourages companies to make investments in capital-intensive machinery and equipment.

 
Transportation infrastructure is part of economic development
 
Arizona’s position as a leader in cross-border trade means that we must continue to ensure that we’re well positioned to facilitate the movement of freight through our state, which means our transportation infrastructure has to keep pace with increasing demands.
 
Last year’s budget called for wise investments to upgrade SR 189, which links the Mariposa commercial port of entry in Nogales to Interstate 19, and to increase the capacity of Interstate 10 near Picacho.
 
The next state budget should minimize any diversion of dollars from the Highway User Revenue Fund to non-transportation purposes, and we should seek to identify a dedicated funding source for the Department of Public Safety. 
  
 
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry