Election season is in full swing. The candidates’ signs are out on a street corner near you and the primary is next month, so it’s not too soon to take a look ahead to November, when Arizona voters will be making their voice heard on a host of ballot measures.
The Arizona Chamber of Commerce and Industry this week weighed in on five ballot questions, and I wanted to share with you the positions we’ve taken.
Proposition 116 – Property Tax Exemptions – Support
One of Arizona’s great strengths as a state is the entrepreneurial spirit of its citizens. In fact, the Kauffman Foundation recently ranked Arizona as the top state for entrepreneurship in the entire country. The tax, legal and regulatory reforms enacted at the state Capitol in recent years have created an environment in which these entrepreneurs can succeed. The Arizona Chamber joins the Arizona chapter of the National Federation of Independent Business in supporting Proposition 116 because it continues to improve the tax environment for small businesses and makes it easier for them to grow and create jobs by reducing the tax burden on their equipment and machinery.
A tax on the value of equipment and machinery increases the fixed cost of operating a business in Arizona and creates a disincentive to new investment. Proposition 116 would exempt the value of equipment and machinery equal up to the wages of 50 Arizona workers, making it more likely Arizona businesses will hire new employees.
Proposition 117 – Property Tax Assessed Valuation - Support
As our friends at the Arizona Tax Research Association have pointed out for years, our state’s property tax system is overly complicated, with two valuations: full cash value and limited property value. Under Proposition 117, the annual growth of the limited property value would be limited to five percent, and it wouldn’t exceed the full cash value.
The 5 percent cap will protect taxpayers from dramatic increases in tax bills due to real estate market volatility. This is especially important during a real estate bubble such as the one Arizona experienced during the last decade. Had the 5 percent cap been in place during that time, over $30 billion in property value that was added during the bubble and subsequently lost during the recession would never have been added to the tax rolls in the first place.
Passing Proposition 117 moves the state closer to our goal of developing a tax system that is globally competitive, fair, consistent, and equitable.
Proposition 118 – Establishment of Permanent Funds - Support
The Arizona Chamber has a longstanding position of developing a school financing system and educational structure that improves learning outcomes in a financially responsible manner.
Passage of Proposition 118 will restructure the distribution formula for the Permanent Land Endowment Fund, whose largest beneficiary is K-12 education. The result will be a simple yet important change that will bring about reliable and consistent K-12 education funding with no new taxes and no new spending from the General Fund.
Arizona Treasurer Doug Ducey deserves applause for crafting this vital reform.
Proposition 119 – State Trust Lands - Support
Few industries have as strong of a positive impact on Arizona’s economy as defense and aerospace. A 2010 Arizona Chamber Foundation policy brief found that private sector defense and aerospace manufacturers account for 37,000 direct jobs that pay average annual salaries of $85,000. These industries depend on the continued operations of military installations throughout the state. Arizona’s five major Army, Air Force and Marine installations and four principal National Guard operations are responsible for over 96,000 direct and indirect jobs. These facilities contribute $9.1 billion in economic output and $401 million in state and local tax revenue according to a 2008 report by the Arizona Department of Commerce.
Although improving, the economy is still fragile. Proposition 119, supported by Land Commissioner Maria Baier and Greater Phoenix Leadership, will help prevent incompatible land use that could put at risk the jobs associated with military bases. For these installations to remain vibrant, they must allow for the full spectrum of military testing and training operations on the ground and in the air. Proposition 119 will ensure they are able to complete their critical missions and remain an integral part of Arizona’s economy for decades to come.
Proposition 204 - Quality Education and Jobs Initiative – Oppose
If the Quality Education and Jobs sales tax makes the ballot, the Arizona Chamber will oppose it.
The Chamber recognizes that a high-performing education system is required to ensure a high-performing economy. In recent years the Chamber has supported reforms that help get more science, technology, engineering and mathematics educators into the classroom; increase accountability measures to ensure better school performance; assign easy-to-understand letter grade assessments of schools; increase school choice; increase funding to ensure third graders can read; and allow high achieving students to get a jump start on their college careers.
We also recognize that our education system requires the financial resources necessary to produce a highly qualified workforce. To that end, the Chamber strongly supported Proposition 100 in 2010, which established a temporary one cent per dollar sales tax, and over 10 years ago our organization supported Proposition 301.
But this initiative proposes an entirely new permanent tax with new implications for policymakers and our state. This new permanent tax does not increase accountability nor does it demand increased achievement from our education system.
Whatever the good intentions of this measure, this is an exercise in ballot box budgeting without serious steps to increase accountability and institute reforms that asks Arizona voters to essentially write a blank check of about $1 billion annually.
Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry