Archive for August, 2009

The 10 metro areas included on the list are: 

1.      Wichita, KS
2.      Huntsville, AL
3.      Seattle, WA
4.      Forth Worth, TX
5.      Tampa, St. Petersburg, FL
6.      Tucson, AZ
7.      Orlando, FL
8.      Phoenix, AZ
9.      Los Angeles, CA
10.    San Diego, CA

Aerospace and defense is one of four targeted industries in TREO”s business development efforts. In Fiscal Year 2008-2009, 16% of new jobs in the region were in the aerospace and defense/homeland security industry.

“Tucson, Arizona, clearly has established itself as a leading aerospace/defense hub. It is home to Raytheon Missile Systems, the world’s largest missile manufacturer, which generates about $5 billion in annual revenue and supports more than 12,000 jobs. With a solid footing in the production of advanced defense systems, Tucson has positioned itself for steady growth in this critical high-tech sector for years to come,” said Jack Rogers, Editor-in-Chief, Business Facilities.

“Business Facilities’ ranking of Tucson as a top metro area for aerospace and defense manufacturing proves that targeted efforts to recruit high-skilled jobs in this industry are paying off,” said Joe Snell, TREO President and CEO. “The aerospace and defense industry is a critical component of Tucson’s economy and a national ranking like this is great recognition for the region.”

Tucson has also recently ranked as a hotspot for young professionals as well as a “Fast City.” In June, Next Generation Consulting ranked Tucson No. 16 on its list of the best places to live and work for young professionals in cities with a population of more than 500,000. And in May, Fast Company magazine ranked Tucson as one of the top 12 “Fast Cities” in the world. For more information on these rankings visit www.treoaz.org.

About TREO (Tucson Regional Economic Opportunities, Inc.)

TREO’s mission is to provide insight, infrastructure, resources and development efforts to accelerate economic prosperity throughout the Southern Arizona region. TREO supports the creation of new business, the growth and expansion of existing businesses, and the attraction of companies that offer high-impact jobs and share the community’s values. For more information, visit www.treoaz.org.

AUGUST 11, 2009, 6:27 A.M. ET

Arizona’s Budget Breakthrough

An alternative to California’s tax and spend model.

Perhaps states are starting to learn the right fiscal lessons from the red-ink blowouts in high-tax California and New York. Today, the legislature in Arizona will vote on a tax reform designed to entice more employers and high-income taxpayers to the state. Sponsored by Republican Governor Jan Brewer, the plan would cut state property taxes, the corporate tax and personal income taxes, in exchange for a temporary rise in the sales tax.

Most economic studies agree that states have more jobs and higher income growth when they tax consumption rather than savings, investment and business profits. This explains why most of the nine states with no income tax at all-such as Texas, Florida and Tennessee-have been economic high-flyers in recent decades.

Ms. Brewer’s proposal reflects this economic logic. Effective January 1, 2011, her plan would reduce the state’s corporate income tax rate to 4.86% from 6.97%, which would be one of the largest business tax cuts in the nation in recent years. The proposal also cuts all personal income tax rates by 6.6%, thus lowering the top marginal rate to 4.24% from 4.54%. A hated statewide tax on commercial and residential property would also be abolished.

Arizona has been hit especially hard by the housing slump, and its budget woes were compounded thanks to former Governor Janet Napolitano’s spending spree before she joined the Obama cabinet. On her watch the budget grew by more than 50% in five years-to $10.2 billion from $6.5 billion in 2004. The state now has a $1 billion budget gap, and to close it the legislature will also vote on a one percentage point increase in the sales tax to 6.6% in 2010 and 2011; in the third year the sales tax would fall to 6.1%, and in the fourth year would revert to its current 5.6% rate.

We’d rather see the legislature cut more spending than raise the sales tax, but on the other hand the sales tax would only take effect if it is approved on the November ballot. The political class is giving voters a say in the matter. The sales tax increase also has the advantage of a built-in expiration date, while the tax cuts are permanent.

Democratic opponents are calling this a tax giveaway to big business. But lawmakers needn’t apologize for trying to retain Arizona’s status as a business-friendly state-particularly when jobs are so scarce. Small employers also benefit from the lower property tax rates and the personal income tax reductions. Lower tax payments will enable them to reinvest more in their enterprises.

The opponents should consult a new study of state business taxes by former U.S. Treasury economist Robert Carroll for the Tax Foundation. He examined 50 states and found that states with lower corporate tax rates have higher wage gains and more productivity over time. This tax cut sounds like a high-return investment.

Republicans control both houses of the Arizona legislature, and as we went to press the main obstacle to passing the reform was the Arizona Senate’s antitax conservatives. They oppose the higher sales tax. These Republicans should look to one of the triumphs of the Reagan Presidency, the 1986 tax reform, which broadened the tax base but substantially lowered tax rates and thus sustained the 1980s expansion.

Arizona has the chance to be the anti-California, closing the budget deficit by growing the economy, not by raising taxes. We hope legislators don’t blow it, because the U.S. desperately needs an alternative to the tax, spend and tax again philosophy of Sacramento and Albany.

Click HERE to see what Congressman Grijalva and I are lock step in agreement on.

Figure 1

In Figure 2, the tax cuts are lagged two years.  Again, this two-year lag actually represents 18 months.  Tax cuts lagged two years (18 months) trace the growth in real GDP fairly closely.  Again, the exception is the period during the late 1989/early 1990s recession, where the tax increases are concurrent with the recession so the lagged values diverge from the real GDP growth rate.

Figure 2

Exhibit 1: Development-Related Employment (Construction + Suppliers), AZ, 2007

Source: Joint Legislative Budget Committee

click graph to enlarge

For a list of 100 top  paying occupations in Arizona
Click here.

In 2006, travel was a $18.6 billion industry in Arizona, and this direct travel spending generated 173,000 direct jobs with earnings of $4.9 billion and $2.6 billion in state, local and federal tax revenue. These numbers have been on the rise since 2002, demonstrating a strong and resilient industry with tremendous growth potential.

One of the most effective ways to measure the impact of the travel industry is to stack it up against other industries that are considered vital to Arizona’s economic success. The Gross Domestic Product (GDP) for the travel industry, which is the sum of earnings, indirect business taxes and other operating surplus, amounted to $6.9 billion in 2006, which is 3 percent of the total Arizona GDP. By way of comparison, the U.S. travel industry comprises about 2.5 percent of national GDP.

From AZ Star 7/13/08 – Fix the LAND USE CODE -

Mike Hammond of Picor Commercial Real Estate said he had a client who was tripped up by a rule saying that if the flush handle on a toilet is not on the side away from the wall, you have to replace the toilet. Cost: Six toilets times $500, plus labor. Reason: Unclear.

This is absurd and bad for business.It must be fixed. Thankfully, various elected officials, city workers and citizens like Hammond and Warne are working to get that done.

Hammond says Tucson’s land-use code has become so byzantine that “quality developers that we want in our city can spend $15,000 on a project and then discover they can’t do what they want to.”

Because of such hassles, many of them borne of confusion among city workers about what the code means, commercial developers like Warne and Hammond warn that Tucson is losing new businesses, and thus jobs, to competitors like Marana, Mesa and Chandler.

As for revitalizing the central city in the face of such bureaucratic hassles? “That’s just a myth,” Hammond said.

Then from Feb 17th 2009 – after much work, many meetings with planners, development services, neighborhoods and business the vote finally gets to council to once and for all FIX THE TROUBLESOME land use code….but only for 1 year:

The land-use code requires owners to meet standards on parking, loading zones, trash collection and landscaping if they want to increase the size of their buildings, parking areas or property by 25 percent or more, according to a story by the Star’s Adam Curtis.

Trasoff’s plan would suspend those sections of the land-use code for one year. It would allow owners to expand their properties by 40 percent or 50 percent before having to meet the standards. Encouraging property owners to invest in their properties could spur construction jobs, which could have a ripple effect throughout the economy.

While we advocate revamping and updating the entire land-use code, this one-year suspension could be an economic boon.Trasoff told the Star that, depending on the size of the property and project, the move could save small businesses possibly tens of thousands of dollars — an incentive to do work now, rather than later.

The trick will be to balance the reasons for the code, to protect neighborhoods from overflow parking linked to businesses, with the need to make it easier for small businesses to expand.

 

If the LUC is a known problem why fix it for only 1 year or 18 months? Why not take care of the problem for good?  Could it be that our elected council is more concerned about the neighborhood voting block that put them in office than the business community that ultimately pays the bills?

Time to move to Marana folks – then maybe, just maybe the council will start to get the point.

WSJ editorial HERE.