Archive for January 9th, 2010

Times are tough, revenues are down, cuts have to happen, taxes are going up.  What we need to start focusing on at the national, state and local level is increasing revenues by attracting more businesses.

I know we sound like a broken record but unless and until we start paying attention to the supply side of our economy we arent’ going to recover and we are doomed to experience future economic roller coaster rides in our state and city.

From an economic perspective people fit in to the following categories:

- Retired – living off their retirement investments, savings and social security.

Government Sector
- Students – living off their parents, loans and grants and transitional employment.
- Military – employed by taxpayers.
- City, County, State and Federal Employees – employed by taxpayers.
- Educators – elementary school through college – for the most part paid for by taxpayers.

Private Sector
- Employees - earn their living because someone started a private venture to offer a good or service.
- Entrepreneurs – embarked on a venture by risking capital and time with the goal of turning a profit.

When you look at the above the groups it’s the employees and entrepreneurs that create the economic engine that support the entire system.

Looking at southern Arizona’s core issues you’ll find a big of a government sector, our largest employment group at 21%. You’ll see a large retiree population fueled by great weather and great amenities. We have a large student population with a major state university and a vibrant community college system. The sector that seems to be missing is the business community. We lack major manufacturers (Raytheon employs 11k out of a total of 1 million people or 1% +/_), finance or tech industries.  The service sector makes up our second largest employment sector at 17%. Service based tourism and retail jobs keep our average annual wages at or near the federal poverty levels.

What are we to do? It’s going to take action from the federal government in the form of loosing credit markets and funding for small business in particular. It’s going to take a refocus from our local leaders on the basiscs. It’s also going to take some taxing and regulatory changes at the state level that makes our state a more attractive place for businesses to relocate.

We’ve done a number of comparisons between Texas and California in this blog over the past year and the further our economy drops the clearer it becomes that we MUST start looking at the core policies that keep business from coming to Arizona. (More on Texas v California – HERE – HERE - HERE – HERE - HERE – HERE - HERE – HERE - HERE – HERE - you get the point).

Arizona is at a tipping point. We can follow our old boom bust cycles based on real estate and growth or we can set the table for future economic prosperity and turn our state into one of the top states to do business in the country. Once the economic engine is in place our educational spending will go up, our social service programs will have more options and the sun will start shinging brighter.

Arizona House Republican have a plan but they need our help. It looks like the House has the votes but they’ll need at least 2 out of the following 4 Republican State Senators to vote for the plan:

Sen. Carolyn Allen
R-Scottsdale
Personal: 71, legislator
Committees: Healthcare and Medical Liability Reform; Commerce and Economic Development; Veterans and Military Affairs
Contact: 602-926-4480; callen@azleg.gov

Sen. Barbara Leff
R-Paradise Valley
Personal: 61, volunteer, former medical social worker
Committees: Commerce and Economic Development; Finance; Healthcare and Medical Liability Reform
Contact: 602-926-4486; bleff@azleg.gov
Web site: barbaraleff.com

 Here’s a full list of our Arizona Legistlators – HERE

House GOP plan would slash taxes for AZ businesses

 
MESA — House Republicans want a package of tax cuts for business they say will stimulate job growth, including one that would increase property taxes of homeowners.
The plan unveiled Tuesday would:
• Slash the corporate income tax rate paid by the state’s largest companies from its current level of slightly less than 7 percent to 4.5 percent — a 35 percent reduction.
• Cut income tax rates for individuals and most small- and medium-sized businesses by 10 percent.
• Permanently repeal the statewide property tax.
• Reduce assessment ratio used to determine how much businesses pay in property taxes to cities, counties and schools — a move that would shift more of the tax burden to homeowners.
At one time businesses paid property tax on 25 percent of the value of their land, buildings and equipment. The rate has already dropped to 22 percent, and lawmakers have approved cutting it to 20 percent in two years.
The new proposal would take the ratio down to 15 percent by 2016.
Local governments would have to raise rates for homeowners, whose assessment would remain at 10 percent of their property value, to make up what businesses would no longer pay.
House Speaker Kirk Adams, R-Mesa, acknowledged the state’s current $1.5 billion deficit when he unveiled the plan, saying that is why the tax cuts would be phased in over four years beginning in 2012.
He offered no specifics for how House Republicans plan to address the deficit in the meantime.
Senate President Bob Burns, R-Peoria, however, was less than enthusiastic. He said there is merit in the goal of House Republicans to make Arizona “a more business-friendly place.” But he said the move may be premature.
“You’ve got to stop the bleeding of the state right now,” he said.
“That’s got to be the No. 1 priority,” Burns continued. “And these other things are OK, but we’ve got to focus on getting this budget squared away.”
Adams, however, said the deficit makes this the best time to reform and reduce business taxes: when people are focused on creating jobs.
Despite shifting more of the tax burden to homeowners, Adams thinks he can sell the plan to voters.
“The citizens of Arizona understand more now than ever the importance of jobs because there isn’t a person in the state who has not been affected by job loss or knows someone who’s lost their job or lost a significant portion of their income,” he said.
But House Minority Whip Chad Campbell, D-Phoenix, said that will never sell with homeowners who already are struggling to pay their current property tax bills. And the move comes even as two groups are gathering signatures to put measures on the November ballot to lower property taxes even more than they are now.
Campbell said Democrats might be more inclined to support another part of the package, which provides tax breaks to firms that produce new jobs if those jobs pay at least 25 percent more than the median wage and if the firms fund at least half of each worker’s health insurance.
  By Howard Fischer
Capitol Media Services
Tucson, Arizona | Published: 01.06.2010