Another Republican-led proposal to stimulate and incentivize business development in Arizona is moving through the legislature – though it is unsurprisingly meeting serious resistance from the other side of the aisle.
Senator Steve Kaiser sponsored SB 1559, which deals with a reduction in the income tax and fees for new businesses across the state. According to the purpose of the legislation provided by the State Senate, the bill “prescribes a threshold of five percent of state contracts the Arizona Department of Administration (ADOA) is encouraged to award to new businesses each year and exempts a new business and a person who is establishing a new business from filing fees to establish the new business.” It also “establishes an individual and corporate income tax subtraction in prescribed amounts for a new business’s first three years of operation.”
The prescribed amounts for individuals (income received from the new business) and corporations (Arizona gross income) are 100 percent for the first year of operation, 50 percent for the second year, and 25 percent for the third.
Earlier this week, Senator Kaiser’s piece of legislation passed the chamber with a party-line 16-12 vote – with two Democrat Senators not voting (Burch and Gonzales). This action followed two, prior partisan votes in Senate Committees– first in the Finance Committee back in February, where SB 1559 cleared 4-3; and in the Rules Committee, 4-3.
The Joint Legislative Budget Committee (JLBC) previously published data from the U.S. Census Bureau’s Business Formation Statistics, showing that there were 7,919 business formations in Arizona in 2022. The JLBC also projected that “the number of new businesses will grow to 8,523 in 2023, 9,173 in 2024, 9,872 in 2025, and 17,561 in 2026.”
Earlier in the Senate Finance Committee, Democrat Senator Mitzi Epstein explained why she was voting against the transmission of the bill to the full chamber, saying that though she was a small business owner and understood the need for these businesses to receive help and access to resources, she believed the provisions of this legislation would be “ripe for abuse.” She feared that SB 1559 would “create a whole new industry” of entrepreneurs helping small businesses take advantage of the tax and fee incentives provided by this proposal (if enacted).
In the committee, Senator Kaiser, the bill’s sponsor, touted his previous experience as a business owner and empathized with young business owners (especially those businesses under five years old) trying to keep their operation afloat and financed in the early years. He stated that “we need to really support our young businesses as much as possible. They do produce the most new jobs compared to existing small businesses and large businesses, and whatever we can do to help them survive and thrive is going to be helpful.”
Another Democrat Senator, Brian Fernandez, told the Finance Committee that he was a no, but he possibly could be swayed to flip his position if there were changes to the bill, inferring that his suggested tweaks mirrored the concerns expressed by his colleague, Senator Epstein.
Representatives from the Arizona Firearms Industry Trade Association and North Phoenix Chamber of Commerce supported this legislation through the Senate process, while a representative for the Arizona Center for Economic Progress registered opposition to the bill.
Before the vote on the Senate floor, the Arizona Senate Democrats Caucus tweeted that “SB 1559 is another handout for businesses,” and warned that “a new business income tax subtraction could cost Arizona’s General Fund an estimated $34.3M in FY25, $36.5M in FY26, and $38.9M in FY27.”
It sounds simple enough – repeal any sales tax on the purchase of food for home consumption currently being imposed by two-thirds of Arizona’s municipalities and thereby provide relief for residents against the ongoing effects of inflation, high fuel prices, and increases in utility costs.
That is the purpose behind House Bill 2061 introduced earlier this month by House Majority Leader Leo Biasiucci along with 35 co-sponsors. Sales taxes in Arizona are formally known as a transaction privilege tax (TPT).
Today I introduced HB2061, a bill that removes the grocery food tax in Arizona. With 35 cosponsors, this is a bill that all Arizonans should get behind! 🇺🇲 pic.twitter.com/CF1CKD2QHM
Arizona does not have a state TPT for the sale of food for home consumption. But supporters of Biasiucci’s bill note that without a change, those who shop in a city or town with a municipal TPT on food will continue to be hit with a double whammy – more TPT being paid along with increasing grocery prices.
Sponsored by @Leo4AzHouse, HB2061 repeals the municipal food sales tax. Cities are reaping the benefits of inflation with record high sales tax revenues, all while Arizonans struggle. It’s time to provide inflation relief to Arizonans by repealing the food tax. We support HB2061 pic.twitter.com/PgjzfJKWbE
There is, of course, a quiet benefactor to those inflation-driven higher grocery prices – the 65 of Arizona’s 91 incorporated cities and towns which tax food for home consumption. The higher the prices, the greater their revenues.
Several municipalities have gone on record against HB2061, including the cities of Apache Junction, Avondale, Buckeye, Chandler, Coolidge, Glendale, Globe, Goodyear, Litchfield Park, Page, Prescott, Scottsdale, and Tempe, as well as the towns of Florence, Fountain Hills, and Gilbert.
Two other cities – Phoenix and Tucson – which do not even have a city sales tax on food for home consumption still oppose HB2061, as do lobbyists such as the League of Arizona Cities & Towns, the Professional Firefighters of Arizona, and Arizona AFL-CIO.
HB2061 cleared its first hurdle last week with a 6 to 4 vote in the House Ways & Means Committee. All four no votes came from Democrats on the committee. One lawmaker who advocated for the legislation during the committee vote was Rep. Travis Grantham (R-Scottdale).
“It’s unthinkable to me that people can stand up and justify taxing something people need to survive on a day to day basis,” Grantham said.
HB2061 is slated to be considered by the House Rules Committee on Monday. It will then be debated by the House, where many lawmakers expect to hear complaints that cities and towns will have to cut services if the bill passes.
It is an argument Biasiucci (R-Lake Havasu City) refuted last week, pointing out that the roughly one-third of Arizona’s cities and towns without a sales tax on food for home consumption are still able to offer municipal services.
Do the 27 cities in Arizona that do not have a food tax have Police? Ask Phoenix, Tucson, Lake Havasu, Kingman and get back to me with your answer.
If passed into law, the elimination of the food sales tax would take effect later this year. However, there is nothing in state law preventing any municipality that currently has such a tax from repealing it on their own.
The Joint Legislative Budget Committee estimates HB2061 could save Arizonans nearly $160 million in Fiscal Year 2022 and potentially growing to a savings of more than $195 million in FY 2026.
Democrats in the Arizona Legislature just voted NO to cut taxes on groceries! EVERY REPUBLICAN VOTED YES!! #HB2061
This month’s approval by the City of Maricopa’s planning & zoning commission of four amendments is the latest step toward bringing another hospital to the community, one of several projects adding to Arizona’s burgeoning supply of medical facilities.
The $762 million project planned for Maricopa by S3 BioTech will provide the city its second hospital, along with medical offices, nearly 140 multi-family housing units, and a hotel with 138 rooms.
The P&Z approvals involved amendments to three zoning maps as well as an amendment to the city’s General Plan. The project located at West Bowlin Road and North John Wayne Parkway will create thousands of construction jobs and potentially 3,000 medical-industry jobs, according to Ed Johnson of S3 BioTech.
While S3 BioTec’s project in Maricopa might not break ground until 2024, Arizona saw several large-scale medical projects open their doors this year, including Exceptional Healthcare’s long anticipated $18 million community hospital in Yuma.
The 20,000-square-foot facility opened this summer, providing Yuma County its second hospital. The new facility off Interstate 8 and Araby Road offers several features, including a 24-hour emergency department, an in-house lab, and helipad.
The project is one of six that Texas-based Exceptional Healthcare hopes to build in Arizona, according to CEO Saeed Mahboubi. The company opened its first in the City of Maricopa in late 2021 and announced just a few weeks later it was moving ahead with expanding its emergency department offering by the end of 2022.
Another medical facility which opened in 2022 is the Dignity Health East Valley Rehabilitation Hospital in Gilbert.
The 50,000-square-foot facility provides 40 beds for private-room inpatient rehabilitation and recovery for patients who have experienced stroke, traumatic brain injury, spinal cord injury, complex neurological disorders, orthopedic conditions, multiple traumas, amputation, and other injuries or disorders.
Mark Slyter, CEO of Dignity Health Chandler Regional and Mercy Gilbert Medical Centers, said there was a need for the new state-of-the-art facility due to the “tremendous growth in complex care” at nearby Mercy Gilbert Medical Center which leads patients to seek conveniently located acute, hospital-based rehabilitation services.
“Dignity Health East Valley Rehabilitation Hospital – Gilbert will be the much-needed resource for those in our community who have suffered from serious illness and injury,” Slyter said of the project. “We are proud to partner with Lifepoint Rehabilitation to provide care and services close to home that will help people resume engaging in the activities that they enjoy, and to live life to the fullest.”
Meanwhile, Phoenix Children’s Hospital is taking steps to expand its pediatric offerings in the Phoenix Metro area with a $135 million campus in the West Valley. Groundbreaking of the Phoenix Children’s Hospital – Arrowhead Campus in Glendale occurred in November 2021.
The project, which is set to open in Spring 2024, will consist of a 180,000-square-foot, three-story hospital providing six operating rooms, 30 emergency / trauma rooms, and 24 inpatient beds. A separate medical office will provide a number of pediatric specialty services, including cardiology, neurology, and oncology.
Farther north, plans are moving forward for the first new hospital in Flagstaff since 1936.
Northern Arizona Healthcare announced in 2021 that it will expand medical services in Flagstaff by building a new hospital and several other facilities on a 90-acre parcel on the southside of the city. But details of the project were not revealed until a few months ago.
According to Interim CEO Josh Tinkle, the new hospital is needed because the Flagstaff Medical Center built in 1936 has become too small and outdated. This has led hospital administrators to annually defer treatment for more than 5,000 patients.
The Flagstaff project will also include more than 300-units of multi-family housing, a hotel, and restaurant / retail offerings to address the needs of new employees and residents. Funding and city permitting will likely take several months to finalize with a hoped for opening in 2027.
And in Bullhead City, Exceptional Healthcare announced plans earlier this year to build on its Maricopa and Yuma successes by constructing a small hospital in the Mohave County community in 2023.
A new 20,000-square-foot hospital will be a “great addition to our community,” City Manager Toby Cotter said at the time of the April 2022 announcement. “The medical facility supports the ongoing growth in our city and region,” Cotter added.
The Bullhead City hospital’s grand opening is expected in mid-2024.
Terri Jo Neff is a reporter for AZ Free News. Follow her latest on Twitter, or send her news tips here.
In the last year, Arizona has added nearly 15,000 manufacturing jobs. But the demand for skilled workers to fill those jobs along with thousands of others across the state which require specialized training is drawing attention to the importance of ensuring students have access to trade or vocational schools.
The Imagine America Foundation (IAF) is focused on promoting the value of specialized career education and helping students get the hands-on training they need. One category the IAF concentrates on is the skilled trades, which includes a variety of occupations running the gamut from production, installation, maintenance, and repair.
“Because the world runs on machines and energy, those able to service them will always be in demand,” according to a recent IAF report titled Pandemic-Proof Careers in Skilled Trades. “Through economic downturns, pandemics, or other natural disasters, keeping these pieces moving will always be crucial to keeping society moving.”
The growth in demand for skilled trade jobs across Arizona is being powered by emerging technologies, a concerted effort by Gov. Doug Ducey to attract certain industries, and an aging workforce set to retire in the next few years.
“For young people deciding on a career or those looking to make a career change that better aligns with the stability, demand, flexibility, and ROI they seek, this growth comes at the perfect time,” the IAF report notes.
IAE recently highlighted several “hot emerging skilled trades” which can offer a more pandemic-proof career. Those jobs include:
Aircraft and avionics equipment mechanic / technician
Electrician
Heating, air conditioning, and refrigeration mechanic / installer
Heavy vehicle and mobile equipment service technician
Industrial machinery mechanic, machinery maintenance, or millwright
Machinist or tool and die maker
Medical equipment repairer
Solar photovoltaic installer
Welder
Wind turbine service technician
Scholarships and other tuition assistance for vocational and trade schools has also become more common in the last few years, with the Arizona Community Foundation leading the way away from a college-only mindset.
That example is now being followed by one of Cochise County’s largest employers, which has created a new scholarship for high school seniors interested in obtaining the training needed for a skilled trade job.
The program announced last month by Sulphur Springs Valley Electric Cooperative (SSVEC) Foundation will award $4,000 to five students who plan to attend a trade school, skilled job training program, or apprentice program in 2023 instead of seeking a traditional higher education degree.
“Our Directors recognized the importance of encouraging, and providing resources, to students who plan to attend a trade school or certified program rather than a degree from a college or university,” said Marcus Harston, SSVEC’s Community Relations Manager.
More information on the SSVEC Foundation Trade Scholarship Program is available here.
Some companies across Arizona are getting even more involved in training the new employees they need. Several, including Boeing and Gulfstream Aerospace Corp., are now working directly with educational institutions to ensure a quality workforce.
For instance, Gulfstream has partnered with Arizona State University and Chandler-Gilbert Community College to turn out maintenance specialists for the company’s fleet of luxury jets.
In addition, the Governor’s Office recently featured Prescott-based CP Technologies which has joined forces with Embry-Riddle Aeronautical University and Yavapai College to train and hire upwards of 200 employees.
Another example is battery manufacturer KORE Power, which is working with Rio Salado College and West-MEC to facilitate training for the advanced manufacturing workers needed at the company’s Buckeye facility.
And Boeing has partnered with Mesa Community College to offer a boot camp for students interested in various electrical wiring technician jobs. Since 2019, more than 350 students have graduated from the boot camp with over 200 getting hired at Boeing, according to the Governor’s Office.
Terri Jo Neff is a reporter for AZ Free News. Follow her latest on Twitter, or send her news tips here.
On Wednesday, Senate President-elect Warren Petersen (LD-14) published his plan to help counter the burgeoning inflation crisis.
Petersen declared that four approaches would relieve the pressure of rising costs to Arizonans: eliminating rental and food taxes, increasing the housing supply, and reducing or eliminating occupational license fees. The president-elect insisted that the state could spare these cost-reducing measures because it has a surplus of funds.
“[H]ardworking taxpayers are reeling during this period of runaway inflation and are having a tough time paying for the most basic necessities,” stated Petersen. “These initiatives are not too difficult to accomplish. Local and state governments have surpluses in their coffers.”
The rental tax elimination proposal would allow tenants to stop paying a tax on top of their rent. Petersen reasoned that homeowners don’t have to pay a tax every time they pay their mortgage. He also noted that the state earns plenty from taxes to landlords.
“This initiative alone can put thousands annually into the pockets of tenants,” stated Petersen.
As for the food tax elimination proposal, Petersen argued that the state shouldn’t be taxing a necessity.
“This tax is regressive and hurts the poorest of the poor,” stated Petersen. “Let’s ban it completely.”
The increased housing supply proposal would cut through bureaucratic tape. Petersen indicated that incoming legislation would clear and expedite the administrative hurdles for land development and housing approvals.
“20 years ago, you could take a property from dirt and build a house within six months. Those days are long gone as a litany of hurdles have been placed in obtaining approvals for land development and housing. Now, it can take as long as four years!” observed Petersen.
The proposal to reduce or eliminate occupational licensing fees would likely boost jobs, with Petersen indicating that reductions of those fees would be half of what they are now.
Petersen shared that Finance Chair J.D. Mesnard (LD-13), Appropriations Chair John Kavanagh (LD-03), and Government Chair Jake Hoffman (LD-15) were on board to make these initiatives a reality.
Constituents interested in tracking legislative updates, especially concerning these four sweeping inflation-reduction initiatives, may access regular communications such as Kavanagh’s weekly “Kavanagh’s Korner” video reports.
The legislative equivalent of spring training began today in the senate with a pre-session orientation meeting of all senators. I will be keeping everyone informed with spontaneous tweets and my weekly Kavanagh’s Korner constituent video reports. pic.twitter.com/gI5Na1SySV
— Representative John Kavanagh (@JohnKavanagh_AZ) December 7, 2022
Arizona has the highest inflation rate in the country — specifically the Phoenix area, charting at over 12 percent. Inflation for the Valley rose by about two points every couple of months beginning in August of last year. Inflation reached a high in August at around 13 percent.
The struggle to fill job openings continues for mom-and-pop enterprises and other small businesses across the country, according to a report issued Thursday by the National Federation of Independent Business (NFIB).
“The labor shortage remains a challenging problem for small business owners,” NFIB Chief Economist Bill Dunkelberg said of the group’s Jobs Report for October. “Because of staffing shortages, small business owners are less able to take full advantage of current sales opportunities and continue to make business adjustments to compensate,”
The Jobs Report is a monthly, national snapshot of the small-business-owning membership of NFIB in 9 industries — agriculture, construction, finance, manufacturing, professional, retail, services, transportation, and wholesale.
The October 2022 report released Nov. 3 shows that:
23 percent of owners report labor quality as their top business problem, second only to inflation;
61 percent of owners reported hiring—or trying to hire—in October;
Of those hiring or trying to hire, 90 percent of owners reported few or no qualified applicants for the open positions;
40 percent of owners have openings for skilled workers while 22 percent are seeking unskilled labor;
Transportation (68 percent) and Construction (63 percent) had the most difficulty in October filling job openings.
There are several programs available to Arizona small businesses to assist with hiring issues. One is the Arizona Small Business Development Center Network funded in part by the U.S. Small Business Administration. There are 10 SBDC Centers in Arizona served through the local community college districts.
Another is Arizona@Work sponsored by the Arizona Commerce Authority and Arizona Department of Economic Security.
