Business Groups React Positively To Arizona’s FY2022 Budget

Business Groups React Positively To Arizona’s FY2022 Budget

By Terri Jo Neff |

Positive reactions continue to come in from business groups in response to the Arizona Legislature’s passage this week of a Fiscal Year 2022 budget package which includes more than $1.3 billion in tax cuts, $1 billion in payments toward state debt, and a transition of the state’s multi-tied income tax system to a flat rate.

The nonprofit, nonpartisan Arizona Tax Research Association called passage of the FY2022 budget “a watershed moment” for Arizona, while Scot Mussi, president of the Arizona Free Enterprise Club, commended the Legislature for passing what he called “historic” tax cuts.

“Every single taxpayer in Arizona will now get a tax cut,” Mussi said. “This is great news for the future of our great state!”

The National Federation of Independent Business, which advocates for small and independent businesses across the country, gave a shout out to the Legislature via Twitter for adopting “landmark property & income tax reforms” which support small businesses. “Your work will allow small businesses to grow our state economy and create more jobs #ForArizonans,” the message said.

On Friday, Gov. Doug Ducey issued a video statement celebrating passage of the 11 bills which make up what he calls the state’s “fiscally conservative, forward-looking budget” that starts July 1.

“Here in Arizona our economy is booming,” said Ducey, thanking House Speaker Rusty Bowers, Senate President Karen Fann, and all the legislators. “New people and businesses are moving here every day. And at the state level that’s resulted in record revenue.  With this budget we’re investing those dollars in the things that matter: schools, universities, community colleges, and new roads and bridges, just to name a few.”

Ducey added that “most importantly we’re giving a bulk of the surplus dollars back to the people who earned them.”

A budget signing ceremony must wait until at least Monday when the Senate returns from recess to formally transmit the budget bills to the governor.

Meanwhile, supporters of the voter initiative known as Proposition 208 are promising a court fight over a bill Ducey is also expected to sign next week.

Prop 208 passed last November by a slim margin of 51.75 to 48.25 percent. The purpose of the initiative was to provide additional funding for public and charter school by way of a new 3.5 percent income tax surcharge for many Arizonans.

Among those subject to the new tax surcharge would be thousands of small business owners who currently report business profits on their state personal income tax return. SB1783, however, provides a small business alternate income tax as an option for those who operate as sole proprietors, LLCs, professional partnerships, and S Corporations.

Under the alternate tax, income derived from small business can be reported on a special small business income tax form. This will ensure the income is not added into personal income for purposes of calculating the amount of Prop 208 surcharge a taxpayer owes.

Critics contend SB1783 is a way to unlawfully circumvent the taxation provision of Prop 208. Proponents of the bill point to the many statements made prior to the 2020 General Election which assured business owners that “business income” would not be subject to the surcharge.

Tourism Bill Would Increase Hotel Lodging Costs To Fund Local Promotional Efforts

Tourism Bill Would Increase Hotel Lodging Costs To Fund Local Promotional Efforts

By Terri Jo Neff |

A bill that would allow many municipalities and counties to “assess” hotels and other transient lodging businesses up to $5 per room per night to fund a tourism promotion agency was defeated Tuesday on the House Floor but it can be reconsidered within 14 days after a last minute motion for reconsideration passed by voice vote.

Currently the Arizona Office of Tourism (AOT) is responsible for promoting and developing tourism in Arizona under the supervision of a director who is appointed by the governor. The duties of the AOT include conducting a marketing campaign on the attractions of the state, as well as promoting Arizona via state, national and international media.

However, HB2161 would allow cities, towns, and counties to adopt a resolution to form a Tourism Marketing Authority (TMA) to be funded by a new “assessment” against rooms used for transient lodging (less than 30 day stays). A local TMA would be run by a “recognized” 501c6 nonprofit tourism promotion agency

The TMA could only be formed upon signed approval of the owners of at least 67 percent of the transient lodging rooms within the boundary of the proposed TMA, meaning a transient lodging property could be forced into the TMA even if they don’t wish to participate. The bill calls for all of the per room, per night assessments to be distributed to whatever entity is contracted to run the TMA.

If no recognized non-profit is available in an area, then the tourism promotion office of one of the member municipalities or county could be contracted to manage the TMA. HB2161 does not provide for the already established, taxpayer-funded Arizona Office of Tourism to have any oversight of the TMA operations.

While many tourism promotion groups support the bill, questions were raised during committee and floor discussions about the need to create a business-funded entity that would be responsible for promoting tourism in a certain area without substantial public control or oversight.

HB2161 calls for each TMA to be governed by the board of directors of the tourism promotion agency and at least one person from one or more of the municipalities or county. The only concession in the bill to concern about public oversite is that TMA board meetings would have to comply with public meeting and public records laws.

Groups such as the Arizona Tax Research Association and Republican Liberty Caucus of Arizona oppose the bill, while cities such as Mesa, Scottsdale, and Surprise have taken a neutral position.

The Tourism Marketing Authority created by the bill would terminate after 10 years unless the legislature approves a onetime 10-year renewal.