2011 Legislature Report
Chambers of commerce throughout Arizona contributed in many ways to help our business community realize a successful legislative session. Highlights are as follows:
- The passage of an economic competitiveness package that will encourage job creation.
- A bill that cut the corporate income tax rate, reduced the business property tax rate, instituted reforms that make Arizona more attractive for export-oriented manufacturers, and created the Arizona Commerce Authority, which will offer new tools to attract businesses to the state.
- Headway into tort reform (explained further under Business Priorities #4 below).
- Major public pension reform bill. (See Business Priorities #2 below).
- The defeat of five immigration bills in the Arizona Senate.
2011 Legislative Business Priorities
1. Advance tax policies that encourage job creation, attract capital investment, and facilitate Arizona’s ability to attract and retain businesses in diverse industries.
a. Most significant was the Jobs Bill passed early in the session. This is a recap:
Lower corporate income tax rate to 4.9% from 6.9%
Lower the assessment ratio for commercial and agricultural property taxes
Increase the “sales factor,” which is the exemption manufacturers get from sales taxes for goods sold in other states
Increase tax exemptions for business equipment
Other tax incentives that will replace the state’s expiring enterprise zone program
Increase homeowner rebates to offset an expected rise in residential property taxes
Replace the Dept. of Commerce with the Commerce Authority . . . public-private economic development agency with $25 million deal-closing fund to help provide job training and infrastructure costs for businesses that create high-quality jobs
Corporate income tax cuts will be phased in beginning 2014, as will the property tax cuts and the increase in the state sales factor, the sales tax exemption given to in-state manufacturers for goods that are sold out of state
Reduce the commercial property tax assessment ratio to 18% from 20%, the agricultural property tax rate to 15% from 16%
Exemption manufacturers get from sales taxes for good sold in other states will be raised from 80% to 100%
Other portions to go into effect immediately: Bill will increase the exemption on business personal property taxes to $79,000 from $67,000 starting in 2011 and accelerate the depreciation schedule for business equipment starting in 2012. The bill will also lower the tax rate on manufacturing equipment to 10% from 20%
b. A number of phased-in tax cuts were passed that backers said would do a lot to entice companies to open up shop in Arizona.
2. Oppose efforts to balance the state’s general fund by sweeping dedicated funds that were collected from specific taxpayers for targeted purposes.
a. Lawmakers passed a spending plan that, for the first time since the Great Recession began, didn’t rely on borrowing and accounting gimmicks. They approved a slew of tax cuts for businesses that supporters said would better position Arizona to capture companies that are fleeing high-tax states. They also enacted a bill that backers said would prevent the fiscal collapse of the state’s pension systems.
b. All told, they approved nearly 400 measures, including a ballot proposal that could spell the end of public campaign financing.
c. S.B. 1609. These reforms will improve the long term funding status of the plans and ease the pressure that rising pension costs place on state and local government budgets.
3. Continuously improve education at all levels so that students have the necessary skills for success in the global economy.
Legislators say they had no other option but to cut $454 million from our schools, community colleges and universities – bringing the three-year total in cuts to $1.3 billion. Other options, included following the Governor’s original budget proposal, which had $116 million less in education cuts, but did not happen.
Legislators also voted for TABOR (HB 2720), locking in the current recession-level cuts to education, preventing our schools, colleges and universities from rebounding as the economy improves.
HB 2219 – School District Consolidation: Established a 16-person joint legislative study committee on school district unification and consolidation. Signed by the Governor.
A list of Education Bills that Passed
Enacted Bills–Passed by the Arizona Legislature and signed into law by Governor Brewer – (Provided by Arizona Education Association and their position)
***Unless otherwise noted in the summaries, July 20, 2011 is the general effective date for these bills to become law.
HB2001 Arizona commerce authority; business incentives (Adams) OPPOSE
HB2002 school district monies; associations; elections (Kavanagh) OPPOSE
HB2219 study committee; unification; consolidation (Fillmore) (no position taken)
HB2237 JTEDs; ADM; student count (Goodale) (no position taken)
HB2301 soft capital; uses (Mesnard) (no position taken)
HB2415 schools; bullying policies (Yee) SUPPORT
HB2421 school districts; budgets; financial reports (Yee) (no position taken)
HB2565 postsecondary education; students’ rights (Court) OPPOSE
HB2587 high schools; military recruiting; form (Proud) (no position taken)
HB2646 JTEDs; adult students (Gowan) (no position taken)
HB2706 supplementary reading instruction; teachers (Lesko) NEUTRAL
HB2710 study committee; outcome-based funding (C. Crandell) (no position taken)
SB1141 schools; residency requirements (Smith) (no position taken)
SB1256 education; omnibus (R. Crandall) (no position taken)
SB1263 schools; administrative tasks; reduction (R. Crandall) SUPPORT
SB1303 schools; dropout recovery programs (R. Crandall) (no position taken)
SB1363 employer protections; labor relations (Antenori) OPPOSE
SB1365 paycheck deductions; political purposes (Antenori) OPPOSE
SB1451 high schools; board examination systems (R. Crandall) SUPPORT
SB1453 parents’ rights; schools (R. Crandall) OPPOSE
SB1521 schools; head injury policies; athletics (R. Crandall) SUPPORT
SB1553 education; Arizona empowerment accounts (Murphy) OPPOSE
SB1609 retirement systems; plans; plan design (Yarbrough) OPPOSE
2011 Legislative Session: Education Funding Voting Record by Legislator
More than half of the state’s legislators voted against public education funding, according to an analysis by a local watchdog organization.
During the 2011 regular session, 59 of Arizona’s 90 legislators voted against public education funding 100 percent of the time, according to voting records compiled by the Arizona Education Network.
WVCCA LEGISLATORS SUMMARY VOTING RECORD: EDUCATION BUDGET LEGISLATION 2010 SESSIONS
|Of Total Education Votes||Of Actual Votes Cast|
|District||Legislator||% For||% Against||% Didn’t Vote||% For||% Against|
|1||Senator Steve Pierce||0%||100%||0%||0%||100%|
|1||Representative Karen Fann||0%||100%||0%||0%||100%|
|1||Representative Andrew Tobin||0%||100%||0%||0%||100%|
|4||Senator Scott Bundgaard||0%||100%||0%||0%||100%|
|4||Representative Judy Burges||0%||100%||0%||0%||100%|
|4||Representative Jack Harper||0%||100%||0%||0%||100%|
|9||Senator Rick Murphy||0%||100%||0%||0%||100%|
|9||Representative Rich Gray||0%||100%||0%||0%||100%|
|9||Representative Debbie Lesko||0%||100%||0%||0%||100%|
|12||Senator John Nelson||0%||100%||0%||0%||100%|
|12||Representative Jerry Weiers||0%||100%||0%||0%||100%|
|12||Representative Steve Montenegro||0%||100%||0%||0%||100%|
|13||Senator Steve Gallardo||100%||0%||0%||100%||0%|
|13||Representative Richard Miranda||100%||0%||0%||100%||0%|
|13||Representative Anna Tovar||100%||0%||0%||100%||0%|
|23||Senator Steve Smith||0%||100%||0%||0%||100%|
|23||Representative John Fillmore||66.7%||33.3%||0%||66.7%||33.3%|
|23||Representative Frank Pratt||0%||100%||0%||0%||100%|
|25||Senator Gail Griffin||0%||100%||0%||0%||100%|
|25||Representative Peggy Judd||0%||100%||0%||0%||100%|
|25||Representative David Stevens||0%||100%||0%||0%||100%|
4. Support reform of the current litigation system including tort reform and greater use of alternative dispute resolution to reduce costs to business.
a. S.B. 1212 protects the due process right by placing a monetary cap on appeal bonds, was signed into law.
b. Another tort reform victory included the passage of H.B. 2423, which provides guidelines and requirements for the Attorney General’s office when entering into contingency fee contracts with private attorneys.
5. Support a comprehensive federal policy to properly seal our porous borders, respond to the needs of the economy, and address the issue of illegal immigrants already in the United States.
a. The defeat of five immigration bills was considered to be a courageous step by some. Many of the bills were likely unconstitutional and would have invited additional litigation. Over 20 chambers of commerce throughout Arizona and sixty CEOs and corporate executives signed a letter calling on the Legislature not to pass additional state-level immigration legislation and instead direct its energy to pressing Congress for meaningful immigration reform. Those efforts were successful in avoiding potential boycotts and other ill-conceived efforts to harm Arizona businesses.
Bills Tracked by the Chambers in the Last Few Weeks of the Session & Outcome
HB 2025 2619 – Unemployment Insurance: Was signed into law by Governor Brewer, calls for a temporary, two-year assessment, beginning in the fourth quarter of calendar 2011 of 0.4 percent this year and 0.6 percent in calendar year 2012 on the first $7,000 of taxable wages per employee. Based on DES estimates, this proposed temporary short-term assessment should be sufficient to bring Arizona’s UI fund into solvency without incurring additional federal interest and penalties. This solution is a necessary and financially prudent response to the extreme effects of the economic downturn. The business community wants to control its own destiny to the greatest possible extent, and H.B. 2619 allows us to do so.
SB 1041 – Invest Arizona (Arizona quality jobs: incentives) would have modernized the state’s expiring enterprise zone program by temporarily reclassifying real and personal property for new qualifying investments. Unfortunately, after strong bipartisan support I the Legislature, Governor Brewer VETOED.
HB 2136 – State Agency Fee Commission: A 13 member State Agency Fee Commission is created to review the fee processes and structures of all state agencies. Language was amended onto HB 2314 which was signed by the Governor.
HB 2078 – Tourism Office; Continuation: The statutory life of the Office of Tourism is extended five years to July 1, 2016. Signed by the Governor.
SB 1201 – Firearms Omnibus: A public establishment or a public event may ban firearms if it is a “secured facility,” if the prohibition is posted and if the facility has secure firearm lockers close to the entrance and under the control of the operator. VETOED
SB 1609 – Pension Reform: A major public pension reform bill and signed by Governor Brewer. With the leadership of Speaker Kirk Adams and Sen. Steve Yarbrough, these reforms will improve the long term funding status of the plans and ease the pressure that rising pension costs place on state and local government budgets.
HB 2707 – Spending Limits & SB 1322 – Mandates on Cities were both VETOED by the Governor.
SB 1585 – Revenue Allocation Districts (essentially creating a TIF – Tax Increment Financing): Died and never made it to the Governor. Will probably come back next year.