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New Job-Creation Funds Proposed in Arizona

January 19, 2011

Arizona Gov. Jan Brewer will convene a special session to focus on job creation proposals centered on her effort to replace the state's Department of Commerce with the public-private partnership she established through executive order last year (see the July 14, 2010 issue of the Digest). Along with legislative approval of the Arizona Commerce Authority (ACA), the governor is calling for $25 million to launch the Arizona Competes Fund, providing tax incentives for businesses locating in the state.

Under the governor's recently released policy agenda for her upcoming four-year term, the new ACA would be exclusively focused on business attraction, retention and expansion in Arizona's strongest economic sectors. As part of the overhaul, the Office of Energy, currently part of the Department of Commerce, would become an independent agency within the governor's office to allow for focus on statewide policy. The FY12 budget unveiled last week by Gov. Brewer recommends a general fund appropriation of $658,200 to support ACA's first three weeks of operating costs until the agency is self-sufficient. Gov. Brewer earmarked $10 million in stimulus funds to establish the authority last year.

At the same time, ACA president and CEO Don Cardon announced his intentions to create the Arizona Capital Strategy Fund, a private fund facilitated by the state, which he says could offer up to $1 billion in loans to small companies, reports The Arizona Republic.

The ACA would not seek state support for the proposed fund, according to the news article. Instead, money would come from a variety of sources, such as an existing pool of $607 million federal private-activity bonds, banks and private investors. The state's role would be to help coordinate and provide leverage and bonding sources. A citizens group would be appointed to help run the program, the article states.

Gov. Brewer's budget proposal aims to fill a projected $1.15 billion deficit in the coming year and a $763.6 million deficit in the current fiscal year. Deep cuts are proposed for universities and community colleges, including reducing university funding by $170 million in FY12 and reducing support for community colleges by $72.9 million.

In her education reform plan released this week, the governor calls for a transformation agenda to prepare students for jobs in the new economy, particularly within science, technology, engineering and mathematics fields. The plan aims to double the number of students receiving bachelor degrees by 2020.

The governor also recommends a number of agency consolidations, such as eliminating the Biomedical Research Commission and transferring its functions along with the Disease Control Research Fund and the Health Research Fund to the Department of Health. The Biomedical Research Commission, which received $500,000 in FY11, awards contracts for medical research projects. The Disease Control Research Fund and Health Research Fund currently receive approximately $11 million annually in non-appropriated revenues, according to budget documents.

The governor's budget recommendations are available at: http://www.ospb.state.az.us/Budbooks.asp.