Business groups divided over legislative priorities
BYLINE: Mike Sunnucks
The business community finds itself split over whether to cut property taxes for a third straight year, or spend state money on recruiting biotechnology and foreign companies and expanding research and development tax breaks.
Real estate and more conservative business groups favor property tax cuts. Meanwhile, economic developers, high-tech and other business interests aligned with Gov. Janet Napolitano want to spend more than $36 million to attract biotechnology and foreign companies to the state and expand R&D tax credits.
The Arizona Chamber of Commerce & Industry, National Association of Industrial & Office Properties, Arizona Retailers Association, Arizona Small Business Association, National Federation of Independent Business and East Valley Chambers of Commerce Alliance have written Napolitano and state lawmakers backing two property tax cuts they say will encourage business investments and ease valuation-driven increases for homeowners and commercial owners.
The business groups want to speed up a 10-year, $200 million commercial property tax cut passed in 2005. They want that 5 percent business property tax reduction to occur over six years instead of the 10-year phase in that was agreed to by Napolitano and Republican legislative leaders.
The tax cut backers also want to permanently a repeal a property tax item suspended for three years in last year's budget deal. The $240 million tax cut passed last year temporarily eliminated the a portion of property tax bills that went to local school systems. The lost revenue for local schools is being replaced by money from the state's General Fund.
The tax cuts have the support of some Republican lawmakers but face skepticism from the Democratic governor -- who signed off on tax cuts the previous two years -- and opposition from teachers unions worried they will cut into the state's budget.
NAIOP State President Tim Lawless said if the property tax cuts fail this year, conservatives could take California-style Prop. 13 type limitations and tax increases caps to the 2008 ballot.
Other business and economic development groups are stepping their support for expanding state R&D tax breaks and back Napolitano's plans to pumping more public money into attracting the biotech sector and foreign firms the state.
Greater Phoenix Leadership, Arizona Technology Council, Greater Phoenix Economic Council and the state chapter of the American Electronics Association have also written to state lawmakers and support plans to:
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Earmark $35 million for the new Science Foundation Arizona to hand out grants to bioscience companies and scientists.
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Allocate $1.2 million into a new state effort to recruit foreign companies to the state.
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Preserve a program that gives companies state money to train new workers.
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Approve a $15 million expansion of state R&D tax credits.
The first two spending items are also being pushed by Napolitano, who has close ties to GPL and the state tech council.
The Arizona Chamber, Tucson Metropolitan Chamber of Commerce and Arizona Association of Industries back both the property tax cuts and the economic spending packages.
Arizona Chamber Vice President Jessica Pacheco said both ideas will help attract businesses to the state.
"The first calls for the very needed commercial property tax relief. The other calls for an enhancement to the R&D tax credit and several other critical investments in Arizona's future," said Pacheco.