Adapted from a guest column by Farrell Quinlan provided to the six member chambers of the West Valley Chambers of Commerce Alliance for publication in their newsletters.
First the bad news, it’s been a tough year.
It started with unprecedented high gasoline prices. Then followed the realization that the rising mortgage crisis wasn’t going to ebb or be contained. Instead, its “toxic assets” surged into a general credit and financial tsunami that engulfed the banks, crashed the stock market and plunged the nation and world into a deep recession.
Arizona, long the state on the leading edge of growth during the fat times, has been hit harder than most. Our economic fortune was tied to the mast of new home construction. The perfect storm of the mortgage and financial crises has exposed how narrowly dependent we have been on “growth” in general to support our economy.
Simply put, Arizona’s economy is not diversified enough. Our state spending appetite mirrored the unsustainable appreciation in our home values. We have a larger state budget deficit on a percentage basis than any other state, including the basket case of California.
Unemployment is rising. Arizonans are worried about their futures.
Something has to change to break this depressing cycle. We need to revitalize our economy, attract new capital investment and take advantage of our natural advantages to create jobs and diversify our portfolio.
The good news at the Arizona Capitol is a groundbreaking approach to incentivize the creation of new, high-paying manufacturing jobs throughout Arizona by attracting to our state one of the few remaining growth industries, renewable energy development and generation.
Sen. Barbara Leff’s SB 1403 would accomplish this through state income tax credits for renewable energy manufacturers that bring to the state new capital investment (plant, equipment, land and infrastructure) and job creation. It would also temporarily reclassify real and personal property for qualified projects with over $25 million in capital investment to help mitigate Arizona’s uncompetitively high and burdensome property tax on businesses.And these aren’t just any jobs. A majority of jobs must meet or exceed 125 percent of the state’s median wage. Employers must provide health care coverage and pay at least 80 percent of employees’ premiums.
Haven’t we heard all these promises before?
Arizonans possess a well-earned skepticism for incentive programs to promote one industry or another. Many feel such programs over-promise and under-deliver. That’s why SB 1403 has been crafted to avoid past pitfalls and guarantees that not one dime of tax credit is realized until capital investments are made, jobs are created and the project is operational.
Taxpayer safeguards in SB 1403 abound. The total and annual amounts for the tax credit program are capped. It positions rural communities to be competitive in attracting new industries and high-wage, high-tech jobs. Companies must commit to at least ten years of operations and if a company tries to reverse course, SB 1403 includes tough “clawback” provisions that refund all incentives and credits to Arizona taxpayers.
Moreover, a detailed analysis by the eminent economist Elliott Pollack demonstrates that the program’s aggregate revenue impact is positive to the state General Fund. The bottom line, it’ll make the state money.
With all of these taxpayer safeguards and a solid “if you build it, only then will the tax credits come” requirement, SB 1403 establishes a new gold standard for economic development incentives that should serve as a model for any future incentive programs.
But the greatest benefit of SB 1403 is that is directly addresses Arizona’s stubborn lack of economic diversification by promoting the development of clean, sustainable, 21st Century technology industries.
There is a consensus that America must become more energy self-sufficient and wean ourselves off imported petroleum, especially from parts of the world where terrorists and dictators might enjoy a chokehold on our national security and economic well-being. Renewable energy generation is a key component of any energy independence policy.
The massive federal- and state-level support for renewable energy production that we’ve all read about means someone, somewhere has to make the billions of dollars in materials and equipment necessary to generate that renewable energy. Why not Arizona?
With SB 1403 on the books, Arizona will again be at the leading edge of job growth and have a more diversified and stable economy.
Posts
