SB 1041 Update

SB 1041 - Invest Arizona - was heard on Wednesday in the House Commerce committee and was approved with a 7-1 vote.

After negotiations between GPEC and the Governor's Office, the bill was amended in the Committee as follows:

·         Removes all the changes to the income tax credits and the premium tax credits that were in the Senate version of the bill.

·         Assesses as Class 6 property, the personal property and real property improvements that are constructed or renovated as of January 1, 2012 through July 1, 2017 and that are owned or used by the qualifying business certified by the newly created Arizona Commerce Authority (ACA).  Limits this classification to a 10-year period.  To qualify, a business must adhere to the following during the 1^st taxable year: 

o   Make a capital investment of at least $5 million and create at least 25 new qualified employment positions within a city/town with a population of 50,000 or more persons and that is located in a county with 800,000 or more persons.

o   Make a capital investment of at least $1 million and create a minimum 5 qualified employment positions in any other location.

·         Requires the business to submit to the ACA a Resolution from the appropriate city/town governing board or county board of supervisors, which acknowledges the business intent to abide by these provisions and consents to the reduced assessed valuation of the property. 

The bill's sponsor, Sen. Michele Reagan (R-Scottsdale) led off the proponents' comments by stating that this will help existing businesses, that it provides something different for rural and urban locations and that it doesn't matter what type of business you have in order to potentially benefit.  Barry Broome from GPEC also testified in favor and stressed that many of the benefits from the Competitiveness Package do not come on-line for several more years, which is why this bill is needed to enhance Arizona's competitiveness immediately.

Not surprising, but the bill was opposed by Kevin McCarthy from the Arizona Tax Research Association (ATRA) and Steve Voeller from the Free Enterprise Club.  Both cited the need for large-scale, comprehensive property tax reform rather than targeted tax benefits for certain businesses.  Disappointingly, the bill was also opposed by Farrell Quinlan of the National Federation of Independent Businesses (NFIB).  The nature of his opposition was "unfairness", but we're still not sure what he meant.

The bill now must be scheduled and heard by the Rules committee, then it goes to Caucus for debate by both political parties, then finally to the floor for further debate and a vote of all House members.

Thank you to Jeff Kros and Triadvocates for this update.  If you have any questions, please feel free to contact Jeff Kros, Julie Rees or Knox Kimberly at Triadvocates.