Business & Job Creation
Businesses need a friendly and fair business environment so they can compete, innovate, and create jobs. We’re keeping politicians from playing favorites by offering special deals and tax breaks to the favored few.
Last week, the Arizona legislature killed an entrepreneurs dream. It passed a bill to create a regional attraction district, with taxing authority, exemptions from property and income taxes, and the ability to issue up to $750 million in government bonds to finance construction. Thus, government greased the skids for the Decades Music Theme Park, a rock music attraction that developers want to build near Eloy, a small town between Tucson and Phoenix.
Arizona's constitution prohibits corporate subsidies by outlawing any donation or grant, by subsidy or otherwise, to any individual, association or corporation. Despite this, last year the City of Phoenix awarded a $97.4 million incentive to Klutznick Company, the developers of the CityNorth mall in north Phoenix.
To stay within the bounds of the constitution and past Arizona Supreme Court decisions, the City has to prove it is buying a public good at an equal market value to the monetary incentive.
A recent editorial in the Arizona Daily Star takes the view that payday loans should be outlawed in Arizona, as scheduled, in 2010. Payday loans are very small loans that accept future paychecks as collateral and charge high fees and rates of interest. .
A few weeks ago, I pointed out that Arizona's economy has been disproportionately fueled by the construction industry. In 2006, the proportion of Arizona's total economic output from construction stood at 7.4 percent, 50 percent higher than the U.S. proportion of 4.8 percent. I attributed this to the relatively high commercial property taxes assessed at a rate twice as high as that of residential property.
There is belt-tightening across the nation. Sales at retail stores dropped in November, and sellers are bracing themselves for a paltry Christmas season. The reasons are obvious. The unprecedented decline in stock market and home values has eaten away at families' savings. Companies are laying off workers and cutting back their hours. People are rationally responding by cutting back to preserve what they have.
Senate Republicans recently announced their intention to balance the state budget without increasing taxes, as suggested by the governor. That will require significant reductions in spending.
ASU economist and professor Dennis Hoffman recently argued that reducing state spending by $1 billion would "significantly worsen and lengthen the economic recession." He estimated that 20,000 workers, including 12,000 private employees, would lose their jobs.
Business interests who supported the Arizona Corporation Commission's power grab over energy policy may be having second thoughts after the election of at least two self-described liberals to the five-member body. Combined with holdover Commissioner Kris Mayes, they will give the Commission a solid majority favoring more government control in the energy business.
President-Elect Obama wants to make good on his promise to create 2.5 million jobs by investing heavily in infrastructure, including retooling public buildings to make them more "green." Unsurprisingly, those in the construction industry cheered this news: after all, they stand to gain directly from this government largesse.
The Arizona Senate recently rejected bills that would have allowed new, state-owned roads to be constructed with private money as toll roads. Lets hope the idea resurfaces soon.
Toll roads make sense. They provide access to large sources of private capital a real boon to a financially strapped state. Arizona could get several highways built today without spending a penny, if it would simply let the private sector help.
When the Goldwater Institute filed a lawsuit challenging the Arizona Corporation Commission's authority to impose renewable energy standards--at a projected cost to rate-payers of $1.2 billion--we received lots of questions about why we were doing so. After all, the Commission was controlled completely by conservatives, who could be trusted not to over-reach their authority, right?