The 2019 legislative session was a momentous one for the business community, especially when it came to issues of water, transportation funding, vocational education and taxes.
Ask business groups what legislation was most important for them last session, and the first thing many mention is the Drought Contingency Plan that will determine how water is managed and distributed among Arizona and the six other Western states that receive water from the Colorado River.
“I’m not saying it’s a slam dunk, but it helps ensure the Arizona economy’s ability to grow and thrive going forward,” said Garrick Taylor, a spokesman for the Arizona Chamber of Commerce.
Lawmakers and Gov. Doug Ducey included an additional $10 million in funding for career and technical education. Schools and CTED districts will also get a $1,000 incentive for each high school graduate who receives an industry-accepted license or certification.
In addition, Pima Community College will receive $15 million in new funding, which allows it to double the size of its aviation technology program that teaches students to repair commercial aircraft.
“That’s good news for workforce development. Twelfth-graders are leaving school with some sort of industry certification in hand. They’re ready to go to work and contribute to the economy,” Taylor said.
A new law backed by myriad businesses and business groups will allow the Regional Transportation Authority to double the amount of tax money it collects. The RTA is currently allowed to collect a half-cent sales tax to pay for road projects. Under the new law, it can go back to Pima County voters to ask for authorization to double that sales tax to full cent.
The current half-cent sales tax generates about $80 million per year, and a full cent would bring in about $160 million, according to Michael Racy, a lobbyist who represents the Pima Association of Governments. The RTA’s citizens advisory committee is working on the recommendations it will make to its board of directors, which is expected to decide about a year from now whether and when to ask voters to double the tax rate.
The current tax expires in 2025, and if the RTA is going to put the tax hike before the voters, Racy said it would be ideal for planning purposes to do it no later than 2022.
Further north, the state budget includes funding for a major transportation project that business groups say will facilitate commerce. The budget includes $130 million for the first phase of a three-year project to widen Interstate 17 north of Phoenix. The project will add two flex lanes that can be used for traffic in either direction on 16 miles of highway between Black Canyon City and the Sunset Point Rest Area, and add a third lane in both directions for seven miles between Anthem and Black Canyon City.
Brick-and-mortar retailers will get a more level playing field with online competitors thanks to the legislature’s decision to impose taxes on internet sales from out-of-state companies. The new policy was enacted under the aegis of the U.S. Supreme Court’s decision in Wayfair v. South Dakota, which held that states can tax online sales, even if the seller doesn’t have a physical presence in the state.
The online sales tax issue was part of a larger effort by lawmakers to conform Arizona’s income taxes with the federal tax code. The tax conformity plan rearranged Arizona’s individual income tax brackets and expanded the standard deduction to match the federal levels of $12,000 for individuals and $24,000 for couples, while eliminating a host of itemized deductions that were scrapped by the federal tax cut and overhaul package in 2017.
Though the conformity plan applies only to personal income taxes, not corporate taxes, it will affect many small businesses that file as individuals. The state eliminated one of its five income tax brackets, and made minor reductions to the rates in the remaining brackets.
County assessors will have a harder time exceeding the annual limit for increasing the assessed value of property, under legislation written by the Tucson Metro Chamber of Commerce. The Arizona Constitution limits increases in assessed value to 5 percent per year. But county assessors can exceed that limit to account for improvements or other changes to a property using a provision known as Rule B.
Senate Bill 1248, which the Tucson chamber successfully pushed, limits the use of Rule B to situations in which a property’s value has increased by at least 15 percent. Robert Medler, the Tucson chamber’s vice president for state and federal affairs, said the new law is a win for every property owner in the state, but will be especially advantageous for commercial property owners or leasees.
Another new law may make it easier for businesses to find qualified, licensed employees. In April, Ducey signed legislation recognizing out-of-state occupational licenses for most professions, making Arizona the first state in the country to enact such a licensing reform. The bill excludes licenses for security guards and private investigators.
And Ducey signed another bill eliminating one licensing requirement altogether. Under Senate Bill 1401, people who wash and blow dry hair, but don’t cut it or use any chemicals, will no longer need cosmetology licenses.
Jeremy Duda is the associate editor of the Arizona Mirror. He can be reached at email@example.com.