Local business leaders weigh in on upcoming legislation

The Arizona legislative session begins next week, and on the docket are many issues that could have a  serious impact on Arizona’s economy.

Farrell Quinlan, the director of the National Federation of Independent Business for Arizona, says there is a lot of optimism among small business owners regarding upcoming legislation.

Transcript:

Ted Simons: Coming up next on Arizona horizon. We will hear what the business community wants to see from lawmakers when the legislative session gets under way next week. And local writer and artist, Bob Boze Bell is out with a new book on wild bill Hickok. Those stories next on Arizona horizon.

Video: Arizona Horizon is made possible by contributions from the friends of Arizona PBS. Members of your PBS station. Thank you.

Ted Simons: Good evening and welcome to Arizona horizon. I'm Ted Simons. Senator John McCain is quote, “doing good.” That’s according to his daughter, Meghan McCain who offered the assessment on ABC’s morning show, “The View.” Meghan McCain, who is a co-host on the program added that she had gotten off the phone with her father as he was continuing physical therapy in Sedona. Senator Lindsey Graham said over the weekend that the elder McCain is expected to return to Washington later this month.

Ted Simons: State lawmakers get back to work next week as the 2018 legislative session gets underway. Time now for our annual conversation with advocates of various issues on what they're looking for from lawmakers on this go around. We start tonight with business interests. Joining is Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry. Todd sanders, President and CEO of the greater Phoenix chamber of commerce. And Farrell Quinlan, the Arizona Director of the National Federation of Independent Business. Good to have you here. Thank you for joining us.

Farrell Quinlan: Good to be here.

Ted Simons: Glenn, we’ll start with you. Every year I say that you're pretty much the happiest guy we’re going to have on this week. You got a lot of things done last session, what's left to do?

Glenn Hamer: First of all, happy new year and thanks for having me back on your show. There's always more to do. And one of the great stories about Arizona is that for the last ten plus years every year we have made progress in our state in terms of it becoming a more competitive state. And I'm talking making our state tax code more competitive, our state regulatory reform situation more competitive as well as our tort reform system. And the last few years we have made a lot of progress when it has come to education funding as well as reforms. Such as getting more money into the schools that are functioning. So we start the year very bullish that we'll continue to make progress in the state of Arizona.

Ted Simons: Progress in Arizona. That's the way the state sees it. How about the city of Phoenix?

Todd sanders: Well, I think they go hand in hand. And just like we're hearing the good news of Senator McCain maybe heading back to the Senate soon, I think the story, at least, from an Arizona and Phoenix perspective, especially as I talk to colleagues running chambers around the country, they're either facing states and cities that are down right in opposition to business or basically don't care. And I think we're in a good spot in Arizona to continue that trend.

Ted Simons: What are you seeing as far as small, independent businesses in Arizona. What do you want to see? We know what you're seeing out there, what do you want to see?

Farrell Quinlan: Well what we are seeing is a lot of optimism. Small businesses are very happy with a lot of the things going on in Washington, D.C. With the tax bill that was just passed. We just had the minimum wage tick up 50 cents. And that has, you know, somewhat of a harder -- a higher burden. But with the tax cut coming, and the ability to see more jobs come to Arizona that we have been seeing over the past 18 months.

Ted Simons: That congressional tax bill. You brought that up. For a small, independent business, give us an example, give us a description of what changes.

Farrell Quinlan: Well, the -- most small businesses are organized to pay their taxes on an individual basis. So when the highest tax level was 39.6% or 35% or 28%, they were paying at that. Now, as we -- we heard a lot about the corporate rate has come down to 21%. So the S corporations are going to come down to 25%. And there are -- there's, like, you know, deductions and, you know, where you start to count the 25% rate. It all equals out. It was a similar-type cut for small businesses. And what we're seeing is that a lot of the taxes that were not regular income, they were the profits from a business. They can now be available to pour back into that business, to get more equipment or to get more employees or honestly handle some of the greater burdens when it comes to this minimum wage or the paid time off provisions of the proposition that passed a few years back.

Ted Simons: Part and parcel of the legislation was the impact on health care and the individual mandate and these sorts of things. Are you concerned about that and the way it will impact Arizona?

Glenn Hamer: The federal tax cut bill is going to have an enormously positive effect on the state of Arizona. Across -- I believe really across the board. And we're seeing this already. Just today, Ted, two major companies with a lot of employees in the state of Arizona just announced that they were giving $1,000 bonuses, or checks, to each of their workers. American airlines and Southwest airlines. Last week we heard about Alliance bank providing additional compensation to a lot of its workers. Bob Parsons has already announced he's going to give quite a bit of new dollars to his employees. The news thus far has been great. More dollars in worker's pockets, more money for charitable contributions, and more money to invest in businesses.

Ted Simons: Are you concerned regarding the health care industry and what was encapsulated in that bill, kind of tagged along there toward the end, how it might impact Arizona hospitals and health care providers?

Glenn Hamer: I expect everything will be fine. There's going to be legislation that will very likely be considered early this year in the Congress that will address some of the issues with the insurance markets. But the news for Arizona, and for low tax states -- and this is really important -- for low tax states, we're going to win big. And the reason why is that by basically putting a cap on the state and local tax deduction, we're no longer -- taxpayers in Arizona -- are no longer going to be funding and subsidizing to the same degree high tax states like California and New York.

Ted Simons: That's an interesting equation there. Some people see it just the opposite. Some of the bluer states are subsidizing some of the red states which don't quite, we'll see, I know. Save that -- as far as the congressional -- Yeah. There we go. Oh, goodness. As far as the congressional tax reform, for a municipality, what are you seeing? Concrete examples?

Todd sanders: Well, I think what we're seeing is exactly what Glenn is talking about. You’re starting to see the effect on large corporations like our hometown airlines that are obviously making a big play here in Arizona. Just talking to businesses, talking to my employees, for instance, we met this morning and one of the big questions is, we would love to know the impact on us. In many cases, they are looking at bigger paychecks going home. For the city and the state, we are going to see a net benefit because of this. And Glenn is right. Arizona is really positioned well to really help its citizens get to the next level.

Ted Simons: Glenn, please follow.

Farrell Quinlan: One of the sleepy little bills that always seems to get no attention, because it doesn't deserve it, is the IRS tax conformity bill every year. When there's a change, there’s a conformity bill. Arizona's income tax is based on the federal adjusted gross income. That's radically changed. I have not seen an analysis of the impact on Arizona. But that's something to watch. It could have an unintended consequence either on revenues for the state or for taxpayers. So that's something to keep an eye on. I have no answers for you.

Ted Simons: That's all right. Keep an eye.

Todd sanders: It seems like it could obviously cause us to have a surplus because of the way they scored the federal bill. So, you know, that could be certainly a positive.

Ted Simons: Well, with that surplus, as Glenn referred to, education issues always big at the capital. And the business community seems to be showing more of a focus and more of an interest in education. Do you like what you saw last go round? And for this session, what do you want to see?

Todd sanders: I do like the focus that we have seen in the last few years to making sure we are looking at education. A billion dollars for instance, for ASU and the universities on the ROD side. And as far as the K-12 system continues to put dollars into that system. Like to see some more of that this year. One of the things that we're looking at is the way that the department of revenue looks at digital services. In the physical world, services aren't taxed. There's an ambiguity as to whether or not digital services are taxed. We need to do legislation to clarify that, to make sure there's parity.

Ted Simons: That is interesting. From a small business perspective, we hear all the time, industries, businesses, companies, can't find qualified workers. They're not educated well enough. Is that getting any better?

Farrell Quinlan: Well, we hear a lot of focus on university education. But we also have to remember a lot of the jobs that we need are people with skills. With the trades. Or, you know, they may not be, you know, doctorate level or graduate level, but you do need somebody who knows how to work certain machinery. If you go to Intel, a lot of their employees don't have bachelor's degrees, they have associate's degrees. Or they have a certification in a trade. And those are the jobs there is a gap there. We're pushing a lot of kids go to college when maybe they could go to a trade and actually not get all the debt after four or five years in college and actually have a job waiting for them when they get out. A good-paying job.

Ted Simons: Glenn looked like he was going to say something. But I'm not quite sure.

Glenn Hamer: Well, I was. First of all, we have some of the best K-12 schools in the country. We should be very proud that we have a number of the top ten public high schools out of 22,000. Basis high school in particular has been doing a great job. We have some of the best districts when you look at Mesa and some of the other districts in town. And I agree when it comes to skills. The key is we know about two-thirds of the jobs require something post-high school. We have been very strong supporters, Todd as well, of career and technical education. The key is, get kids graduating from high school and get them into the right programs. Whether it is technical schools like Scottsdale based UTI or community colleges or our universities. But we're making a lot of progress as a state and we should feel good about that.

Todd sanders: It's important, there's been a sea change, especially from the perspective of the business communities. There's not one path. There's multiple paths for kids to take. And as soon as we start to move away from the 19th century model to a model that looks at a holistic system, you're going to start to see, I think, a lot more folks going into industries that are going to be well-qualified and suited to their skills and aptitudes and what they want to do.

Ted Simons: Before you guys go here. Around the horn. Give me one sentence as far as what you want to see from the legislature from a municipal perspective.

Todd sanders: First of all, Larry Fitzgerald to stay in the Cardinals.

Ted Simons: Okay.

Todd sanders: What I think has been productive as far as the legislature is to ensure that we know where the rules are and, for instance, that what the city is doing, their scope of influence is properly within the scope of the city and not in a broader perspective. Or it's not impacting business in a way that I don't think the legislature would intend. So I would guess that would be something we would look for.

Ted Simons: Give me a sentence. What's the biggy as far as you're concerned?

Farrell Quinlan: Do no harm. Glenn started off by saying all the things the government has done. And some of the reforms actually were government taking a step back. Getting out of being too hands on and thinking that they have the answers. The regulatory reform agenda that Governor Ducey has been pushing and now at the federal level the administration has been doing. You know, we don't even know -- we don't even appreciate yet how -- That's not one sentence.

Ted Simons: It's a compound sentence. We got the gist of it. What do you think, Glenn.

Glenn Hamer: Let's conform -- let's take maximum advantage of the federal tax bill. We're under great leadership. Governor Ducey is doing a great job. We have a pro-business legislature. Keep on trucking and let’s keep winning.

Ted Simons: Gentlemen. Thanks for joining us. Good to see you all. Good to keep on trucking. You pull up the '70s on us. Up next on Arizona Horizon, a new book on wild west figure, Wild Bill Hickock, from artisan historian Bob Boze Bell.