Legislature/Business

May 12, 2014

Transcript:

Ted Simons: The state legislature is considered by many to be business friendly, but how much did Arizona business and industry officials succeed in getting their agendas through the recently completed legislative session? Joining us now is Glenn Hamer, president and CEO of the Arizona chamber of commerce and industry. Good to see you again.

Glenn Hamer: Great to see you, Ted.

Ted Simons: What did the chamber want to see in this session, and were you pleased with the results?

Glenn Hamer: We were pleased with the results. The big ticket item was the governor proposed in her state of the state to provide a sales tax exemption for manufacturers. At the time Arizona was one of only about 12 states that taxed electricity for manufacturing. This is something that had come up on a number of the deals that the Arizona Congress authority was working on. We were very pleased that we will now join the vast majority of states who no longer tax electricity on manufacturers. That I would say was one of our key victories this session.

Ted Simons: And I know the argument for this was that it bolsters job creation. How so?

Glenn Hamer: Well, when you take a look at all the things Arizona has done over the last four or five years, I'd argue that on tax form and regulatory form we've done more than any other state. The good news is that we're in the game when it comes to these big job announcements, whether it's Tesla, or apple, we're a finalist. But one of the areas where we have been lagging is how we treat electricity on manufacturers. We don't want to be on the bottom tier of states. So this is the type of thing that just makes us that much more competitive.

Ted Simons: And yet there are counties especially rural counties, that needed that revenue base and some of those folks were not very happy, and according to some pretty conservative lawmakers there at the legislature, they say they rely on that, and it's not fair that they're losing that. Especially when they couldn't get it reimbursed by lawmakers.

Glenn Hamer: Well, at the end of the day, no one seems to complain when big ticket job announcements occur. And I think you have to look at this in a dynamic nature. So whatever revenue is quote unquote lost from this tax exemption, think if it helps in a big -- If it helps in expanding existing jobs for a company or attracting a big ticket manufacturer to the state, think of all the tax revenue we're creating in terms of personal income tax, property tax, and sales tax. So we think if you look at this in a dynamic way, it's in everyone's benefit, including the state taxpayers as well as local and city taxpayers.

Ted Simons: And smaller counties as well, because they're the ones that raise the biggest fuss on that.

Glenn Hamer: Well, people are always -- We understand the concern. But I think you look at the numbers, this is something that will benefit all the different counties. And cities. And the way this did go through, is that there was an accommodation made this sales tax exemption will apply only on the state level. I submit, I think there will be extraordinary pressure for any locality that wants to land a big ticket job expansion to conform to the state law. But we'll see how that plays out.

Ted Simons: You refer to apple, and there was a million tax credit there if you install a certain amount of renewable power capacity to supply your own -- Everyone called it the apple bill. And critics are saying this legislation was specifically designed to benefit apple. First of all, do they have a point? Secondly, does it matter?

Glenn Hamer: Well, we want to be competitive for all these big ticket deals. And what's happening, Ted, is that there's a lot of companies out there when they're looking to locate to a state, and they have all sorts of different options, and we're competing with Texas, we're competing with other states that have very attractive features, one of the things that a number of companies now are looking to do is to have a greener energy supply. So this is a policy that will -- It's going to benefit over time more than one company. For us at the chamber, we look at a sort of basket of policies. We've been very strong proponents of broad-based tax, regulatory and tort reform, but we also need to have tools in the toolbox. You look at Texas, which I believe Dennis mentioned, they have a very aggressive toolbox. Their deal closing fund is much more robust than ours. And I believe Arizona needs to be very aggressive when it comes to competing for these big ticket items.

Ted Simons: Since we're talking about the legislative session, again, some lawmakers down there, and these aren't liberal folks, these are very conservative folks, they were saying it's simply not fair. This kind of legislation.

Glenn Hamer: Well, when you look -- When you take a look at the bills that you mentioned, they passed, I believe both passed with broad boy partisan support. The electricity exemption bill passed with very few dissenting votes. But there are other bills that passed as well. For example, representative Olson had a bill that would index our income tax for inflation. So it was a combination of bills. But in terms of making us more competitive in the manufacturing field, we absolutely did a few things this session that moved the meter.

Ted Simons: The -- I know the chamber was very much emphasizing education this session. Are you happy with what you got, and what were your thoughts when attempts to overturn common core seemed like there was a new shot being fired every day? What was your thoughts on that?

Glenn Hamer: We were surprised. We called those standards the Arizona college and career ready standards. The business community for years, decades has been saying, we need standards that really match the skills that are necessary in the work force. We just heard from Dennis, there is even -- Even with the economies coming back, it's vitally important for kids that are graduating from our high school to be prepared for the Universities and the world of work. There's a lot of misinformation out there. We want to make sure that these are Arizona standards. We do not want something that is imposed from the federal government. The standards that we have, Ted, the truth is, they were adopted in Arizona in 2010, there wasn't a lot of controversy. We feel that the focus for these standards needs to be on proper implementation, we need to get a testing regime in place that adequately covers these standards. And -- But it was obviously a controversial area, this particular session.

Ted Simons: Indeed it was. Also controversial is the idea of the tax cuts and the credits we've talked about earlier. And the impact on revenue and how that impact on revenue impacts education. K-12 and post-secondary. Are there concerns that this is lost revenue here that is not going to -- Good for apple, good for maybe Tesla, maybe not so good for Mrs. Smith's fourth grade class?

Glenn Hamer: Well, we need to have a healthy economy to make sure we have those revenues to put into education. And the fact is, we've been increasing the amount spent on education over the past several years. This past year even with all the debate and controversy around common core, we were able to get an additional $8 million for the new assessment. There is more money put into data systems. We've continued to defund our 3rd grade reading program. But another important point here, Ted, is let's not confuse just pouring dollars into the -- That does not simply translate into academic achievement. If that were the case, districts like Newark, New Jersey, would be number one. We need to make sure the new dollars that we're putting into education are done in such a way that it improves student achievement.

Ted Simons: So if dollars from before the recession, we still aren't there in terms of returning those dollars to education, if there is an attempt to return them, you're not necessarily against it, you're just saying let's find an Avenue that makes sense?

Glenn Hamer: Absolutely. And, for example, we have about 2,000 schools in the state of Arizona including charter schools. About 500 of those schools are A schools, including a number in lower economic areas. Lisa Graham Keegan, our former state superintendent is leading an effort with us and the Tucson Hispanic chamber to make sure that every student in Arizona has access to an A school. We know, there is magic happening all across the state. A story that has not been told as much as it should, out of 19,000 400 high schools ranked by "U.S. News and World Report," one state in the country had three in the top 10. That one state is Arizona. Two are basis schools and one is University high school in Tucson. We have better sense today than we did 20 years ago of what works. The key is to replicate those high-performing schools.

Ted Simons: Is the business community, the chamber, are you ready next session to be as pushy or even more so when it comes to education, education reform, and education funding?

Glenn Hamer: Ted, we're ready to rumble. We are ready for this. This is incredibly important -- My greatest surprise since being at the chamber now for about eight years, was worst economy since the great depression, and yet you'll hear from virtually every industry from every part of the state, from every sector in the economy saying they need skilled workers. If we can do a better job of educating our kids, we're going to see every economic indicator in this state move forward at a faster rate. And we're committed to doing that.

Ted Simons: All right. Glenn, it's always a pleasure. Good to see you. Thanks for joining us.

Glenn Hamer: Thank you.