Business and the Legislature

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Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry will discuss bills approved by lawmakers that relate to the business community.

Ted Simons: Governor Doug Ducey has signed a bill granting tax cuts for insurance companies. The bill was among the priorities pushed by the Arizona chamber of commerce and industry. Here to talk about the business community's reaction to the just completed legislative session is the chamber's president and CEO, Glenn Hamer. Good to see you again.

Glenn Hamer: Great to be on the show.

Ted Simons: Good to have you here. Overall thoughts before we get deep in the weeds, overall thought on the session.

Glenn Hamer: Fast. Fast session, 81 days. Shortest session since we have had color photography. A productive session. You know, it -- we, as a chamber, we want to make progress in our competitiveness every year. We did that big-time this year. You mentioned the insurance tax, Lee was just on the show. We have to do everything possible so that we're creating jobs in all sectors of the economy. We were also very happy that the governor signed and pushed for in the state of the state, the individual income tax indexing bill. That is important to all Arizona taxpayers and important to small businesses who pay under the individual income tax. We made progress in tort reform, regulatory reform. We were very pleased with how the session ended up.

Ted Simons: For some of these bills, and specifically we talk about insurance rates just because the governor signed that today cutting the premiums. I understand that you say it will spur economic growth. How will that happen? A. And, B, critics say it is happening at the cost of the general fund. I think by -- whenever it runs out it could be up to a $45 million hit.

Glenn Hamer: The key here is to make sure that all of our different tax rates are competitive. When we're competing, when Lee is talking about Utah and Texas, all right, let's talk about Texas. They don't even have an individual income tax. So, the fact that we made progress in that area this year is important. Our insurance premium tax, if you converted it into a corporate income tax rate, it would be for some companies 13, 14, 15%. It would be punitive. We made sure it phased in, done in a responsible way, so that we're basically middle of the pack. We have to make sure that in all of the major levers that companies are looking at, when they're looking to expand, when they're looking to relocate, we have to make sure that we're competitive as a state. And we're glad that we made significant progress this year.

Ted Simons: And, yet, we saw cuts to universities, big-time cuts, $99 million to the state university system. We saw an attempt by the legislature to get rid of common core. They didn't quite make it. It certainly seems like the governor is somewhat ambivalent on this. I know you're big on common core and post-secondary education. Your thoughts, please.

Glenn Hamer: We are big on -- we want high standards, we want Arizona standards. State's board of ed will do a very thorough review of the standards and we will come out of it with higher Arizona state standards. We believe that that is a big positive. Our universities are very important to this state's economy. The good news, Ted, is going forward, the budget that was passed is based on pretty conservative economic growth estimates. I would expect we will see in the future, additions to areas like the universities that were cut this -- this go-round. I think it is also important to mention you have a couple of other things playing out. Pending lawsuits, including one in the K-12 system. I believe that did play a factor in terms of this -- the governor and legislature pushing for a more conservative budget. And I think it is also important to say that even before things really kicked off, there were two things that were basically kept in play. One, the tax rate reduction, which we feel are very, very important to maintain the state's competitiveness and improve it. And also the Medicaid restoration effort was kept in place. And sometimes that gets overlooked. I would say all in all, definitely some pain. Governor made it clear in the state of the state there was going to be some pain. I would expect going forward, economy will be doing better and we will start seeing some restorations in some of those areas.

Ted Simons: For those who see the corporate tax cuts, I think in July, starting with hundred some odd million off the bat, and they see that, and they also see cuts not only to education but some child services and social services and other things, and they wonder, is that the kind of state that businesses are going to want to come to?

Glenn Hamer: We need to make sure that we have a very healthy business environment. One thing I didn't mention, the governor did put in his budget $24, $25 million into student achievement funding for the K-12 system. This argument, particularly on the K-12 system, that let's just put more money into it without any sort of regard as to -- as to the effectiveness of the funds is not a good approach. At the chamber, we have been strong proponents of putting more money into things like third grade reading. We want to make sure that every dollar invested by taxpayers is properly invested. On the university side, I would expect what we will see -- this was -- a lot of conservatives in the legislature made it clear that this is the -- this is the bottom in terms of some of these reductions. I would expect that sitting here, if I have the opportunity to be here a year from today, our economy will be healthier and you will see more funds into those areas.

Ted Simons: When do we expect to see the results of all of -- we have had a series now of pretty conservative governors and legislatures cutting taxes. We are really going to see the corporate tax cuts come to play in July. When do we see the results on this? As you mentioned, we just had Lee on and Arizona is not keeping track with the Nevadas and Colorados -- we should be doing better than Colorado and Utah.

Glenn Hamer: It also depends on the ranking. For example, Chief Executive Magazine now has us comfortably in the top 10. We're in pretty good shape with most of the -- most of the national rankings. Look, we want to be number one on all of these. The governor in the state of the state, or his inaugural speech, said we want to be the pace leader, Ted. And that's why we're going to keep a laser focus, toward regulatory -- continues to move forward while we push dollars into the classroom, and particularly for our K-12 system, make sure that those increases in public investment match what actually teaches kids.

Ted Simons: You've got -- I know you have a lot of success in this last few legislative sessions. This last session, what was your biggest disappointment?

Glenn Hamer: That's -- Ted, I -- I -- we live in a great state. It is tough for me to think about disappointments when we have days where we're breaking records in terms of spring training attendance, and today Arizona chamber of commerce weather. The work never ends. I mean, we always want to improve all of the different levers that companies are looking at because we want all of our people to have great economic opportunities. We are -- you know, we're pleased with how the session ended. It was fast. We're all catching a breath. But I will tell you this. When the governor said he was going to move up the speed of business, he meant it. And I believe the state is going to be well served by that.

Ted Simons: All right. Good to have you here. Thank you for joining us.

Glenn Hamer: Thank you, Ted.

Glenn Hamer:President and CEO, Arizona Chamber of Commerce and Industry;

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