Economic Development Across Arizona (video)

Phoenix

Business incentives, also known as tax giveaways, are common up here in the Arizona Legislature. Today’s video is about three different economic development bills. I voted “no” on two of them and “yes” on one.

HB2834 is the ultimate in picking winners and losers. It would allow municipalities to determine projects that would be eligible for lower property taxes in order to reduce their expenses while the project is being developed. (This is similar to GPLET but different.) The upshot is that you could have one building that is getting a dramatically reduced property tax rate right next to another building whose owner is paying their fair share of property taxes. ATRA spoke against this bill and said it could be subject to gift clause legal challenges. This was billed as legislation that would help rural Arizona, but it was a statewide plan to allow municipalities to pick winners and losers. It died in committee with four Republicans and me voting “no,” and three Dems and two Republicans voting “yes”.

HB2282 is a small business assistance grant using federal dollars. It would distribute $5000 grants to truly small business to help them keep afloat or help them re-invent themselves for the post-COVID era. It has limited time frame, it will help Local First businesses, and it uses federal dollars we have. It easily passed on a bipartisan vote. This was also a state wide economic development plan, but the bill sponsor, Rep. Aaron Lieberman, had metrics built into it to make sure that rural Arizona gets their fair share.

HB2649 is the 10-year continuation of tax incentives for data centers. When you store your data and information on the cloud, it’s actually being stored in a giant facility in Phoenix. The Lobbyist said that this 10 year program have been really successful because now Arizona has 25 data centers that qualify for this tax giveaway. I asked where the data centers are located and how many jobs were created. The Lobbyist presentations were very thin considering this is a 10 year multi million dollar program. When I had my public relations business, one of my services was writing and designing annual reports. There should be a 10 year recap on what’s been accomplished by this program, how much it costs and how many jobs were created where — not just nebulous factoids and random data points.

I recently heard a story on KJZZ that pretty much all of the job creation that Governor Doug Ducey’s brags about occurred in Maricopa County. In Commerce on Tuesday, we had a robust discussion about economic development beyond the Great State of Maricopa, particularly when we discussed the two bills above and HB2747 (study committee on broadband and fiber optic). [UPDATE: at the April 15, 2021 meeting of Arizona’s Financial Advisory Committee, they said 90% of the job growth during the post-COVID recovery has been in greater Phoenix.]

Not surprisingly, 24 of the 25 data centers are located in Maricopa County, one of them is in Pima County, and there aren’t any anywhere else in the state. One of the Lobbyist said that data centers are amazing because national estimates say that they have a trickle down economics impact of $32 million for the area where they are located. That’s almost $1 billion for Maricopa County, maybe $32 million for Pima County, and nothing for anywhere else.

I voted against the ten-year expansion of the data center tax giveaway because no real statistics were offered to justify continuation, and it primarily helps the one county that doesn’t need the help. The Legislature needs to look beyond the borders of Maricopa County. There are multiple bills in the Legislature about improving Internet access, installing towers across the state and offering telecom tax breaks. Except for the study committee (HB2747), the rest of the bills just throw money at the problem with no apparent plans. We should take a comprehensive look at access problems, determine where the gaps are and what is needed, and figure how much it will cost to help rural Arizona.

UPDATE as of April 16, 2021: HB2282 is stalled in the Senate. HB2649 was sent to the governor for his signature. HB2834 is still dead.