More Transparency in Commerce Authority Tax Giveaway Deals Is Needed (video)

UA College of Medicine

Today’s video is about HB2409, small business investment tax credit extension. This is also known as the Angel Investor Tax Credit. In the big scheme of tax giveaways in the state of Arizona, this one is sort of small potatoes dollar wise, but I still have issues. It is an extension if $2.5 million per year tax credit for 10 years. The angel tax credits are for “qualified investors,” people who are licensed, trained, and smart enough to play the stock market and make otherwise risky investments wisely because of their expertise. [My layman’s definition.] 

I have attended several Bioscience Roadmap events where they showcase research and new discoveries from the universities that are … just …about… ready for market. What they need is venture capital to get the new drug discovery or the next medical device from our universities to production to market.

I am very familiar with this topic because ever since I started my own small business in 1986, I have been writing about or working in public health and medical research. In fact, the first Bioscience Roadmap event that I attended featured Dr. Gene Gerner, Dr. Tom Grogan and the story of how their research at the Arizona Cancer Center blossomed into huge NCI research grants, new drugs, and successful UA spinoff businesses. I knew them, wrote about their research, and photographed them when I worked in the communication office at the cancer center.

My point is that I value scientific research and believe that research jobs (and related jobs that come with big grants) are some of the best jobs in our state. One of the reasons that I don’t support the angel investment tax credit is that I found out that only 30% of the funds go to businesses that spinoff from our research universities. Also, there is a $10 million ceiling to qualify as a “small start-up business” (who is eligible to receive funds from angel investors). If your business has $9 million in assets, is it really as “small business start-up”? 

Continue reading More Transparency in Commerce Authority Tax Giveaway Deals Is Needed (video)

Tax Giveaways, Gentrification, & Housing in Tucson (video)

Rep. Pamela Powers Hannley

On Sunday, March 1, 2020, I was the keynote speaker at a South Tucson community forum on tax giveaways (specifically the GPLETs), gentrification, housing, and poverty. The following is my speech.

Thank you all for coming, and I especially want to thank Brian Flagg of Casa Maria for organizing this.

You may know me as a Legislator now, but old friends in the audience also know me as a political blogger with Blog for Arizona.

Gentrification, Rio Nuevo, incentivizing development with tax giveaways, corporate welfare… these are topics that I have been researching and writing about for more than 10 years.

During that 10-year time frame, I have also been advocating for public banking as a way to self-fund infrastructure projects, tackle student debt and spur economic development through low-interest loans—not giveaways. Public banking is based upon a public private partnership between a state bank and local community banks and small local businesses—like those represented by Local First.

The major problem with public banking is that you have to trust the government to make the system work for everyone—not just for the corporations and the wealthy, as out current system works. After almost four years in the Legislature, I trust the Arizona government far less than I did before. The belly of the beast is not a pretty site.

So… where does that leave us?

As a blogger, I theorized that layers of tax breaks—beyond Rio Nuevo– were fueling the development in the city core.

Do you remember when Molly McKasson lost the mayoral race to Bob Walkup in 1999? She was successfully painted as an old hippie chick who wasn’t ready to lead. Walkup was the successful Raytheon exec who would run Tucson like a business.

McKasson was quoted in the newspaper as saying, “It’s too bad that Tucson has decided to put all of its eggs in the developers’ basket.”

She was spot on!

Twenty years later, downtown is gleaming with new buildings, and everyone in power points to the new buildings as a sign of success downtown.

But at what cost?

Continue reading Tax Giveaways, Gentrification, & Housing in Tucson (video)

#HB2752 Gives Away Future Revenue Automatically– Bad Idea! (video)

Throughout last week as we debated multiple tax giveaways, I repeatedly asked, “Is $1 billion in new tax giveaways too much?”

In debate on Thursday, Rep. Mitzi Epstein and I showcased the 18 Republican bills that give away potentially $1 billion and revealed how little the bill sponsors actually know about the revenue losses that their proposals will create. (I say “potentially” because seven tax giveaway bills have an unknown cost. We shouldn’t be passing bills when we don’t know the economic impact!)

On Thursday, we were debating Rep. Bret Roberts’ HB2752, which was projected to be a $64 million hit to the general fund in FY21, $71 million in FY22, and $110 million in FY23. There was a floor amendment that said it change the calculations for the tax break. Roberts refused to answer a my question regarding how the calculations had changed and whether the cost was going to go up or down from the projected figures. It doesn’t necessarily work out well for the Republicans when they refuse to answer questions. Since he refused, I asked Epstein about this. The upshot is that the amendment made Roberts’ bill even worse and pushed it into the unknown cost column, bringing that total to eight tax breaks with an unknown cost.

Continue reading #HB2752 Gives Away Future Revenue Automatically– Bad Idea! (video)

Is $1 Billion in New Tax Giveaways Too Much? (video)

AZ Tax Breaks

Crossover week– when hundreds of bad bills are pushed through both houses– is always difficult. In addition to four 12-hour days this past week, Democrats had the extra pressure of trying to stop the tax giveaway parade before it dances off the cliff with our state’s future.

I used to call these tax giveaways fiscally irresponsible, but with 18 tax breaks poised to pass the Arizona House and more coming our way from the Senate, we have crossed the line into insanity. Of the 18 tax giveaways, 11 have some cost estimate. Those 11 total close to $500,000 annually in new tax breaks starting next fiscal year; there are another 7 tax breaks with unknown costs. They’re not free; the Joint Legislative Budget Commission (JLBC) doesn’t know how to estimate their cost. You can read more detail about these bills these three articles herehere, and here. With so many unknowns, if they all pass, Arizona could be looking at $1 billion in new tax giveaways (AKA lost revenue) in next fiscal year or in the near future, since several of them automatically increase over time, and it takes a two-thirds majority to repeal any of them.

Continue reading Is $1 Billion in New Tax Giveaways Too Much? (video)

Is 5G ‘Risky Business’? (video)

technology

Today’s video starts with a walk down memory lane to HB 2365. This was a very complicated, major telecom bill that passed the Legislature in 2017. I was the only person in the Legislature who voted “no” on the final read. I believe I was the last person to vote. Rep. Isela Blanc turned to me and said “You’re voting ‘no’? You should explain your vote.”

I didn’t explain my vote because my stance was part hunch.

I originally voted “yes” on HB2365. (I remember being skeptical, but it was sold as no big deal.) I voted “no” when it came back from the Senate with amendments for two reasons. 1) The bill included a lot of accelerated depreciation, which I interpreted as a tax break for the telecom corporations. I remember asking questions of the staff regarding the cost, and there wasn’t really any clear answer about cost. 2) The bill was very complicated. I remember the explanation alone being pages long, and we had to make a decision very quickly. I voted “no” because I thought we really didn’t know what we were voting on.

Continue reading Is 5G ‘Risky Business’? (video)

What Is the Cost? 18 Tax Giveaways Pass #AZ House Ways & Means (video)

Arizona's fiscal cliff

The sheer volume of tax credits, tax cuts, tax shifts, and miscellaneous tax giveaways in this Legislative session is mind boggling. Will the Arizona House pass one billion dollars in tax giveaways in 2020? It could happen. To say that this behavior is fiscally irresponsible is a gross understatement.

The House Ways and Means Committee has passed 18 tax giveaways in 2020, and those bills are now hitting the House floor for debate and votes. Six of the 18 already have passed the House: HB2355, HB2356, HB2293, HB2732, HB2778, and HB2779. (See descriptions below.) These six will eliminate hundreds of millions of dollars in future revenue from the General Fund, and there are 12 more tax giveaways to be voted on. As noted in previous blog posts, these tax giveaways primarily benefit large corporations– like Microsoft, APS, TEP, SRP, SW Gas– specific business groups or industries, and wealthy Arizonans.

It is often said that a budget is a moral document. In our state budget, the Legislature supports corporations and wealthy Arizonans with never-ending, multi-year tax giveaways, that often have inflation adjusters. Arizona wouldn’t have an affordable housing problem, crumbling infrastructure, and grossly underfunded education system if the Legislature had long-term plans and multi-year, inflation-adjusted budgets to address those problems. Instead, programs and services that benefit the people of Arizona are lucky to get one-time funding and beg for more each year (or pass citizens initiatives).  We don’t have a budget surplus; we have chronically underfunded programs.

Continue reading What Is the Cost? 18 Tax Giveaways Pass #AZ House Ways & Means (video)

How Can the #1 ‘Pro-Life’ State Be #50 in Child Wellbeing? (video)

sleeping baby

Several times during the tax cut debates on Wednesday, Feb. 11, in the House Ways and Means Committee, Chairman Ben Toma and other Republicans repeated the mantra that Arizona has a “budget surplus”. The only reason that we have funds that have not been allocated is because we have had decades of budget cuts and chronic underfunding of important programs like public education(!), the Housing Trust Fund, Temporary Assistance to Needy Families (TANF), and so forth. It’s not that there is no need in our state, and, so therefore, we have extra cash. We don’t have extra money.

Also, several times during the committee meeting, I reminded everybody that Arizona is worst in the nation for Adverse Childhood Experiences (ACEs). We are not only shortchanging our school children by underfunding education, we are shortchanging small children before they ever get to school. It is highly ironic that Arizona is the country’s #1 “pro-life” state and also #50 in ACEs, due to our stingy policies and poor treatment of our children.

In my study of gaps and inequities in maternal and child health in Arizona, I took a comprehensive approach and looked through the lens of the social determinants of health. Two contributing factors to Adverse Childhood Experiences are housing insecurity and food insecurity.

Continue reading How Can the #1 ‘Pro-Life’ State Be #50 in Child Wellbeing? (video)

#AZLeg UPDATE: 12 Tax Giveaways Pass House W&M Committee in 3 Weeks (video)

Save our billionaires

All 12 tax giveaways or revenue reductions heard in the House Ways and Means Committee in the past three weeks passed– many on bipartisan votes. For the record, I was the only person who voted “no” on all of the tax giveaways.

To be clear, none of these tax reductions do anything to: increase education funding, increase access to healthcare, increase prenatal care, reduce adverse birth outcomes, reduce Adverse Childhood Experiences, reduce student debt, increase wages, foster workforce development, reduce poverty, or provide food and housing security for Arizonans. If you are not Microsoft, APS, TEP, SRP, SW Gas, qualified investors, resort owners, developers, contractors, or just rich people, you are not getting a tax break from the Republican Party.

In fact, to pay for education, the Republican Party wants to raise your sales tax while lowering taxes for corporations and elites. Do you want to pay 10 or 11% of sales tax on every purchase? If you don’t, just say no to tax breaks for Microsoft, APS, SRP, TEP, SW Gas, and the richest Arizonans.

Also, remember…

  1. Many of these tax breaks increase over time.
  2. Most of them have no sunset date.
  3. Most of them have no cost estimate.
  4. None of them have clear economic impact or job creation numbers– beyond the nebulous trickledown economics figures normally given by the Arizona Commerce Authority.
  5. None of them have clear performance measures.
  6. It takes 2/3 vote to get rid of them.
  7. No one has done the math on the total cost of all of them on an annual basis going forward.

We are creating a giant revenue hole in the future. This is fiscal irresponsibility.

Continue reading #AZLeg UPDATE: 12 Tax Giveaways Pass House W&M Committee in 3 Weeks (video)

Tax Cuts R Us: Third Round of Massive Tax Cuts in House Ways & Means (video)

Arizona House

How can a “pro-life” state be #50 for Adverse Childhood Experiences? Because the Arizona Legislature prioritizes corporate welfare over child welfare. It’s that simple.

The House Ways and Means Committee has passed six tax breaks in the past two weeks. Tomorrow’s agenda has 12 bills, including eight additional bills that are tax breaks or other means to reduce revenue. The Microsoft tax break (HB2771) that I warned you about a few weeks ago in on the agenda.

Ways and Means has passed six tax cuts so far in 2020. Has anyone done the math to determine the future annual hit if all of these tax breaks are passed. Probably not. We don’t have any JLBC costs estimates for some of them, and several are structured to automatically increase over time. The Tea Party– under Governor Jan Brewer, Senate President Russell Pearce, and several Legislators who are still in office– passed massive annual decreases in corporate income taxes, the results of which have been felt in the classrooms. When she left office, Brewer suggested that they may have gone overboard with the tax cuts. When Governor Dough Ducey took over, he said real men aren’t afraid to cuts taxes and has continued to cut, cut, cut. Let’s stop cutting and start investing. We have hundreds of millions of dollars in extra funds this year. Don’t let them give it away like they did last year.

Just to be clear– none of these 14 tax reductions would do anything to directly help public education, access to healthcare, reduction in poverty, workforce development or infrastructure. They are all about cutting taxes or giving tax credits to business.

Here are the bills that could reduce general fund revenue in the queue for Feb. 12. If you want the Legislature to invest in education, healthcare, and infrastructure– the People’s To Do List– instead of the corporate wish list, please voice your opinion on Request to Speak (RTS) or by phone or email to your Legislators (regardless of party).

Continue reading Tax Cuts R Us: Third Round of Massive Tax Cuts in House Ways & Means (video)

What’s on the #AZHouse Ways & Means Agenda? More Tax Cuts! (video)

Republicans

The alternative headline for this blog post could be: Are eight tax cuts in two weeks too many? I think so.

Last week, I said that the State of Arizona should change its motto from Ditat Deus (God Enriches) to Tax Cuts R Us.

Looking at this Wednesday’s Ways and Means Committee agenda with four more tax giveaways on it, I stand by my assertion. Eight tax cuts in two weeks? That is fiscally irresponsible.

Today’s video is about HB 2732 (tax credits; affordable housing), but HB2404 (prime contracting; exemptions; certificates), HB2409 (small business investment credit; extension), and HB2629 (TPT; exemption; pacemakers) are also on the agenda. (On the pacemakers, the Dems are wondering why those aren’t already sales tax exempt, since they are medical devices.)

For the last few years, the Legislature has considered (but not passed) tax credits for developers who agree to build affordable housing. I have voted against this every year because there are better ways to make sure that people can afford a place to live– like paying a living wages, fully funding the Housing Trust Fund, and eliminating tax giveaways for luxury apartments.

HB 2732 is a bit less generous with the developers than previous versions of this bill, but this bill still takes millions from the general fund over the next ~20 years. This tax credit is capped at $8 million a year for 10 years. If we pass this, the first year cost would be $8 million, $16 million the second year, $24 million the third year, and up from there to $80 million in year 10. The question is, will we be able to afford $80 million out of the general fund in 2031? (After all, the Republicans have proposed eight tax cuts in the past two weeks! Is there plan to break the bank on the general fund? Their proposals are fiscally irresponsible.)

Continue reading What’s on the #AZHouse Ways & Means Agenda? More Tax Cuts! (video)