The second regular session of the 55th Arizona Legislature adjourned for the year early Saturday, bringing an end to a session that the president and CEO of the state chamber of commerce says featured several wins for the Arizona business community. 

“This was a winning session for Arizona businesses and taxpayers, and one that will advance and solidify our reputation as the best state in the country for job creators to relocate, invest and expand,” Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry President and CEO Danny Seiden said. “Whether securing priority personal and commercial property tax reforms, further slashing regulatory burdens and government red tape on Arizona businesses, improving our state’s legal and tort environment, or making vital and historic investments in education, workforce, water and other critical infrastructure, the work of this Legislature has well-positioned Arizona for a future of strong and sustained economic growth.” 

Seiden pointed to significant business tax reforms that he says will solidify the state’s competitive standing. 

Gov. Doug Ducey in April signed into law legislation by state Sen. J.D. Mesnard, R-Chandler, that lowers to 15% the commercial property tax assessment ratio. Seiden and tax policy experts say a commercial property tax assessment ratio reduction is necessary to ensure the state’s continued economic competitiveness and to help reduce the disparity in the property tax burdens borne by commercial property taxpayers versus homeowners. 

The governor in March signed into law legislation sponsored by Rep. Jeff Weninger, R-Chandler, that lowers the valuation on business personal property – things like machinery and equipment. 

“These tax reforms will lead to more job creation and investment,” Seiden said. “I applaud the governor and the Legislature for identifying the parts of our tax code that needed to be updated, modernized and simplified and that will keep the economy strong.” 

Also on the tax front, the Legislature will ask voters whether the state constitution should be amended to say that ballot measures calling for the approval of a tax should be approved by at least 60% of votes cast, rather than the current simple majority. Tax increases sought through the legislative process must receive a 2/3 vote of the Legislature to be approved, but that higher threshold does not exist at the ballot box.

The proposal will appear on the November general election ballot. 

“We’ve seen how out-of-state special interests have exploited the loophole in our law to pursue tax policy that would hurt Arizona job creators and taxpayers,” Seiden said. “The rules for passing a tax increase should be the same, whether you’re attempting to do it at the Legislature or at the ballot box.” 

The business community during the legislative session also successfully advocated for improvements to the state’s civil justice system. 

A bill to reform the way defendants are named in asbestos cases received bipartisan support and was signed into law in April. 

The legislation by Sen. Vince Leach, R-SaddleBrooke, curbs a common trial lawyer strategy of naming several parties in personal injury lawsuits related to asbestos exposure, even if those potential defendants’ connection to an injury was negligible. 

A bill to reduce regulatory burdens on business was passed by the Legislature and signed by the governor that streamlines and simplifies regulatory policies while preventing the government from adopting new rules that inhibit job growth and economic development. Sponsored by Rep. Travis Grantham, R-Gilbert, and backed by the business community, the bill is designed to allow businesses a fair and impartial appeal of government agencies’ actions and allows businesses to recover the legal fees associated with appeals through the Office of Administrative Hearings (OAH).

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The state Senate Judiciary Committee last week passed SB 1191, legislation that aims to eliminate municipalities’ attempts to sidestep Arizona’s right-to-work law, which ensures union membership remains voluntary and not a required condition of any employment. 

Some cities have adopted local ordinances to give organized labor a leg up when issuing zoning permits. The bill prohibits municipalities and counties from requiring the use of union labor in zoning and land use activities and prohibits certain requirements from being included in public works contracts.

A representative from the Greater Phoenix Â鶹´«Ă˝Ół»­ of Commerce testified in support of the bill. 

“The purpose of the bill and amendment language is to ensure that competitive advantages aren’t given to union labor companies,” said Mike Huckins, the chamber’s vice president of public affairs. “These (local ordinances) have a chilling effect on the business communities and create an unfair burden on businesses, especially small businesses.”

The Arizona Building and Construction Trades Council opposed the bill. 

“This comes down to local control. It comes down to whether community leaders know best,” the Council’s Luke Douglas said. “It also could end up jeopardizing prices.”

Those in support of the bill said the bill could put downward pressure on construction costs.

“The city will sometimes attach conditions to zoning requirements, including the use of union labor workers. Tempe is demanding this as part of the development agreements,” said Jon Riches of the Goldwater Institute. “This drives up prices for consumers, infringes on basic private property rights, and gives preferences to organized labor workers.”  

Josh Umar, a representative from the American Subcontractors Association of Arizona, spoke to the legislation’s effect on small businesses. 

“Small and upcoming businesses and contractors are going to be the ones that are going to be benefiting from this,” he said. 

Jake Hinman of the Arizona Multihousing Association said the rising construction costs hurt housing consumers.

“Researchers have examined the prevailing wage and found that the rates are unbearably higher, increasing construction costs in the low-income residential products,” he said.

Other groups in support of the bill include the Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry, Arizona Builders’ Alliance, Arizonans for Fair Contracting, and the Arizona Chapter of National Association of Industrial & Office Properties. 

Opponents include associations representing city and county governments and Living United for Change in Arizona, a progressive advocacy group. 

The bill will receive a vote of the full Senate after being considered by each party’s caucus. 

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The state Senate on Wednesday passed two bills to rein in frivolous lawsuits, with bipartisan support for both.

SB 1157, sponsored by Sen. Vince Leach, R-SaddleBrooke, would curb a trial lawyer strategy of suing several parties in personal injury lawsuits related to asbestos exposure, even if those potential defendants’ connection to an injury was negligible. 

“This is a commonsense bill,” Leach said when the bill was heard in the Senate Judiciary Committee. “We have a problem in this particular area where over-naming in a lawsuit creates more liability.” 

Mark Behrens, who testified in the committee on behalf of the United States Â鶹´«Ă˝Ół»­ of Commerce, said asbestos litigation over the last several decades has devolved into an endless search for a solvent bystander. 

Behrens said the bill “simply requires the plaintiff to disclose upfront, the who, what, why, and where of their injury.” 

The legislation would accelerate the disclosure of information and make sure that innocent companies are not named erroneously or frivolously, which currently leads to a dismissal rate of more than 90% during the discovery period of the lawsuit. Of the companies dismissed from the suits, nearly all of them were not found to have any connection to the damages or injuries claimed by the plaintiff. 

The erroneously identified companies, however, must cover without reimbursement the cost of defense counsel during the early stages of litigation before they are dismissed. 

In one example cited by Behrens, Marine One, a steel company named in more than 182,000 different personal injury asbestos suits, was sued in cases they never should have been named in. While their product was never found to have harmed people, they were forced to file for bankruptcy due to the cost of defense attorneys. 

The bill passed the Senate 18-12.

The Senate on Wednesday also passed SB 1092, another bill by Leach, that places limits on product liability lawsuits brought against product sellers who find themselves the target of product liability lawsuits despite not having made any alterations to a product or doing anything else that could have caused an injury to the plaintiff.

“SB 1092 would protect retailers and other businesses from unfair product liability lawsuits while maintaining the right of the consumer to sue other parties in a product’s chain of distribution,” said Chad Heinrich, Arizona state director for the National Federation of Independent Business, one of the bill’s supporters. “The current law in Arizona places the burden of product liability at the doorstep of the retail business owner. This is unfair since most issues with products should be addressed through the manufacturer of the product, not the store owner who sold the product. SB 1092 would protect sellers of a product from the unfair financial burden of expensive attorney’s fees and the time required for litigation—simply to prove their lack of liability.”

The bill passed the Senate 17-12.

Leach said the state’s legal environment is important to its overall economic development prospects.

“I am proud to sponsor these two bills to promote a better legal environment in Arizona, which will only help our state attract jobs,” Leach said. “When trial lawyers bring bogus lawsuits, it’s job creators who pay the price by spending more time and money on defending themselves than on running their business.”

The Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry, the state’s leading advocate for reforms to the civil justice system, applauded Leach and the Senate votes.

“Sen. Leach and the senators from both parties who supported these bills have our sincere thanks,” Â鶹´«Ă˝Ół»­ spokesperson Annie Vogt said. “Unfortunately, we’ve seen several bills introduced this session that encourage litigation against employers, which the plaintiffs’ bar would be happy to see become law. Thankfully, Sen. Leach continues to stand up for job creators.”

Both bills now head to the House of Representatives.

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