Bipartisan agreement is not common in Washington today, especially regarding big-dollar and hot-topic issues such as public infrastructure. That’s why last week’s breakthrough on a $550 billion infrastructure package is a big deal.

Months ago, President Joe Biden proposed a more-than-$2 trillion infrastructure package that spanned everything from traditional infrastructure (roads, bridges, rail, etc.) to what has been dubbed “human infrastructure” (childcare, welfare spending, and more). Republicans quickly drew their line in the sand: yes on traditional infrastructure, no on anything else.

A bipartisan agreement between Republicans and Democrats in the Senate seems to have struck a balance. The Senate will take up a bill  on physical infrastructure investment, but “human infrastructure” can come in another bill. 

Republicans also opposed raising taxes to finance new spending. The negotiated version of this bill seems to have relieved their concerns: it pays for these new investments by utilizing unused COVID relief cash, funds leftover from states that refused an extension of enhanced federal unemployment insurance supplement payments, and several other sources.

After months of negotiating, Republicans and Democrats seem to have come to a filibuster-proof consensus on a more than 2,700-page infrastructure bill.

Bipartisan infrastructure team

Arizona Sen. Kyrsten Sinema and Ohio Sen. Rob Portman were the lead negotiators of the package that eventually garnered support from both Democrats and Republicans in the Senate.

The bill’s basic contours are as follows:

• $110 billion for roads and bridges
• $39 billion for public transit
• $66 billion for rail
• $55 billion for water and wastewater infrastructure
• Billions for “airports, ports, broadband internet and electric vehicle charging stations”

Should this bill pass, the 50-50 Senate will have overcome partisanship in a deeply polarized political environment and agreed on big-dollar spending amid deeply entrenched partisan warfare.

Speaking on the Senate floor, Sen. Sinema said, “I know it has been difficult. I know it has been long… that is what our forefathers intended.” Her comments come days after protestors were outside of her Senate office during a protest of her stance against eliminating the Senate filibuster. Sinema’s office responded to calls for doing away with the filibuster in a statement: “The filibuster helps protect the country from wild swings between opposing policy poles.” 

U.S. falling behind the pack in infrastructure

The American Society of Civil Engineers gives America’s infrastructure a C- . They note that there is a water main breakage on average every two minutes in the United States, that “43% of our public roadways are in poor or mediocre condition, a number that has remained stagnant over the past several years,” and that “an estimated one in five school aged children lacked the high-speed internet connection.”

Infrastructure investment has garnered bipartisan support for years, but until now no large-scale compromise has been reached on the matter. 

In 2016 and 2020, then-candidate and then-President Donald Trump campaigned on even greater investments in American infrastructure. President Biden has done the same. Former Secretary of State Hillary Clinton campaigned on similar investments in 2016.

The U.S. Â鶹´«Ă˝Ół»­ of Commerce has helped lead the business community’s  encouragement of bipartisan infrastructure investment. The Â鶹´«Ă˝Ół»­ led a coalition of more than 300 organizations that called for similar action on Independence Day 2021. 

As the package nears completion, the Â鶹´«Ă˝Ół»­-led coalition released a : “We applaud the bipartisan group of Senators – led by Senators Portman and Sinema – who worked tirelessly to achieve agreement on this much-needed infrastructure proposal… America’s productivity, global competitiveness and quality of life depend on all Members of Congress to make a durable commitment and outline a clear strategy that will invest in and modernize our crumbling roads, bridges, transit, rail, water and energy infrastructure, access to broadband, and more.”

While the jury is still out on whether this bipartisan infrastructure package can make it to the president’s desk, this is the best chance Congress has had in recent memory to unite both parties around momentous investments in public infrastructure.

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Two statesmen with deep roots in Arizona are calling on voters to say “no” to Proposition 208, saying it would place Â鶹´«Ă˝Ół»­p there with New York and New Jersey as one of the highest income tax states in the nation.

That would kill many small businesses, cause job losses and shrink tax revenues that support schools and government services, said former Vice President Dan Quayle and former Arizona U.S. Senator Jon Kyl at a virtual event hosted by the Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry. The event was sponsored by Total Spectrum, HSL Properties and the Keating Companies.

“Let me be very clear: We are now recovering from a 100-year pandemic and this initiative wants to raise taxes 77.7 percent on individuals and small business? That should be the end of the discussion,” said former Vice President Dan Quayle, a longtime Arizona resident who grew up here.

The initiative, which seeks to tax certain earners to help fund education, would raise Arizona’s top income tax rate from 4.5 percent to 8 percent — a 77.7 percent increase — for individuals who earn over $250,000 and households that earn over $500,000. 

Small businesses would shoulder much of the costs

What most voters do not realize is that a majority of small businesses in Arizona file under the individual tax code, not as corporate filers, said Kyl, who served as a U.S. senator from Arizona 1995 to 2013 and again in 2018.  

If the initiative is passed, those companies could nearly double the 4.9 percent tax rate that big corporations pay.

“More than half of all small businesses pay their taxes as individual income taxes,” Kyl said. “The people who are going to suffer are all of those small business owners and their employees. We’re talking about the dry cleaners, the plumber, the electrician, the pesticide control.”

Prop. 208 is wrong path for education funding 

At the event, Quayle and Kyl urged about 100 community and business leaders in attendance to educate their constituents on why this initiative is the wrong path for education funding.

They listed a number of reasons why, including: 

1. Arizona could lose its competitive edge to surrounding states

A sharp tax increase on individuals and small businesses would put Arizona at a disadvantage when competing with nearby states with similar or no income taxes like Colorado, Nevada, New Mexico and Utah. 

“We’ve had a great opportunity for people moving here because other states have messed up. They’ve raised taxes. They’ve made it very unfavorable for businesses and we’ve benefited from that,” Kyl said. 

2. Local, state tax revenues would drop 

If residents and businesses start to fail or flee the state, there are that Arizona could lose a minimum of $2.4 billion in revenue over the next decade as a result of a reduction in business recruitment, job growth, and wages.

3. Sends wealthy taxpayers and businesses packing 

Under the weight of this proposed tax increase, about 90,000 wealthy residents would be impacted. Many may be motivated to leave the state. Others would be less likely to move here. The same goes for new investment.  

Not only would local and state coffers suffer, so would charities and nonprofits that rely on donations from benefactors and local companies. 

4. Voter initiatives are nearly impossible to fix

If Proposition 208 passes, it will be nearly impossible to alter, even in the case of some unintended negative consequence. Once passed by voters, it takes a three-fourths vote by the state Legislature to change a voter initiative. Then, any changes made to the act must further its purpose. 

“This is permanent. It’s almost impossible to change,” Quayle said. “A small business may not earn $250,000 today, but five years from now, they’d like to.”

5. Proposition 208 does not adjust for inflation

Unlike current state and federal tax rules, the proposition fails to adjust for inflation. That could sweep more small businesses into higher tax brackets year after year. 

6. Most of the funding comes from an out-of-state group

Most of the funding for the initiative’s campaign comes from the Portland, Oregon-based Stand for Children, Inc. with over totaling more than $4 million coming from the group.  

Don’t turn Arizona into a “fly-over” state

Arizona has been able to increase its funding for education over the past four years because of its fast growth and healthy economy before the pandemic, both speakers said. 

Today, Arizona has a reputation as friendly and open to business with a relatively low tax base, Quayle said. That could change overnight if the initiative passes. 

“If we go from 4.5 percent to 8 percent, Arizona is going to be known as a fly-over state. Pure  and simple.” 

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If you are in charge of one of the nearly 5 million American companies that has received funds as part of the Paycheck Protection Program (PPP) or you are still planning to apply for a PPP loan, it’s important to be aware of the significant updates and changes to the program that come as part of the Paycheck Protection Program Flexibility Act (PPPFA), signed into law on June 5, 2020.

• First of all, if you are interested in applying for PPP funds and have not yet done so, new applications are being accepted again as of July 6, 2020, through August 8, 2020.
• Loan recipients now have 24 weeks instead of 8 to spend loan proceeds and still be eligible for forgiveness.
  • While this period has been extended, recipients are still able to apply for forgiveness starting at 8 weeks after receipt of funds.
• PPP proceeds are still calculated off of your business’s payroll expenditure and, as before, the funds are intended to be applied primarily to your payroll to, although the qualification for forgiveness has been reduced from 75% of funds spent on payroll to 60%.
  • Eligible expenses for the remaining portion of the loan remain the same (rent, mortgage interest, utilities); however, a new requirement that comes as part of PPPFA is that if 60% or less of the loan is spent on payroll, none of the loan will be eligible for forgiveness, and will revert to the repayment terms, below.
• The portion of the loan that is not eligible for forgiveness will still be subject to a 1% interest rate, but the repayment term for loans issued after June 5, 2020 has been increased from two to five years. Loans issued prior to June 5, 2020, will still have a maturity of two years, although borrowers and lenders may mutually agree to modify the maturity terms to conform with the PPPFA.
• Additionally, the deferral period for PPP loan repayment has been increased to six months after the SBA makes their forgiveness determination.
  • Currently, your PPP lender has 60 days to make their initial forgiveness determination, after which point the SBA has an additional 90 days to accept or adjust the lender’s determination. It’s only after this point that the 6-month deferral begins.
• PPPFA also extended the deadline to rehire workers and still have their salaries qualify for forgiveness, from June 30, 2020 to December 31, 2020. It also introduced a couple exceptions to this requirement, although it’s worth noting that documentation will need to be provided to demonstrate that good-faith, written offers to rehire workers were declined.
  • The exemptions include the inability to rehire a similarly qualified employee prior to the deadline OR an inability to return to the same level of business activity as prior to February 15, 2020 due to compliance with COVID-related restrictions.

As guidelines are regularly being clarified, for the most up-to-date guidance on PPP expectations/best practices borrowers should reach out to their lenders.

Mark Khazanovich is the director of operations at KORE Accounting Solutions, a future-focused management accounting firm specializing in providing legal professionals and business owners with the data and insights they need to stay compliant and run more profitable businesses.

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