Mitigating the impact of Proposition 208 on small businesses and restoring public confidence in elections will be among the top goals for the state Legislature this year, said the new chair of the Arizona Senate Commerce Committee.

At the top of the list will be finding ways to help businesses and individuals still struggling from disruptions during the pandemic, said the new Commerce chair, Senator J.D. Mesnard (R-Chandler).

“There will be certain priorities that will be everybody’s priorities like responding to Covid, and one major aspect of that will be how it has impacted our businesses,” said Mesnard, who spoke to Â鶹´«Ă˝Ół»­ about what he foresees as priorities in 2021.  

With Covid-19 shutting down much of last year’s session, lawmakers must scramble to address these and other pressing concerns, he said.  

“Because we pretty much hit the road last March when Covid arrived, we really haven’t done much, so there will be a lot of interest about what we can do to help individuals and businesses,” Mesnard said. “There seems to be light at the end of the tunnel with the vaccine,  but it still will take months.” 

Mesnard, a small business owner, investor and consultant, was named the new chair of the  Commerce Committee that oversees regulation and policy important to business and industry.  

Topping the list of goals this session will be finding ways to help small businesses, organizations and citizens still struggling to get through the final throes of the pandemic, he said. Expect to see some form of legislation to shield businesses from frivolous Covid-19 lawsuits. 

Mitigate damage from Prop. 208

Another most pressing issue this session will be how to offset harm to small businesses and the state from Proposition 208, Mesnard said. 

The proposition created a new tax for top earning individuals and couples, but also is expected to affect tens of thousands of small businesses. These are “pass through” entities, meaning they do not file their income taxes as corporations. Instead, they file under the individual tax code. 

Under the new law, Arizona’s top income tax rate has jumped from thirteenth lowest in the nation to the ninth highest. The rate jumped from 4.5 to 8 percent, a 78 percent increase, affecting individuals who earn $250,000 and joint filers who earn $500,000. Small business owners who file under the individual tax code are subject to the tax as well. 

The new tax rate could have dire consequences for Arizona’s economic health, said Mesnard, who is working with fellow lawmakers, business advocacy and trade groups, and legislative budget staff to find ways to lessen the impact and protect the state’s ability to attract new investment.

“You can’t have the 9th highest income tax rate in the country and the 11th highest combined average sales tax rate and I don’t know what the commercial property tax rate is but it’s got to be certainly in the top half of the country. You can’t have all those things and expect Arizona to be a place attractive to move to,” he said. “So we need to figure a pathway forward.”

Committee members already are starting to look at possible changes in tax policy to “rescue ourselves from the predicament,” Mesnard said. “We don’t want to become a flyover state.” 

“We’ll be looking at our whole tax code to look at what would be good tax policy and how we’ll respond to this. Right now we’re in bransoriming mode. There’s no immediate solution. I think it’s a big challenge, frankly.” 

Public confidence in county and state elections

With a lot of interest over election integrity, another top objective is to reinstill public confidence in the election system, Mesnard said. 

“There’s a lot of people that think the election was rigged or wrought with fraud or irregularities. Others dismiss that entirely,” Mesnard said. “Whether right or wrong, there are lots of doubts and we need to make sure we do everything we can to restore people’s trust and confidence in the election system.”

Mesnard said he would like to see every step of the process analyzed to determine if any changes need to be made to ensure election integrity. 

He also introduced a bill that would allow a recount of an election to anyone willing to pay for it. 

The bill, , states that the person requesting a recount would have to file a bond with the Superior Court and pay an amount determined by the court to be sufficient “to provide for full reimbursement of the costs of conducting the recount.” 

“This should not be a Republican or Democrat thing. Because if people don’t have confidence in the system, I don’t know a greater existential threat to the democratic electoral process than people who don’t show up to vote, who don’t think it’s real,” he said. “I mean, that’s what you see in other parts of the world. God forbid that type of thing happens here.”

Mesnard home grown 

Before being elected to the Arizona Senate in 2018, Mesnard served eight years in the House of Representatives. He was speaker of the House for the 2017–2018 term. Prior to running for office, he spent eight years working at the Arizona Senate where he served as a policy adviser on issues ranging from education, transportation and retirement, to family services and government administration. 

Mesnard attended Arizona State University where he earned a Bachelor’s degree in music composition and Master’s degrees in business and public administration. 

He helped establish Voices of the World, a non-profit Christian charity that provides humanitarian aid to the poor and destitute of the world. A husband and new father, he lives in Chandler.

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It’s a wrap. Arizona voters have spoken. Despite some major disappointments, business and industry saw some major wins, too. 

First the new president. President-elect Joe Biden’s victory could prove favorable for Arizona when it comes to trade, immigration and border policies, said Glenn Hamer, president and CEO of the Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry, which represents some of the largest employers statewide.

Business and industry now hope to see an end to the punishing trade wars and tariffs of the past four years.  

“I don’t think we’re going to see tariff threats on our allies like Mexico and Canada, and for a state like Arizona that relies heavily on trade, that’s a positive going forward,” Hamer said.

Border issues should improve

He predicts improved relations for trade and cross-border tourism, major financial drivers for Arizona. There’s also hope that restrictive visa policies that have made it difficult to hire workers and attract top students from other countries will improve. 

“COVID-19 precautions must be at the front of the line in moving forward, but we need to get our borders up and running with our friends and allies and North American neighbors,” Hamer said. “Snowbirds from Canada need a haven from their brutal winters. In terms of Mexico, many of our border communities are integrated and border closures have been devastating.”

Keeping new tariff-free trade pact secure   

Hamer is also confident that the new administration will keep the new United States- Mexico-Canada Agreement (USMCA) secure. The is bringing cross border commerce into the modern age with new provisions that include guidelines and protection for e-commerce and intellectual property that will benefit Arizona. 

“I’m very bullish that the next administration will expand on this tremendous agreement and further cement our trade ties,” he said.

Tax and regulatory agenda cause for concern

Hamer’s organization was a vocal supporter of the 2017 Tax Cuts and Jobs Act, which he argues was essential to the country’s pre-pandemic economic expansion.

“We won’t support a rollback of the tax reductions that unlocked one of the most vibrant economies the country’s ever known,” Hamer said. “We’re counting on job creators to help us recover from the current downturn. Saddling them with higher taxes and more regulatory red tape won’t grow the economy.”

Hamer says the outcome of two U.S. Senate runoff races in Georgia in January will be pivotal.

“These races will determine not only which party controls the Senate, but also the extent to which policies that help create jobs will either be retained or rejected,” he said.

A much needed healing message 

Biden hit all the right chords in his victory , said Hamer, who immediately sent out a tweet congratulating the president-elect: 

“It was uplifting and unifying. We are a good people and the greatest country in the history of the world. We are the UNITED STATES of America. It’s time to heal,” Hamer wrote.

Voters retain pro-business, pro-tech, pro-education stewards

At both the national and state level, Arizona voters retained a majority of candidates endorsed by business and trade groups who have worked to build the state’s economy and future.  

At the state Legislature, the GOP held onto majority control. While the chamber endorses candidates from both parties, keeping the provides needed certainty right now, said Garrick Taylor, executive vice president for the Â鶹´«Ă˝Ół»­. 

Under the state’s leadership, Arizona has watched its economic strength grow exponentially, and it’s experiencing a faster recovery from the pandemic than many other states.

“We’re less concerned with partisan affiliation than we are with making sure the Legislature is committed to strengthening the state’s competitiveness,” Taylor said. “Ensuring that there is a strong majority of pro-jobs, pro-growth legislators is more essential than ever.”

Proven record for moving mountains

Among those re-elected to their respective state houses are dozens of lawmakers who have successfully led Arizona to increase teacher salaries and funding for education to the tune of $1 billion more per year, promote policies to attract a wide range of industries and high paying jobs, and take on a major battle with Mother Nature. 

Last year, Senate President Karen Fann, House Speaker Rusty Bowers and other legislators helped smooth a sometimes contentious process to update the seven-state to protect one of Arizona’s most important water resources, the Colorado River.  

A new U.S. senator

One person who was essential in moving the historic water pact forward was Arizona’s U.S. Senator Martha McSally, who lost her bid to retain her Senate seat against  astronaut and fellow military pilot Capt. Mark Kelly (D).  

McSally, lauded as one of the hardest working public servants in Congress, received strong support from business groups including chambers of commerce, trade associations and small business groups. Earlier this year, McSally received the U.S. Â鶹´«Ă˝Ół»­â€™s Abraham Lincoln Leadership for America for her record of bipartisan pro-job, pro-free enterprise work. 

Arizona business leaders are now eager to forge a similar relationship with Senator-elect Kelly.  

“Arizona’s job creators congratulate Capt. Mark Kelly on becoming the state’s next U.S. senator. We look forward to working with him on policies that will strengthen the country and state’s economies,” Hamer said. “Many Arizona businesses are struggling during this pandemic-induced downturn, so there is much work to be done. Sen.-elect Kelly can count on us as willing partners.”

Two serious blows to small business, industry

Two state ballot propositions that were widely opposed by business and trade groups statewide also received voter approval. Both were heavily funded by out-of-state groups.

Most daunting was the narrow passage of Proposition 208, the “Invest in Ed” measure. The new law imposes a high personal income tax on the state’s top earning individuals to fund education. Forgotten in the frenzy to help educators, voters did not realize it would impact tens of thousands of small businesses as well.

“This is a job-killing tax that threatens to destroy Arizona’s reputation as a pro-business, pro-job creation state,” Hamer said. 

The could stifle Arizona’s ability to compete with other states. Neighboring states such as Nevada, New Mexico and Utah have lower or zero income tax rates. Other states are rejecting similar measures. Colorado voters elected to lower that state’s income tax.

Passage of Proposition 207 was another blow. The new law makes recreational marijuana legal in Arizona. Business groups fought its passage for a , including a fear of more workplace injuries and accidents and less productivity on the job. 

Moving forward 

Despite some major disappointments, voters resoundingly cast their ballots for dozens of public servants who have made Arizona a business-friendly state. 

“Arizona is now counting on their leadership to develop the policies necessary to emerge from the pandemic just as we entered it—with one of the nation’s strongest economies,” Hamer said. 

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