Advocates for economic growth cheered the Arizona Legislature’s passage of a major income tax and commercial property tax reduction as part of the Fiscal Year 2022 state budget.

Under the agreement, most taxpayers will pay a flat 2.5% individual income tax rate once the tax reductions are fully phased in, providing relief for all Arizonans. The current lowest rate is 2.59%. The exact timing of the complete implementation of the reduction will depend on state revenues meeting certain targets. 

Groups like the Arizona chapter of the National Federation of Independent Business, the Arizona Small Business Association, the Arizona Tax Research Association, and the Arizona chapter of Americans for Prosperity all applauded the Legislature for its work to send the historic tax reform to Gov. Doug Ducey’s desk.

“Every Arizonan—no matter how much they make—wins with this legislation,” Ducey said. “They will get to keep more of the money they earn under this tax plan.”

Had the Legislature failed to adopt the tax reform, members of Arizona’s small business community were facing a 77% tax increase due to a ballot measure that narrowly passed last fall. 

“It will protect small businesses from a devastating 77% tax increase, it ensures working families and all Arizona taxpayers get to spend their money how they choose, and it will help our state stay competitive so we can continue to attract good-paying jobs,” Ducey said.

Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry President and CEO Danny Seiden said the state’s most influential business advocacy welcomed the news. 

“Today is a tremendous step forward in enhancing Arizona’s economic competitiveness,” Seiden said following the bill’s passage. “This historic tax package reduces income taxes for all Arizonans, returning money to hardworking families, providing critical relief for our small businesses, and reforming our disparate property tax structure.”

The property tax provision of the bill reduces Arizona’s corporate property tax assessment ratio from 18% to 16% at the time of full phase-in.

The NAIOP Arizona chapter earlier this year released an analysis of a potential assessment ratio reduction, noting that commercial property in Arizona has the highest assessment ratio of any other property type.

The found Arizona’s commercial property assessment ratio to be uncompetitive both regionally and nationally. The report’s authors pointed to the positive economic development benefits of the assessment ratio reform.

“When site selectors are evaluating locations for business expansions or relocations, improvements in metro Phoenix’s ranking could make a meaningful difference in whether a city in Arizona is ultimately chosen,” the report found.

The Legislature this week is finishing work on two remaining bills in the 11-bill state budget. A state budget must be adopted by July 1 when the new fiscal year begins. 

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As Maricopa County’s population continues to grow at full tilt, cities in the region are facing different challenges to manage and capitalize on the influx. 

Two communities on opposite sides of the county, Buckeye and Tempe, are having to take quite different approaches to economic development. Buckeye is only 5 percent built out with a massive 640 square miles within its boundaries. Landlocked Tempe is nearing built-out with 40 square miles.   

“Tempe is mainly growing up and Buckeye is growing out with very different issues,” said Cheryl Lombard, president and CEO of , the voice of the real estate community that hosted a virtual forum last Friday to hear from both mayors. Arizona Public Service sponsored the event.

Both cities are models of responsible growth 

With the pandemic still impacting communities and Californians and residents of other states moving here, both cities are models of “responsible development and responsible growth,” Lombard said. 

“Even though these communities are 45 miles apart, these mayors and councils are doing a great job on continuing what growth and what opportunity exists in their communities,” she said.

About 200 attendees tuned in to listen as Buckeye Mayor Eric Orsborn and Tempe Mayor Corey Woods talked about their unique challenges and what the future holds.  

Here’s what they had to say:

Buckeye: could rival Phoenix in population one day 

Buckeye’s biggest challenge is keeping up with explosive growth, Mayor Orsborn said.

For 20 years it has been spreading like wildfire, topping national lists year after year for its percentage growth increase  Currently, Buckeye is the second fastest growing city in the U.S., according to the U.S. Census Bureau.

It is also one of the largest in terms of land mass, stretching nearly to Wickenburg on the north and to Gila Bend on the south. In comparison, Phoenix encompasses 517 square miles. 

“Growth and Buckeye are synonymous and that will continue to be so for decades to come,” Orsborn said. 

Currently, Buckeye has almost 100,000 residents. By 2040, it’s predicted to reach 300,000. At ultimate buildout, it could house 1.5 million residents. 

Monster master planned communities rising up 

Most of the development in Buckeye has been housing. Single family homes, largely in large have been cropping up. Communities like Douglas Ranch, Sundance, Tartesso, and Festival Ranch are under construction or breaking ground soon. 

alone is 53 square miles — a little larger than Phoenix. At buildout, it will be home to about 300,000 residents with an economic impact of around $60 billion.

Commercial and industry are arriving, including that have easy access to freeway interchanges heading in all directions, the CANAMEX Corridor, and Buckeye Municipal Airport. Companies like Walmart, Cardinal IG and Five Below. Other businesses and schools are coming in like Wells Fargo, Chase Bank, Banner Health, and Great Hearts Academies. 

More businesses needed to serve population, create jobs 

With the housing boom, the biggest challenge is keeping up, Orsborn said. Water infrastructure, water resources, transportation infrastructure, and city services like fire and police are top priorities. 

The city also needs more business to serve the burgeoning population. When compared to other cities, Buckeye has about a third of the retail per capita. Healthcare, education, grocery stores, sitdown restaurants, and retail are lacking. 

Industry is needed to create jobs for local residents, Orsborn said. 

“Ninety percent of our residents currently leave the Buckeye area and travel east on I-10 to jobs outside of Buckeye. We’re looking for opportunities for people to work in the community they live in.”

Meanwhile, with so much empty land, the city has the opportunity to grow the best it can be, he said.

Tempe: city on the lake focused on workforce housing, mobility hubs 

In contrast, Tempe relies on a large commuter population coming into the city to work, attend Arizona State University, or visit amenities like , said Mayor Woods.

Home to 54 million square feet of industrial and office space, Tempe is a net importer of jobs with top research firms, Fortune 500 companies and startups. Companies like Carvana, Norton, State Farm, Honeywell and Wells Fargo. 

While about 190,000 residents live within the city, the average number of people in the city on any given day is 320,000 with the influx, Woods said. With the economy reliant on incoming people, bringing them back after the pandemic is essential. 

“First and foremost our economic development priority is getting employers, employees, residents and visitors feeling safe and getting them ready to come back to work and play.”  

Mobility hubs make getting around easier for workers, residents 

Another key goal is to reduce traffic congestion and make travel within the city easier for residents and commuters, Woods said. 

“The ability to track and expand business is to make it as accessible as possible for employees to live and travel to their workplace,” he said. 

In that vein, Tempe is working to create a new system of where people can connect to multiple modes of transportation including transit to get to work, amenities or attractions. Hubs provide residents and visitors with more options besides single occupancy driving. A hub can span one, two, or few miles to provide on-demand travel choice for short trips around a community. 

Workforce housing to attract employees is coming  

Affordable workforce housing is another priority. An initiative, , was launched by Woods last year to accelerate housing affordability to create the next generation of affordable and workforce housing opportunities in Tempe. 

The fund already has $1.5 million and the city is working to buy and build its own affordable and workforce housing options. Funds are also being used to provide incentives for developers to build affordable housing, he said. 

“Accessible affordable housing and ease of mobility really are strategies that are key to growing our economy and sustaining the living, walkable and driving city that I and the entire city council see as our collective future.”

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Businesses and community leaders in Arizona’s historic “Copper Corridor” are calling foul on the U.S. Department of Agriculture (USDA) for its recent decision to rescind an important step toward completion of a land swap that is essential to the development of the mine. 

At stake are thousands of jobs in the struggling region, said Superior Mayor Mila Besich, who is trying to get the word out about how important the Resolution Copper Project is to the mining region.  

Besich said the unexpected setback came after years of negotiating in good faith with all concerned parties to address environmental and other community concerns. The copper mine, which has been working for almost a decade to get all permits in place, is projected to employ 3,700 workers and generate more than $1 billion in annual economic benefit when fully operational.  

“When the Resolution Copper project was introduced to Superior, it brought a glimmer of hope and opportunity to our small, close-knit community. Its predecessor, the Magma Mine, was shuttered in 1996 and opportunities were scarce for Superior to provide employment and business prospects for our diminishing population,” said Besich in a recent editorial in the .

“Arizona’s Copper Corridor is the equivalent of Yukon gold. Some of the richest and most accessible copper ore deposits are found here in eastern Pinal and southern Gila counties. Two of the three copper smelters left in the United States operate in our region,” said Besich, who also serves as executive director of the Copper Corridor Economic Development Coalition, a  region-wide private-public partnership to advance the economic and community development of Arizona’s mining country.

Huge global need for copper 

Having a steady home-grown copper supply will be a competitive advantage for U.S. manufacturing companies, said business and economic development groups who have worked through the process. Arizona stands to benefit tremendously. 

The mine will be one of the largest producers in the country. Copper is an essential component in mobile devices, medical equipment and clean energy technologies, and demand is growing worldwide. The World Bank estimates global copper demand could rise by 200 percent by 2050. 

“Mining belongs in this part of Arizona and it can be done responsibly while protecting the environment and the beautiful landscape that we love and cherish,” Besich said. 

Years of negotiation shot down under new administration 

At issue is a involving the Oak Flat area, which is considered sacred to tribes in the Southwest. To alleviate those concerns, the mine underwent seven years of negotiations with the tribes to put into place measures everyone could live with, Resolution Copper officials said. 

Several changes were made to the project as a result, including permanent protection of natural features of the Apache Leap cultural and recreational area and a partnership to protect Emory oak tree groves in the area. 

The land exchange legislation allows for the exchange of 2,422 acres of land above the copper deposit for 5,459 acres of Arizona land owned by Resolution Copper that will become public land.

In January, the mine was notified that the U.S. Forest Service the land swap in its final environmental impact statement. A 45-day review was to follow. But when President Joe Biden took office, the USDA announced it was rescinding the environmental impact statement, halting the objection phase, and revoking the land swap. 

USDA wants another “thorough review”

In a , the USDA said it is requiring the project go through another “thorough review” with all parties involved because of a new Presidential Memorandum involving tribal relationships. The memorandum refers to ensuring that the Forest Service “has complied with the environmental, cultural, and archaeological analyses required,” the USDA stated. 

But company officials said they already have engaged all parties “every step of the way.”

The Forest Service, the lead agency charged with overseeing the federal approval process, spent nearly a decade gathering insights from local leaders, Native American tribes, NGOs, community organizations and businesses, company officials said.  

“Simultaneously, Resolution Copper participated in hundreds of other conversations and engagements, including numerous community working groups, to collect the input that continues to shape the project,” the company said in a prepared statement. 

Voices in support of Resolution Copper 

Business and community leaders including Governor Doug Ducey have issued public statements protesting the action. Here are some of their voices:  

Gov. Doug Ducey

“I am extremely disappointed in the Administration’s decision to cease progress on Arizona’s Resolution Copper project, which is set to grow jobs and is estimated to create a direct and indirect economic impact of more than $1 billion to Arizona’s economy every year,” Ducey . 

“An effective and predictable regulatory environment is a critical factor in Arizona’s booming economy. In Arizona, we follow what works. Undoing lengthy, comprehensive, and already-completed federal environmental studies on a whim with the changing of federal administrations doesn’t work. This type of activity threatens an untold number of major projects in Arizona and around the country.”

Pete Rios, former vice chair, Pinal County Board of Supervisors

“As Pinal County District 1 supervisor and a native to the Hayden-Winkelman area, I am extremely familiar with copper mining — both the opportunity it represents and its legacy,” . “I know the Resolution Copper project and the enormous opportunities a project like this can unlock for Pinal County. I think you’ll agree, as I do, that Resolution Copper is good for Arizona and good for the people of Pinal County.”

Garrick Taylor, interim president, Arizona Â鶹´«Ă˝Ół»­ of Commerce and Industry

“The Forest Service conducted its work with transparency and with a genuine commitment to public engagement. This will be a tremendous job creator. Not only will Resolution Copper be a major employer, but it will lead to construction activities and new commercial development such as housing, hotels and retail. What’s more, we know from the Environmental Impact Statement that it will be a safe, environmentally responsible project that will help meet the ever-growing demand for copper.”

Jacob Evenson, Boilermakers Local 627, business manager

“Throughout this process, Resolution Copper consulted with multiple tribal nations throughout the state of Arizona. Hundreds of our Boilermakers that are also tribal members have been at the table helping shape the vision of the Resolution Copper mine. To have a clean energy revolution, we need copper to power our windmills, move electric cars, and operate solar panels. We demand the USDA reissue the Final Environmental Impact Statement without delay and continue progress towards construction.”

Mike Oddonetto, Oddonetto Construction, Inc., Globe

“Resolution Copper has been an important source of business for my firm over the past year, enabling us to expand our own , and I look forward to continuing to work with the company to grow our business.”

Rich Nolan, president, National Mining Association  

“The mining industry stands ready to support the Biden administration’s aggressive plans for electrification and modernizing our nation’s electric grid – actions that will require massive amounts of copper and other mined materials – but it is imperative that our permitting processes proceed in a timely manner to support those goals.”

By the numbers: new jobs, tax revenues, industry 

Resolution Copper is considered one of the most significant private investments in Arizona history, developing one of the world’s largest untapped copper deposits in Arizona’s Copper Triangle. 

Economic impact studies show that once in operation, the mine would:

• Supply up to one-quarter of the nation’s copper demand and produce up to $61 billion in economic value for Arizona over the 60-year life of the project.

• Create approximately 3,700 jobs with 1,500 direct employees and 2,200 indirect and induced jobs. Employees will be paid approximately $134 million in wages and benefits per year. Approximately 600 employees and contractors are already on site. 

• Generate between $88 to $113 million in state and local tax revenue each year. An additional $546 million will be spent annually in goods and services from local businesses.

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Arizona currently has the highest population growth rate in the United States and has the third-highest population growth since 2010, according to 2020 census data. Arizona is also currently ranked 4th in the U.S. for GDP growth per year. Further, when measuring chained GDP (GDP growth measured over multiple years and adjusted for inflation) over the past 50 years, Arizona has the second-highest percent growth within the United States, trailing closely behind its neighboring state Nevada.

As Arizona forges ahead at the forefront of technological development, medical advancement, aerospace, research, and mining and minerals, experts ponder if the state is emerging as a national economic powerhouse or if the growth will be short-lived.

Arizona’s economic fundamentals

Arizona’s economic origins are most commonly organized into the five C’s: Copper, Cotton, Cattle, Citrus, and Climate. 

The production of copper, an essential mineral for growth sectors such as construction, manufacturing, and tech, over 6 of the 14 billion dollars produced by Arizona’s mining industry.  

The United States is the copper producer in the world and Arizona is responsible for over of American production. During the Second World War, Arizona’s mining industry was called upon in order to facilitate the manufacturing of weapons and defenses integral to victory in the war.

This precipitated a momentous shift in Â鶹´«Ă˝Ół»­anufacturing. After 1950, the manufacturing and service industry the economic output of the mining industry in the state, taking Arizona in a new direction by connecting the state’s economy to the service industry. 

Recent shifts

Harvard professor Michael Porter that in order to predict and determine economic growth as well as an increase in the standard of living, one must examine the change and continuity of economic clusters throughout the history of a state. 

Economic clusters, defined as a dense network of companies and institutions in a certain geographic sphere, succeed, according to Porter, when the private and public sectors invest in them and establish policies and partnerships that are conducive to their growth. This leads to job creation and expanded economic output.

Comparing the most prominent economic clusters from the 1950s to Arizona’s present helps to illustrate how Arizona has become one of the fastest-growing and most competitive states.

The clusters of innovation concept represent a new way of thinking about the economy and have begun to take hold as communities across the nation look at theof California’s Silicon Valley and Massachusetts Route 128. What Arizona has done so far is managing to develop new economic clusters while sustaining traditional economic clusters like mining and manufacturing. 

Arizona’s Most Important Clusters

The most heavily traded clusters in Arizona include aerospace and defense, business services, metal mining, medical devices, and communication services. 

The aerospace and defense cluster offers the state a in the manufacturing of aircraft and research and development. Employing 52,000 people directly with an average salary of more than double the median salary in Arizona, the aerospace and defense industry has proven to be an extremely important economic cluster for Arizona. Leading international companies like Northrop Grumman, Honeywell, and Boeing’s investment in the state also contribute to other industries that support manufacturing. However, such an economic cluster requires an extremely innovative workforce.

An Innovative Workforce and Research and Development

Universities in Arizona are also a major part of the equation that can help one to understand Arizona’s fast-growing economy. 

“Research universities act as magnets for businesses that seek the talent they produce and benefits derived from the innovations and creative activity underway,” says Dennis Hoffman, economics professor and associate dean for research at the W. P. Carey School of Business. Besides employing more than 50,000 people directly and indirectly and providing more than $2 billion in wages annually, ASU serves as a huge hub for research and development.

Hoffman also explained in that “University R&D acts as a catalyst for private activity. Trace the paths of the most successful entrepreneurial ventures and you are likely to find that research university connectivity played an important role.” 

The University of Arizona, Northern Arizona University, and Grand Canyon University have also emphasized the role of academia in fueling research and development. 
The University of Arizona is among the top 20 U.S. public universities for research expenditures, and their Office for Research, Innovation, and Impact topics ranging from augmented reality to “the fusion of the digital, physical and biological worlds”.

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