The year 2021 is in its final hours. Before we ring in a healthier and more prosperous 2022, here are my top-10 business and policy stories of the year that was: 

1.      Once-in-a-generation tax reform 

Staring down the potential imposition of one of the nation’s highest individual income tax rates, the state Legislature and Gov. Doug Ducey worked to ensure that Arizona’s tax environment remained one that attracts job creators and creates economic opportunity. Together they passed a $1.3 billion tax cut package that delivered a 2.5% flat income tax rate. But they didn’t stop there. They also reduced the commercial property tax assessment ratio from 18% to 16% over four years, and they adopted an alternative small business tax filing option. Combine these reforms with the state Supreme Court’s ruling in August that Proposition 208 – the measure that sought to jack-up Arizona’s top income tax rate by nearly 78% – was unconstitutional, and 2021 was a very good year for taxpayers. 

2.      Record jobs recovery

Proving that public policy matters, few states bounced back from the pandemic-induced downturn like Arizona. We in August from the Arizona Office of Economic Opportunity that Arizona had recovered 100% of the private sector jobs it had lost since April 2020, the third-fastest recovery in the country. By November the state had recovered more than 100% of all jobs lost, and saw one of the country’s largest month-over-month unemployment , resulting in a 4.7% unemployment rate, the lowest in more than a decade.  

3.      Arizona one of tops in the nation for in-migration

Americans vote with their feet. The world’s freest people can rent a U-Haul and choose anywhere in the country to call home. In 2021, Americans , making the state one of the four largest population gainers and one of the top-3 in total net migration gains. When the Â鶹´«Ă˝Ół»­ and our colleagues in the business community evangelize about the power of free-market policies, this is what we’re talking about. 

4.      Intel’s record investment 

Intel in March announced its plans to construct two new fabs at its Chandler Ocotillo facility, representing a $20 billion investment, the largest in state history, which will result in 15,000 local long-term jobs. Not only is the investment huge, but it solidifies Arizona’s place as the hub for the jobs that will define the next decade and beyond. Forbes rightly referred to Arizona as “.”&˛Ô˛ú˛ő±č;

5.      Next generation manufacturing 

That Intel investment is just one example of the way Arizona’s reputation for next-generation manufacturing grew in 2021. The stories were frequent and plentiful. ElectraMeccanica that its 235,000-square-foot manufacturing facility will be rolling by next summer and that its Solo electric vehicle is undergoing validation . KORE Power that it’s bringing a first-of-its kind lithium-ion battery manufacturing facility to Buckeye. Lucid Motors the official start of production of their vehicles at the company’s Casa Grande facility, and the Lucid Air model Motor Trend’s Car of the Year Award. Nikola its first Tre battery-electric vehicle (BEV) pilot truck fresh from its Coolidge plant. These are the types of headlines that make other states green with envy and they’re the jobs that will power the economy for years to come. 

6.      Liability protections

The Legislature and Gov. Ducey passed and signed into law , legislation that establishes commonsense liability protections for health care providers, businesses, schools and universities, non-profits, and government entities that are taking responsible steps to prevent the spread of the virus. The bill was good news for businesses getting back to some semblance of normalcy without having to worry about the threat of abusive litigation. 

7.      Nationally recognized vaccine rollout, new therapeutic innovations

It was a year of vaccines and therapeutic innovations as Arizona did its part to take down the pandemic. The White House Arizona’s fantastic mass vaccination site at State Farm Stadium, and the Ducey administration and county health departments rolled out additional sites across the state, ensuring any Arizonan who wanted the lifesaving jab could get it. Arizona Â鶹´«Ă˝Ół»­ members were often behind the scenes, mobilizing their workforces to volunteer at the sites and keep them humming with remarkable efficiency. And credit to our nation’s pharmaceutical innovators, who not only developed the vaccines in record time, but who have also game-changing antiviral pills that will keep Covid-positive cases out of the hospital. These companies and our nurses, doctors, and other healthcare professionals will make 2022 a brighter one. They deserve our sincere thanks. 

8.      Regulatory modernization

More red tape got cut in 2021 to meet the moment we’re living in. Ensuring we can get with our takeout orders might not seem like a big policy innovation, but the bipartisan effort demonstrated Arizona policymakers’ willingness to ensure that our regulatory environment makes sense in the face of changing times. The Legislature and governor also the disincentive for businesses to appeal negative state agency decisions by making the attorney fee recovery statute for non-tax administrative action consistent with regular tax appeals, and they raised the aggregate cap on reimbursed fees. I’ll admit it’s the kind of in-the-weeds regulatory reform that might not have been splashed on the frontpage, but it makes Arizona a better state to do business.  

9.      Build Back Better bites the dust

The massive domestic spending bill that President Joe Biden made a centerpiece of his 2021 domestic agenda fizzled out before the end of the year, which was good news for job creators and anyone worried about Jimmy-Carter-level inflation rates. But it wasn’t just the price tag of the tax increases and transfer payments – it was the rotten policy, with measures ranging from environmental regulations to giveaways to Big Labor and trial lawyers, to interference in drug pricing, all of which resulted in a bill so big and so bad that it deserved to collapse under its own weight. West Virginia Sen. Joe Manchin has gotten a lot of ink for his refusal to go along with the White House and Majority Leader Chuck Schumer’s artificial timeline for the bill’s passage, but Arizona Sen. Kyrsten Sinema deserves credit for her work to make a bad bill a little better. We need her and Sen. Mark Kelly to keep up the fight in 2022 if there’s an attempt to resuscitate this legislation.  

10.   PRO Act collapses

Arizona’s Sinema and Kelly stepped up big time in their refusal to sign on as co-sponsors to the Protecting the Right to Organize, or PRO Act, in 2021. The bill contained a litany of items on organized labor’s wish list, all of which would have driven a wedge between job creators and employees and sparked litigation and headaches. After a party-line vote in the House, things looked bleak, but Sens. Sinema and Kelly haven’t gone along, depriving Sen. Schumer of the 50 co-sponsors he says he needs to bring the bill to the floor for a vote. If the filibuster stays in place, the bill faces a rough road, but that’s a big “if,” and Schumer would love nothing more than an excuse to dump the filibuster and ram through the PRO Act as a standalone bill or stick it into Build Back Better. No matter the strategy, our senators have the power to stop it.  

That’s just a glimpse into the business and policy wins that defined a year with the potential for dozens more, on topics ranging from infrastructure to the job market to cryptocurrency and NFTs (to name a few). We at the Arizona Â鶹´«Ă˝Ół»­ are looking forward to 2022, which we’re confident will be another year of job creators, lawmakers of both parties, and the governor working together for a more economically vibrant and resilient Arizona. Happy New Year.  

Danny Seiden is president and CEO of the Arizona Â鶹´«Ă˝Ół»­ of Commerce & Industry

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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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On this week’s Total Spectrum Spotlight, Jay Timmons, President and CEO of the National Association of Manufacturers, joins Congressman Erik Paulsen to discuss infrastructure investment, the potential impacts of domestic and global tax reforms being considered, and why the Southwest U.S. is so appealing to businesses. They also touch on future workforce concerns, which the NAM hopes to address through its campaign, designed to connect emerging and displaced workers with higher paying careers in manufacturing.

Watch this space on Wednesday for the interview. 

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Maintaining Arizona’s reputation as a “go-to” state for businesses and expanding school choices for parents are top priorities for the new chair of the Arizona House Ways and Means Committee. 

Rep. Shawnna Bolick (R-Phoenix) is the new chair of the committee, which is important to business and industry, having jurisdiction over taxation and other revenue-raising measures. 

Bolick, who is the outgoing vice chair of the committee, spoke to Â鶹´«Ă˝Ół»­ about what she foresees as priorities in 2021.

As an advocate for small businesses, Bolick said she will continue to support legislation that is focused on lessening or eliminating taxes, attracting and keeping businesses, and helping companies still struggling from pandemic disruptions. 

“We’re discussing how we build our path forward to make sure Arizona remains a go-to state. I come from a mindset that we really need to reform the state tax code. It would be really ideal if we were a state without a state income tax state. Obviously, that will take a few steps to get there,” Bolick said. 

A school choice advocate, Bolick’s career includes consulting for nonprofits like the Alliance for School Choice, the Arizona Charter School Association and Arizona School Choice Trust. One of her top priorities will be making sure Arizona families continue to have many options for their children to give them the best education possible.

Lessening impact of new tax on small business top concern

As the legislative session starts this month, Bolick said her top concern is to find ways to reduce the negative impact on businesses from Proposition 208. 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, going 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 not only hurt Arizona’s small businesses — companies with 500 or fewer employees — but it could act as a deterrent for new growth, Bolick said. If measures aren’t taken to mitigate the damage, Arizona could become a “flyover state” for businesses looking for a new place to land. 

“I’m very focused on ensuring Arizona becomes a destination to capture businesses and individuals fleeing high tax states like California. I believe we need to make sure companies at least consider our state before they head to Texas or Florida to do business,” she said.

Bolick has been meeting with other lawmakers, business groups, taxpayers and other stakeholders taxpayers to find solutions. Some options include property tax relief for businesses, flattening tax brackets, and tax incentives. 

More education choices, more control for parents

Another top goal will be to expand education choices for families, whether they choose a charter, district, private, online, home school or other option for their children, she said. 

Covid-19 has highlighted the stark disparities among socioeconomic classes, she said.

Charter schools often have smaller class sizes and can be a better fit for some students.

“Obviously, affluent families have the means to enroll their kids in private schools and hire tutors,” Bolick said. “Lower income students need to have school choice options. I don’t think many even know they exist even though there’s a private school or charter school up the street that is open and has been open the entire semester.”

As a parent during Covid-19 school shutdowns, Bolick has seen firsthand how difficult learning has been for families. One option is to create more learning pods and where students can excel in small group settings, she said. 

“As a parent of two children, one in high school and one in college, I’m seeing exactly how they are learning and where they’re learning has truly changed.”

One benefit from the pandemic is the realization that children can learn anywhere, she said. 

“Fortunately, we reduced some of the regulatory barriers for online learning and now that districts and charters have an appetite for some of that, we might see some new models coming forth,” she said. “Kids can learn from anywhere now. It shouldn’t be relegated to one or two buildings.”

Expect legislation on initiative reform

Bolick also expects bills coming forth to reform the state’s ballot initiative process. 

In recent years, special interest groups and individuals outside of Arizona have waged expensive campaign battles to get initiatives like Proposition 208 passed, she said. Often, these campaigns are not fully thought out when it comes to what is best for Arizona. 

“Businesses are not going to keep coming here if we continue to allow out-of-state groups and individuals to basically run our state,” Bolick said. “I believe Arizona has so many untapped resources and so much potential, I want to make sure that we’re not getting in the way of growing business.”&˛Ô˛ú˛ő±č;

Public policy background   

Bolick is currently serving her second term in the state House of Representatives. Bolick graduated from Syracuse University’s Maxwell School of Citizenship and Public Affairs with a B.A. in policy studies. She completed her Masters of Public Policy graduate coursework from American University in Washington, D.C. She interned in the New York State Assembly one semester and later worked for former Texas Lt. Governor Rick Perry on his high-tech council.

Bolick also is an education advocate, having served as a member of the Arizona State Board of Education’s Academic Standards Development Committee as a public high school parent and as an appointee to Arizona’s Early Childhood Education and Health Board by Governor Doug Ducey.

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