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Republican Gov. Jan Brewer in her first one-on-one broadcast interview of 2011 said Wednesday that she knows the state needs a strong higher education system to help attract business.

Nevertheless, she said, the state doesn't have the money to expand the system. Instead, her budget for next fiscal year would impose a $170 million cut, 20 percent, on the three state universities, and a $73 million cut, or 45 percent, on the community college system.

"Education's been a No. 1 priority," Brewer said. Nevertheless, the universities and community colleges should have been prepared for the big cuts, because "they knew it was coming."

She said the proposed cuts are a change from the current fiscal year, in which federal stimulus money was used to shore up their budgets.

Brewer and the Republican-controlled Legislature pushed through $100 million in state funding cuts on the three universities for the 2009-10 fiscal year. Although funding didn't go down for the current fiscal year because of the federal stimulus money, the universities had to give up $10 million in state aid to get the federal money.

Tax cuts for businesses in the economic development plan that Brewer was expected to sign into law today would give them a $400 million a year break at full implementation, according to her office. The Joint Legislative Budget Committee estimated the reduction at $538 million a year.

She said a number of big businesses were "waiting in the wings" to set up shop in Arizona and create jobs, waiting for the tax cuts package and other incentives in the economic development plan. She declined to identify any of the businesses.


The structure of the new Arizona Commerce Authority is such that it will be in control of private businesspeople, while operating under the sanction of the state government. Gov. Jan Brewer is ceding her executive control of the old state Department of Commerce to the authority.

The authority will raise money from the private sector and have control over a number of significant financial tools, including a state-funded pool of up to $25 million that will serve as a "deal-closing" fund. It would help attract businesses to the state by offering incentives to get them to sign on.

Additionally, the authority will oversee the certification of tax-credit eligibility for businesses that create "quality jobs." The legislation defines such a job as one that pays more than the median income in the county where it is being created.

Businesses creating such jobs will be eligible for tax credits of up to $3,000 a year for three years for up to 400 new jobs.

A key question is how the members of the authority will avoid being in conflict of interest when they are considering the tax-credit certification for businesses that may themselves be investors in the authority.

Commerce Authority Director Don Cardon has pledged transparency and openness in operations. Brewer will need to assure state residents, including as it turns out several members of her own Republican Party in the Legislature, that the authority will operate totally above board.


Gov. Jan Brewer's economic development plan, manifest as SB1001 in a special legislative session, could see quick action with approval as early as Wednesday, some are saying.

The plan would reduce several business taxes -- including taxes on corporate income and property -- and offer tax and other incentives to attract business.

The proposal would give tax credits to companies creating "quality jobs", defined as jobs paying more than the median income in the county where it is created. For that, an employer would get a tax credit of $3,000 a year for three years for each of up to 400 jobs.

Corporate income taxes would decline from the current 6.9 percent to 4.9 percent in half-point increments for four years, starting in 2014. That would save businesses more than $200 million at current income levels.

Total tax savings for businesses at full implementation of the cuts would be $400 million by the governor's office estimate, $538 million by the Joint Legislative Budget Committee's estimate.

Brewer and legislative leaders say business growth stimulated by the cuts should help offset the tax revenue losses. They also say that the plan should help replace many of the 300,000 jobs that Arizona has lost in three years.

The state's unemployment rate was 9.4 percent in December, the last month for which statistics are available.

Economic Development,


Gov. Jan Brewer called the Arizona Legislature into special session this afternoon to take up her economic development package.

A news release from Brewer's office this afternoon gave these details on the business tax-cut package that is part of what she is calling "the Arizona Competitiveness Package," designed to stimulate job growth:

  • The creation of a Quality Jobs Program, with corporate tax credits of up to $9,000 for each qualifying new job. ($3,000 per job, per year, with a 400-job cap)

  • An increase in the electable state corporate income-tax sales factor to 100 percent, up from the current 80 percent. This will encourage firms to establish headquarters and manufacturing centers in Arizona.

  • Re-authorization of the Arizona Job Training Program, providing job-specific, reimbursable grants to train employees for new careers.

  • A four-year, phased-in reduction of the state’s corporate income tax to 4.9 percent, beginning in January 2014. This will give Arizona the nation’s fifth most competitive corporate income-tax rate.

  • A 10 percent increase in the state’s Research & Development tax credit, encouraging further collaboration between Arizona’s research universities and the private sector.

  • A 5 percent acceleration of the depreciation schedule for business personal property, spurring purchases of new equipment and other capital investments.


Arizona Gov. Jan Brewer announced her economic development plan today at the State Capitol, leading as expected with a package of business tax cuts.

The plan also calls for the legal trappings to change Arizona's Commerce Department to a private-public Commerce Authority to boost economic development and a "deal-closing" fund to lure businesses to the state.

A special legislative session will be called to allow the Legislature to focus on the plan and get it passed quickly.

The business tax cuts will include a reduction in the state corporate income tax by about 29 percent, elimination of the state tax on goods manufactured in Arizona but sold elsewhere, reductions in real estate and personal property tax rates for businesses and other tax-reducing steps. All would be implemented gradually beginning in about two years, taking full effect by 2017.

The Joint Legislative Budget Committee has estimated that a similar business tax-cut plan in the Senate would save businesses about $475 million a year when fully implemented.

Arizona Week will look at details of the plan throughout the week and on Friday evening's program. We are seeking interviews with the governor, with Arizona Commerce Authority Don Cardon and with an economist for analysis of the plan.

Arizona Commerce Authority Don Cardon tax-cuts,


The package of tax cuts working its way through the Arizona Legislature is important for business recruitment and retention, but no more so than maintaining a high quality educational system, says the head of Arizona's leading business organization.

Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, said in an interview today in Phoenix that executives of a lot of companies looking at Arizona will say that they like low taxes and little regulation, but that if the higher education system isn't top notch, "we'll send you a postcard from Alabama."

Hamer said Gov. Jan Brewer's economic development package, expected to be revealed as early as next week, will include important business tax cuts. He said just as important will be its enhancement of a new economic development arm, the Arizona Commerce Authority.

There's no way to tell how many jobs can be created as a result of attracting businesses to the state with the tax cuts, Hamer said, but he said it should make up for the 300,000 jobs lost in the recession over the last threee years.

He called elements of the tax-cut package "a game changer for us" in terms of attracting businesses.

Glenn Hamer,

About AZ Week Notebook

News and commentary from Arizona Week producer/host Michael Chihak and interns Melanie Huonker and Lucy Valencia.