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Proposition 116 supporters say it would spur hiring

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Thursday, Oct. 4, 2012
By Sarah Pringle
Cronkite News

PHOENIX – Easing property taxes businesses pay on everything from milling machines to restaurant silverware would help create jobs across Arizona, supporters of Proposition 116 say.

Under current Arizona law, equipment or machinery owned by businesses is subject to an annual property tax, with the first $68,079 of value exempt.

If voters approve Proposition 116, the exemption for items acquired during or after the 2013 tax year would rise to an amount equal to the annual earnings of 50 workers in the state – estimated at $2.4 million.

“It would serve as a great signal that Arizona is open for business,” said Farrell Quinlan, Arizona director of the National Federation of Independent Business, which pressed for the legislation referred to the ballot.

“What kind of business does it impact? It’s manufacturing,” Quinlan said. “And that’s the kind of business we want here. It keeps us in the global economy.”

A group registered with the Secretary of State’s Office as Vote Yes on 116 had raised $28,150 through Sept. 17, $20,000 of it from the National Federation of Independent Business.

Doug Click, chairman of Vote Yes on 116, is president of Arizona Hi-Lift, which sells and rents machinery and equipment. He said a lot of out-of-state businesses looking to expand have turned elsewhere because states like Colorado, California and Texas don’t have this tax.

The higher tax exemption would put Arizona in a better position to compete, Click said.

“What’s good for other businesses is good for my business,” Click said. “It’s a big circle and right now the circle’s kind of small.”

There is no organized opposition to Proposition 116.

Bryon Schlomach, director of the Center for Economic Prosperity at the Goldwater Institute, an independent watchdog group that promotes limited government and free enterprise, said the change would help Arizona become more of a small business incubator.

“That’s ultimately where we generate our standard of living, our prosperity,” Schlomach said.

Garrick Taylor, spokesman for the Arizona Chamber of Commerce and Industry, said Proposition 116 wouldn’t jolt the tax system.

“It’s just a move that makes sense to strengthen the state’s economy,” he said. “If you ask any voter what the No. 1 issue is, jobs and the economy keep popping up.”

A report by the Joint Legislative Budget Committee estimated that the cost to homeowners of making up for revenue lost under Proposition 116 would be negligible – about $3 a year for a homeowner in the Mesa Unified School District, for example.

Edward Perkins, an analyst with Arizona State University’s Morrison Institute for Public Policy, said the legislation behind Proposition 116, which passed unanimously, was a “rare display of bipartisanship”.

“The hope is it will create more jobs,” Perkins said. “‘What’s not to like?’ That’s been the bottom line.”