Arizona Economic Development Can’t Seem To Get It Right

It looks like Arizona Legislature is trying to get business friendly.  I applaud that they are trying to do something.  I just think they don’t get it.  Why is this state hell bent on simply attracting a multi-billion dollar manufacturing/production facility of a multi-national corporation?  Don’t get me wrong we should be willing to do this.  However, this should not be our ONLY strategy as it is not fruitful long term.

The best way to build an economic base is to support the local companies that already choose to call this their home.  As they rise on the success scale they will give back far more to the community than a production plant of a foreign company that simply employs people here.  Most importantly the executives of a company take the lion share of the income generated.  Having those executives native and supportive of Arizona means that they will invest back in spades.  Simply look at the PayPal mafia model for how this works.

So while House Bill 2250 seems great to attract companies doing $150 million in construction and adding 150 jobs by cutting their property taxes from 20% to 1% for 10 years, it doesn’t help build the real future.  It really only helps deals that are already under way.  Instead let’s get serious.  Let’s cut property tax for ALL owner occupied arizona businesses  from 20% to say 10 – 15%. (Offset this by raising Residential Property taxes which are FAR TOO LOW)

If you must keep it to only those reinvesting dollars in a property.  Lets make it reasonable.  $250,000 (instead of $150,000,000) and employs at least 10 people.  Don’t cut it down to 1% instead cut it to say 10 – 15%.  If you want to be serious about the economy you have to be serious about small business.  End of story.

5 thoughts on “Arizona Economic Development Can’t Seem To Get It Right

  1. Tactics, tactics, tactics, tactics… and nowhere a strategy to be found.
    A huge problem (that I’m just now starting to really see) in AZ is that everyone wants their tactic. But just like it takes a village to raise a child it takes a strategy – employing a myriad of tactics – to create a new economy.
    Where is the human capital going to come from when our schools are shamefully underfunded and deficient? Where is the arts and culture we want in and around our businesses? Where is the cooperative spirit that celebrates the greater successes, not just our individual (or small group) success?
    AZ is mired in the frontier spirt – the myth of the rugged individualist – that makes us concern ourselves primarily with what is good for me and mine. It is mired in a battle of tactics – where every individual insists his or her tactic is the “one magic lever” that when pulled will create the vibrant growth economy we need.
    And it is all bullshit.
    If it were as simple as this tax break or that tax incentive AZ would already be a business Mecca.
    It is time we got serious and stopped advocating for our pet tactic and started advocating for a comprehensive ecosystem of tactics (some of which we may, personally, not like, not want to fund, and not have any use for) that will create an environment for sustained economic growth in Arizona.
    You can’t make bread without yeast… but you can’t make bread with JUST yeast either.

  2. I definitely think there needs to be a larger strategy. As I stated in this post it is not a matter of not recruiting larger businesses just that it can not be the ONLY tactic.

    You should know me well enough to know that I believe our current school strategy sucks and that I am a strong supporter of the arts and culture. Note, that unlike HB2250 I am suggesting that we raise property taxes, which compared to national averages are very low. To pay for schools, arts, culture, etc…

    I own a home. I don’t own business property (at this time). So I am actually advocating for things that don’t currently benefit me, but rather hurt me (economically).

    No one tactic will do it, but not implementing anything and just talking strategy just makes you “The Arizona We Want”.. :)

  3. My rant about tactics wasn’t directed at you – but more generally at the general content of the dialogue.

    I deplore endless efforts to craft the perfect strategy – and perhaps I should have used the word outcome(s) there. The important thing is to try a multitude of tactics that contribute to the desired outcome (even if we don’t particularly like the tactic)… Measure the results and double down on the ones that work…

    I thinks people like you and I need to resist the tactic debate and continue to point out (again and again) that it will take a myriad of tactics – and that there is no “magic lever”.

  4. […] about those same governments funding local business development.  I know I’m sounding like Derek Neighbors here, but it’s something that’s been bugging me. If cities put as many dollars into […]

  5. Arizona has long been business-friendly, so long as the business is real estate. But it has never been small-business-friendly. The only program Arizona has ever had that helped small businesses was the Job Training Act, funded by a tiny surcharge on unemployment payroll taxes. In its heyday, the tax generated $12 million, half of which was reserved for small businesses. Grants would pay for 3/4 of training costs for “net new” employees and 1/2 of training costs for existing employees. But it required a massive application and overwhelming administrative costs. So few small businesses applied and money reserved for small businesses was always left on the table at the end of each year. But no matter, because for three of the past four years the Republican Legislature has swept all the money out of the Job Training Fund, so no job training grants went to anyone.

    So now the Governor appoints a basic Blue Ribbon Committee to study ways to make Arizona more business-friendly. She appoints eight well-meaning and successful business leaders to the panel. Of these Committee Members, not a single one has ever worked for, much less led, a small business. They are all big-business moguls.They came up with a long list of suggestions that amount to privatizing the Arizona Department of Commerce. I don’t really know if a private Commerce Authority is a good idea or not, but the only recommendation to help small businesses was… wait for it… create a job training fund!