Tax cut package falls apart on Senate floor

2010-04-28T05:00:00Z Tax cut package falls apart on Senate floorHOWARD FISCHER Capitol Media Services Arizona Daily Sun

PHOENIX -- Arizona businesses won't be getting tax breaks this year.

Senate President Bob Burns, R-Peoria, said Tuesday a last-ditch effort to reach a compromise over a House-passed package of tax cuts fell apart.

Burns said he can't sell Senate Republicans on even a scaled-back compromise offered by House Speaker Kirk Adams, R-Mesa, to phase in what eventually would cut taxes by $650 million a year by 2019.

At that point, House Speaker Kirk Adams, R-Mesa, decided to pull the plug on HB 2250, which he called the best hope for the state to create new jobs. Adams said he already had compromised and was unwilling to give up any more.

"He feels like that if he can't get the entire package (of tax cuts) it won't be effective," Burns said of Adams. "I couldn't deliver the entire package," the senate president continued. "So he said, 'Let's quit.'"

That move provoked an angry reaction from some senators.

"It comes across as a petulant, immature teenager who says, 'I'm going to take my ball and go home," said Sen. Carolyn Allen, R-Scottsdale.

Allen said the chances for a deal were still possible when Adams killed his own measure "if cooler heads could prevail."

"But, no, he has to have it all," she continued.

That's also the assessment of Gov. Jan Brewer. The governor said Tuesday she offered a tax cut package of her own, albeit a much smaller one: It had a price tag of just $47.5 million.

"The speaker does not want to compromise," the governor said on Horizon, a public affairs show on KAET-TV, the Phoenix PBS affiliate. "It's either all of it or none of it."

Adams, however, puts a different spin on the situation.

He pointed out the plan passed by the House had what eventually would amount to $950 million in tax cuts. Adams said he agreed to a smaller plan, with most of the tax cuts deferred for years. "There was compromise, significant compromise, all in one direction," he said. At this point, Adams said, there's not enough left to make the dent he had hoped in the state's jobless situation.

The problem, he said, is a "philosophical issue with tax reductions" among many Republican senators. Adams said it didn't matter how much more he would have compromised.

"That probably is a bridge that we just can't build together," Adams said.

What may have been the final stake through the heart of his plan was Brewer's decision to oppose it. Instead, months after the House had approved the package, she responded with her own plan -- one missing the key elements and cutting taxes by a much smaller amount.

The speaker said that some members of his caucus feel politically betrayed. He said they voted for Brewer's proposal to ask voters for a three-year hike in state sales taxes, a package that, if approved next month, would raise $3 billion over its lifetime.

"The governor's sales tax proposal never would have gotten out of the House were it not for the jobs bill," he said. "It was an expectation."

But Brewer said now is not the time for tax cuts, especially big ones.

"We just can't afford it," the governor said. Brewer also said there was a political timing problem with the speaker's plan to sharply cut business taxes: It was being pushed even as Brewer hopes to convince voters to pay more every time they buy something.

Central to HB 2250 is Adams' premise, based on an economic study, that the state needs a more business-friendly climate to attract and retain jobs. Adams specifically sought to diversify the economy to move it further away from construction and growth.

The compromise package included a 28 percent cut in corporate income taxes and various changes in how some companies compute what they owe the state. It also scrapped the state property tax and shifted the cost of future local government and school district bond issues and overrides from businesses to homeowners.

That stalemate over HB 2250 also likely means lawmakers will not approve a proposal by the governor to abolish the state Department of Commerce and replace it with a quasi-public agency known as the Arizona Commerce Authority focused exclusively on economic development.

Under her plan, the authority would be governed by a board of directors, with the governor as its chair and 14 chief executives, business, education and community leaders making up the rest of the panel.

Brewer said the Department of Commerce has been ineffective in promoting economic development. She said part of the problem is political: The agency since its inception has been headed by gubernatorial picks, often times a political ally of the governor rather than someone with a business background.

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(1) Comments

  1. JeffJJ
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    JeffJJ - April 28, 2010 4:02 pm
    Do tax cuts really stimulate the economy and provide jobs? In the past ten years the legislature has cut taxes repeatedly. So where are the jobs? Phoenix, the 5th largest metropolitan area in the US, hasn't got a single Fortune 500 company headquartered there. Our state's economy is based on call centers and home building. Those industries only provide low wage jobs. I think the real solution is to invest in schools to develop an educated work force that attracts good jobs to our state.
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