By Farrell Quinlan

The 50th Arizona Legislature has boldly staked its claim to being the most pro-small business legislature in Arizona’s history. With issue after issue, legislators advanced measures to relieve the tax and regulatory burdens on the engines of our economic recovery, Arizona’s small businesses.  Even in instances where lawmakers mistakenly pursued bad policy, they did so with the right motive in mind—creating more jobs.

Here are 2011’s top ten legislative victories for the small business:

1. Broad-based Business Property Tax Relief – Passage of then-House Speaker Kirk Adams’ “jobs bill” (HB 2001) included historic business property tax relief that when fully implemented will mean a 28 percent reduction in the business property tax assessment ratio over the preceding decade. Our business property tax burden was the fourth highest in the nation back in 2006 when we began to lower the Class 1 assessment ratio from 25 percent. When the 18 percent Class 1 ratio is realized in 2016, Arizona’s business property tax burden will have settled into the low- to mid-20’s ranking among the 50 states. Truly historic. Moreover, Governor Brewer’s courageous veto of SB 1041 upheld the principle of broad-based business property tax relief over the allure of constitutionally-dubious schemes that pick winners over losers in the tax code.
2. Corporate Income Tax Rate Cut – The “jobs bill” was so monumental this session; it easily earns the top two positions on this list of small business victories. HB 2001 also slashes Arizona’s corporate income tax rate 30 percent to 4.9 percent when it’s fully phased in by 2017. We should not discount the enormously positive signal this sends to out-of-state enterprises looking to relocate to more business-friendly states. Our corporate income tax and business property tax rates are no longer in question due to our protracted budget crisis. Instead, Prop. 108’s protection against tax increases effectively locks in not only stable and predictable rates—it locks in significantly lower rates. That’s the best economic development tool we could create to spur the strong, broad-based economic recovery that we are all looking to achieve.
3. Health Savings Account Incentives – House Majority Leader Steve Court’s HB 2556 creates income tax credits for small businesses for the premium paid on a high deductable health plan and for contributions to employees’ health savings accounts. 
4. Local ‘Bounty Hunter’ Audit Ban – Sen. Steve Yarbrough’s SB 1165 reverses the emerging trend of cities contracting with ‘bounty hunter’ auditors on a contingent fee basis to audit businesses collecting sales tax receipts.
5. City & County Regulatory Bill of Rights – Sen. Lori Klein’s SB 1598 establishes a Regulatory Bill of Rights to ensure fair and open regulation by local governments.
6. Union Preference Prohibition – Rep. Michelle Ugenti’s HB 2644 prohibits state entities, counties, cities and towns from accepting federal money for a construction project if accepting it requires them to give a preference to union labor.
7. Employer Protections & Labor Relations – Sen. Frank Antenori’s SB 1363 restricts unlawful picketing, trespassing and defamation by labor unions against a business.
8. Tax Closing Agreements Reform – Rep. Jack Harper’s HB 2202 enhances the criteria for declaring an ‘affected class’ for the purposes of determining whether an extensive misunderstanding or misapplication of Arizona tax laws has occurred—thereby allowing for the abatement of past tax liability, interest and penalties.
9. IRS Conformity Policy – Rep. Harper’s HB 2332 waives any interest or penalties for unpaid tax liability due when the state fails to conform to revised definitions in the Internal Revenue Code in time for the taxpayer to accurately file their annual tax return.
10. Civil Appeal Bond Limits – Sen. Al Melvin’s SB 1212 provides some relief for businesses in civil lawsuits by limiting the amount of the bond that must be posted against a judgment during the appeals process.

Though this list could go on listing other wins in areas like workers’ compensation reform and returning solvency to our unemployment insurance trust fund, it should be noted that the 2011 session included its share of disappointments.

Sen. Antenori’s SB 1322 would have required most municipal services in Phoenix and Tucson that cost more than $500,000 to go through an open and competitive bidding process. Sen. Nancy Barto’s SB 1593 would have allowed healthcare insurers from any of the 50 states to issue their policies in Arizona under the same coverage terms as in their home state. Unfortunately, both were vetoed by Governor Brewer. The Legislature also failed to act on a referendum to increase the exemption amount on the business personal property tax, a job-killing tax that punishes small businesses for reinvesting in machinery and equipment to grow their businesses.

Still, these setbacks cannot diminish the 50th Arizona Legislature’s overwhelmingly positive record on small business issues. The 7,500 Arizona members of the National Federation of Independent Business thank Governor Brewer and our lawmakers for this session’s impressive achievements on behalf of small business and look forward to building on them next year.

 – Farrell Quinlan is state director for the National Federation of Independent Business in Arizona (www.nfib.com/az). 

Click here to access the NFIB/Arizona Voting Record to see how your lawmakers voted on these and other bills.