'Green' bill signed by Brewer could have negative effects here
KINGMAN - Mohave County could see a cut in property tax and income tax revenue from renewable energy manufacturers looking to move into the area.
On Monday, Gov. Jan Brewer signed into law a legislative bill that would provide income and property tax incentives to businesses that manufacture items for renewable energy facilities, such as solar plants.
According to the bill, businesses building or expanding their headquarters or manufacturing facilities in the state would be eligible for an income tax and/or property tax credit.
The bill goes into effect starting Jan. 1, 2010, and ends Jan 1, 2016.
It could drop tax revenue local governments receive from state-shared revenues and property tax, according to a financial analysis completed by the Arizona Senate.
The Board of Supervisors voiced their opposition to tax incentives with a resolution to the Legislature in June.
"You just can't control what goes on in Phoenix," said Board of Supervisors Chairman Tom Sockwell.
Mohave County has one of the best places for solar energy and it doesn't need tax incentives to bring these businesses in, he said.
"I wonder if they're (the Legislature) aware of how badly these groups want to come here," Sockwell said. He has a feeling that Maricopa or other counties in the state may be trying to encourage solar development in their areas and this may be a way to do that.
"I'm really disappointed," said Supervisor Gary Watson. "This is very short-sighted by the Legislature. It does nothing for the county."
While he was in business, he never got tax breaks or incentives for anything, why should one business get a tax break or incentive while others do not, he said.
The whole incentive program is a bad idea and just continues the Legislature's bad budgeting practices, Watson said. It'll mean less tax revenue for the state and the local governments.
"No one down there (Phoenix) wants to bite the bullet with the budget," he said. "It's very discouraging."
Supervisor Buster Johnson said he would not support businesses looking to move into the county with the help of the tax incentive program. "We have a limited amount of taxable land," he said.
The Bureau of Land Management and the state own a lot of land in the county.
It's not fair that homeowners, who pay their property taxes, would have to subsidize businesses that do not, Johnson said.
"Phoenix is pushing this," he said. If the Legislature wanted to create a special enterprise zone or allow counties to decide if they wanted to offer incentives or not that would be one thing, he said.
"This is very short-sighted by the Legislature," Johnson said. "How am I supposed explain this to a business that's been here for 20 or 30 years?"
"I thought it was a bad idea," said State Sen. Ron Gould. The incentives would shift the tax burden from one business to another. He would rather lower tax rates for all businesses, he said. "I didn't vote for it," said Rep. Nancy McLain. She is open to making Arizona tax friendly to businesses, but it has to be for all businesses.
She also received word that the Board of Supervisors had voted unanimously against the incentives and wanted to support the Board.
She is glad that the technology is being developed, but she didn't think the U.S. was at the point where it was necessary to make the switch to renewable energy. There is still plenty of coal, oil and other energy resources, McLain said.
"I don't understand the need for a tax incentive," she said.
Rep. Doris Goodale also voted against the incentive program. She thought it was a new style of incentive program that might be a good idea, but when the Board voiced opposition, she took a closer look and voted against it.
According to the bill, in order to be eligible for the income tax credit, a business would have to create one and a half new, full-time job openings for every $500,000 in interest capital at a manufacturing facility, according to the bill. It would have to create one new full-time job opening for every $200,000 in interest capital for a business headquarters.
The company would have to pay 51 percent of its new employees a wage that was 125 percent more than median annual wage in the state and 80 percent or more of a new employee's health insurance premium. According to a financial analysis from the Legislature, the median annual wage in Arizona is currently $38,662. The company must also stay in business in the state for at least five years after receiving approval for the tax credit.
The income tax credit for the program is capped at $70 million annually. It is only available to businesses for the tax years 2010-2014.
The bill also allows businesses to drop from a class 1 to a class 6 property tax bracket. According to the legislative financial analysis, that's a drop from a 22 percent full cash value assessment to a 5 percent full cash value assessment.
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