PHOENIX -- Gov. Jan Brewer said Monday she wants more tax cuts to lure business here even before the ones approved last year have had a chance to take effect.
In her State of the State speech, Brewer said Arizona is on the mend. The state budget is balanced and more money is flowing into the treasury than paid out for services.
"Too many Arizonans remain unemployed or underemployed,'' the governor said.
"This economic downturn has been tough for them and their families,'' she continued. "I haven't forgotten about them.''
The answer, Brewer said, is luring more firms to the state. And that means enacting even more tax cuts than the $538 million package of business tax reductions approved last session which, phased in over several years, will cut corporate income taxes by nearly 30 percent and business property taxes by 10 percent.
"Together, just like last year, let's continue to lower taxes, cut regulation and tell all employers that Arizona means business,'' the governor said. "We need to make Arizona the free-market beacon to the nation and the world where you have the opportunity to prosper.''
But Brewer's whole premise drew derision from Senate Minority Leader David Schapira. He said Arizona has a balanced budget not because of better economic development but because the state slashed aid to schools and health care for the poor.
House Minority Leader Chad Campbell said there's nothing wrong with wanting to restructure the state tax code in a way that makes Arizona more attractive to business. But he said that cannot be done in a vacuum.
Campbell said he proposed lowering the corporate income tax rate last year, though not by as much as the Republican-controlled Legislature eventually approved. He also sought to eliminate entirely the annual tax that businesses pay on the value of their machinery and equipment, something not in the adopted GOP plan.
"But I paid for them'' by closing other tax loopholes, he said. "That's the difference: You have to pay for your tax cuts.''
He said there is no way the state can create enough jobs to make up for the amount of money lawmakers already have voted to forego.
But House Speaker Andy Tobin said he believes that tax cuts, by themselves, do work. He said the jobs added in the last year prove that.
"Clearly, our recovery has already started,'' he said.
"The businesses are seeing consistency,'' Tobin continued. "They're seeing a great opportunity here where this Legislature's going to help them.''
The speaker said it is "a good time to review and see if there's maybe more we can do for them.''
Tobin also disagreed with Campbell's assessment about whether those tax cuts pay off. He said every 1,000 jobs created generates $1 million in income in state tax revenues.
It will take a lot of jobs, though, to get Arizona back to where it was before the recession. The most recent figures show the number of people working in the state now is nearly 269,000 less than it was at its peak in December 2007.
Brewer provided no specifics of exactly where she wants to cut taxes, promising more details later this week. She did say, though, she wants to "aid small businesses by simplifying the state tax code.''
One possible change involves a provision in state law which allows businesses to reduce the amount of profits reported on their income taxes by the amount of money they have lost in the past five years. The Arizona Chamber of Commerce and Industry is pushing an alternative which would allow losses to be carried forward to offset profits for up to 20 years, a move that could mean big future breaks for some new start-up that have been unprofitable as well as companies that lost money during the recession.
Campbell said with the state currently running a surplus, this is a good time to restore some of the cuts made in the lean times.
He acknowledged one reason the surplus exists is because voters approved a temporary one-cent hike in state sales taxes. That levy, which brings in close to $1 billion a year, is set to expire May 31, 2013. And Brewer repeated Monday that the tax self-destructs, with or without legislative action.
But Campbell said there are some one-time things the state could do with the money.
He pointed out lawmakers have not allocated any cash for major repairs to public schools for several years. Campbell said funding that program would not only make schools safer but generated much-needed construction employment.
Brewer, in a separate package of priorities released after her speech, also said she will spur economic development through creation of a community college scholarship program to help adults retrain and transition into new careers, and a requirement that individuals enrolled in tax-funded job-training programs undergo drug testing.
The governor also boasted about the fact that the temporary one-cent sales tax she convinced voters to enact in 2010 will disappear at the end of May 2013. Brewer said that shows voters she is keeping her promise.
But there actually is less to that promise than meets the eye.
The ballot initiative was crafted as a constitutional measure, with a specific three-year life. That means it automatically self destructs, with or without legislative action.
There has been some discussion about a new tax among groups concerned about the loss of the approximately $1 billion a year the levy raises. But that would require an entirely new vote.
Brewer has so far been noncommittal about whether she would support such a levy.
But the governor made it clear she does not believe that, with a recovering economy, the state budget should go back to where it was before the recession -- and before many state programs were scaled back or eliminated entirely. Instead, she promised a "refashioned government.''
"It will be a limited, efficient, nimble government,'' Brewer said. The governor specifically pushed for "personnel reform that improves the management of workforce, restructures the grievance and appeal system, and modifies human resource practices.''