April 27, 2005
Arizona municipalities will have to work harder if they want to use tax dollars to lure major shopping centers, auto malls and other retail outlets.
On Monday, Gov. Janet Napolitano signed legislation introducing requirements for communities that want to offer sales tax rebates and other subsidies for retail businesses. City and town councils throughout the state will have to take two separate votes on a proposal, and spell out in writing how the project would generate more tax revenue than would be part of the subsidy. They also can no longer claim an emergency to prevent a voter referendum on a tax incentive package.
Valley municipalities will face an even higher hurdle when the new law goes into effect in the fall because retail subsidies must be approved with a two-thirds vote. In most East Valley cities, that will require support from five of seven council members.
Sen. Jay Tibshraeny, RChandler, moved the two related bills through the Legislature as a compromise between critics of tax incentive projects and cities seeking to avoid a state mandate. The bill was backed by mall developer Westcor and the International Association of Shopping Centers.
"This is a strong sign to the cities that if this bill doesn’t change the way they do business, the next step would be a total ban," said Tibshraeny, a former mayor of Chandler.
But critics who are upset about the rising price tags for tax incentive packages say Tibshraeny’s legislation won’t be enough to rein in cities. They favor another bill sponsored by Sen. Ken Cheuvront, D-Phoenix, that would ban most types of retail incentives with exceptions for redevelopment and historic restoration projects, as well as subsidies tied to the cleanup of soil and groundwater contamination.
That proposal has been passed twice by the Senate, but has been held up in the House of Representatives. Cheuvront agreed to delay implementation until June 1, 2006, so Valley cities and towns could have a chance to craft their own alternative.
House Speaker Jim Weiers, R-Phoenix, has refused to allow a final vote on even that version at the request of Rep. John Nelson, a Republican and former Phoenix City Council member.
Cheuvront said Tuesday he’s working with several Republicans in the East Valley to pressure Weiers to call a vote. They are citing as examples Mesa’s May 17 election on a $80 million subsidy for the proposed Riverview at Dobson project, as well as auto malls slated for Chandler and Gilbert that include a combined $100 million in tax incentives.
"Let’s just say we have going to have to pry (the bill) out," Cheuvront said.