Arizona’s 2012 legislative session picked up where the first half 2011 session left off—aspiring to be the most pro-small-business Legislature in Arizona’s history. The 2012 session’s accomplishments ended up being so consistently good and significant in scope that the Fiftieth Arizona Legislature can rightly make the claim to be the most pro-small-business in state history. NFIB’s work during the session cutting regulatory red tape, stemming lawsuit abuse, properly managing employment benefits, and streamlining and easing the tax burden are ranked in reverse order below.
#10. Senate Bill 1441: Residential Construction Fall Protection Regulation, sponsored by Sen. Andy Biggs, restores to Arizona’s control the regulation of fall protection at residential construction sites, standards that have proven to be very successful in promoting the safety of our construction workers while avoiding arbitrary and costly regulation. The legislation reversed a late-2011 decision by the Industrial Commission of Arizona to adopt federally promoted, one-size-fits-all fall protection standards on the construction industry in Arizona that would have imposed unnecessary and significant new costs and burdens.
#9. Senate Bill 1193: Small Business Impact Data for Proposed Rules, sponsored by Sen. Gail Griffin, expands numerous regulatory rights involving appeals and licensing applications and requires that government agencies use empirical, replicable and testable data when preparing their economic, small business and consumer impact statements for proposed rules and regulations.
#8. Senate Bill 1410: Trespasser Responsibility Act, sponsored by Sen. Ron Gould, solves a potential problem created by the recently published Third Restatement of Torts, the most influential legal treatise on the current state of common law which largely governs civil lawsuits. While the Restatement is not a binding source of law, it is widely used and accepted by the legal community and is occasionally cited by judges in their decisions. At issue was the Third Restatement’s expansion of property owners’ exposure to liability when a trespasser is injured on their property. The Third Restatement places the liability on the land owner for protection of trespassers unless they are “flagrant” trespassers, a concept undefined by either existing common law in any state, let alone Arizona, or in the Third Restatement itself. NFIB drafted this legislation to block activist judges’ ability to wreak havoc upon small-business owners by imposing this flawed legal reasoning.
#7. House Bill 2519: Unemployment Insurance Omnibus, sponsored by Rep. Karen Fann, makes a series of reforms tightening up Arizona’s unemployment insurance system, including requiring individuals to engage in a sustained effort to obtain work during at least four days of the week and make at least three work search contacts per week. The law also declares that a worker is considered to have refused an offer of suitable work if an offer is withdrawn after they either refuse to submit to a drug test or tests positive for drugs.
#6. House Bill 2571: State Personnel Reform, sponsored by Rep. Justin Olson:
- consolidates multiple state government personnel systems
- transitions the state to an at-will workforce
- improves the management of the state workforce
- restructures the grievance and appeal system
- and, updates human resources practices.
Currently, about 80 percent of Arizona state workers are ‘covered’ employees and the remaining 20 percent being ‘uncovered’ or at-will employees. Once fully implemented over the next few years, those numbers will be flipped with 80 percent of the state workforce becoming at-will employees just like most of the taxpayers who work in the private sector. The efficiency and accountability gains will hold down the cost of state government.
#5. House Bill 2368: Workers' Compensation Omnibus, sponsored by Rep. Karen Fann, makes many necessary reforms including a more stable indexing formula for benefits and greater subrogation rights. But the most important provision regards the use of evidence-based medicine in workers’ compensation claims. While indemnity costs in the Arizona workers’ compensation system have risen in recent years, medical benefits still constitute 71 percent of our total benefit costs compared to 59 percent nationwide. Far from placing Arizona in the position of trailblazer in this area, roughly half of the states in the U.S. have adopted evidence-based medicine treatment guidelines for workers’ compensation cases. Experience in these other states suggests that adopting evidence-base medicine will not only result in better quality care for injured workers but less time off work.
#4. House Bill 2466: Local Sales Tax Portal, sponsored by Rep. Rick Gray, offers small businesses a one-stop web portal to remit transaction privilege (sales) tax receipts to state and multiple local municipalities. Scheduled to be in place before 2015, this easy-to-use web portal will streamline the confusing process of remitting sale tax receipts separately to multiple jurisdictions and will lower the cost of compliance for businesses collecting the sales tax.
#3. House Bill 2150: Unemployment Insurance Appeals Reform, sponsored by Rep. Tom Forese, provides clarity to and fair treatment for employees and employers in Department of Economic Security (DES) unemployment compensation proceedings. The NFIB-written law:
- provides a definition of an employee to clarify the factors that should be considered in determining whether someone is an employee or an independent contractor
- requires DES to state the reasons for its decisions to ensure that the determinations are consistent with the law so all parties will be able to consider them in deciding whether to pursue an appeal
- and most importantly, provides 30- and 60-day time periods to appeal DES decisions instead of the clearly unreasonable 15-day time periods that are replaced.
#2. House Bill 2815: Tax Reform, sponsored by Rep. J.D. Mesnard, builds on the foundations of last year’s Competitiveness Package of business tax relief by making further reforms designed to spur economic prosperity. The chief benefits for small businesses include an 85 percent boost in the personal property tax exemption for equipment and machinery and a state income tax deduction equal to the federal 10 percent bonus depreciation for assets purchased this year. Also, the net operating loss (NOL) carry forward for corporations is extended from five years to 20 years to match the NOL treatment already enjoyed by S corporations, LLCs and partnerships who file as individuals. The legislation also creates a phased-in 25 percent reduction in the income tax on long-term capital gains on assets purchased after 2012 and reworks the thresholds and eligibility criteria for receiving a new jobs tax credit.
#1. Senate Concurrent Resolution 1012: Small Business Job Creation Act (Proposition 116), sponsored by Sen. Andy Biggs, refers to the November ballot a pro-growth adjustment to the constitutional exemption for new equipment and machinery investments—the crucial component of a job-producing recovery. Written and championed by NFIB, passage of Proposition 116 will unleash more than 60,000 small business job creators by effectively removing them from the personal property tax rolls. Proposition 116 enjoyed unanimous bipartisan support among legislators and is structured to protect K-12 school budgets and avoids placing additional stress on homeowners.
Victories from the 2011 half of the 50th Arizona Legislature
Won property tax reductions for all businesses
Lowered, over time, the commercial and industrial property tax assessment ratio to 18 percent by 2016 from its current 20 percent. (House Bill 2001)
Helped slash corporate income tax rate
Decreased in phases the corporate income tax rate to 4.9 percent by 2017 from its current 6.968 percent. (House Bill 2001)
Obtained faster depreciation of business personal property
Advocated for passage a 5-percent bump in the accelerated depreciation schedule for business personal property. (House Bill 2001)
Killed property tax shift to existing small businesses
Defeated a misguided effort to abandon broad-based property tax reductions for small business for a policy of picking winners over losers in the tax code. (Senate Bill 1041)
Fought for health savings account incentives
Created income tax credits for small businesses for the premium paid on a high-deductable health plan and for contributions to employees’ health savings accounts. (House Bill 2556)
Banned city ‘bounty hunter’ auditors
Reversed the emerging trend of cities hiring ‘bounty hunter’ auditors on contingent fee contracts to audit and harass businesses collecting sales tax receipts. (Senate Bill 1165)
Won protection for small businesses against union intimidation tactics
Restricted unlawful picketing, trespassing, and defamation by labor unions against a business. (Senate Bill 1363)
Ended union preference in federal contracting
Prohibited 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. (House Bill 2644)
Secured a city and county regulatory Bill of Rights
Extended the state’s Regulatory Bill of Rights to cities and counties to ensure fair and open regulation by local governments. (Senate Bill 1598)
Won relief against lawsuit abuse during appeals
Helped pass a law providing relief for businesses in civil lawsuits by limiting the amount of the bond that must be posted against a judgment during the appeals process. (Senate Bill 1212)
Obtained state tax audit reform and relief
Enhanced 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. (House Bill 2202)
Protected taxpayers form harm when state dithers
Secured waiver of any interest or penalties for an unpaid tax liability due to the state failing to conform to revised definitions in the Internal Revenue Code in time for the taxpayer to accurately file their annual tax return. (House Bill 2332)
Won government-employee pension reform
Supported changes to Arizona government-employee pension benefit and contribution structures aimed at bolstering solvency and minimizing unfunded liabilities. (Senate Bill 1609)
Secured ballot initiative to end taxpayer money for politicians
Referred to the 2012 General Election ballot a proposition baring taxpayer funds from being used to finance state and legislative candidates’ political campaigns. (Senate Concurrent Resolution 1025)