The 52nd session of the Arizona State Legislature ended May 6, 2016, with some significant small-business victories.
NFIB-authored legislation provides an optional Declaration of Independent Business Status (DIBS) process to ensure state regulators won’t declare a small business’ 1099 independent contractors misclassified and retroactively declare them W-2 employees. (House Bill 2114)
Opportunity to Correct Regs Violations
NFIB-authored legislation firmly establishes a cooperative and pro-compliance approach to enforcing Arizona’s regulations by requiring regulators to offer small-business owners an opportunity to correct a rule violation before issuing any citation or fine. (House Bill 2337)
Exempt Rule-Making Loophole Closed
NFIB-authored legislation closes a dangerous loophole that allowed state bureaucracies to create new regulations under an exemption from the Administrative Procedures Act and have them stay in place for five years without any review, public comment, small business impact report and other oversight controls. (Senate Bill 1388)
Regulatory Overreach by Cities Slapped Back
NFIB successfully supported a series of bills reining in the regulatory overreach of Arizona municipalities in redefining what goes into calculating the minimum wage (House Bill 2579); requiring predictive scheduling penalties on businesses (House Bill 2191); imposing recycling fees, mandating energy-usage reporting and banning retail plastic bags (House Bills 2130 & 2131); and, devastating the ability of pet stores to operate and survive (Senate Bill 1248).
From the 2015 half
Won Landmark Regulatory Reform
NFIB worked with Rep. Warren Petersen, chairman of the House Commerce Committee, to pass House Bill 2213, landmark legislation making Arizona the first state in the nation to require its inspectors and auditors to offer small-business owners an opportunity to correct a rule violation before issuing any citation or fine.
Reduced Section 179 Equipment Expensing
NFIB teamed up with Gov. Doug Ducey’s office to convert an unexpected and late-developing $30 million revenue surplus into a tax cut for small business by matching the federal Section 179 equipment expensing and bonus depreciation provisions in Arizona’s tax code for 2014.
Held Workers’ Compensation Premiums Down
NFIB helped pass a pair of workers’ compensation tweaks that should serve to keep small business’ premiums down. House Bill 2346 makes it clear in state law that workers’ compensation benefits are not required to cover medical marijuana costs, and House Bill 2331 requires workers’ compensation claimants to sign-off on knowing that making false statements to attain benefits opens them to penalties, fines and forfeiture of benefits.
Repealed Regressive Tax on Unemployment Insurance Premiums
Working with legislative leaders and the governor’s office, NFIB accomplished a long-held policy objective of Arizona small-business owners by getting a repeal of the 0.1 percent tax on unemployment insurance premiums included in the state budget deal (Senate Bill 1471). This regressive tax was paid by private sector employers—95 percent of whom are small businesses—to fund a job-training program. The $7-per-employee tax collected approximately $13 million annually for the fund, which had accumulated a positive balance of more than $50 million due in large part to small businesses’ inability to qualify for it or see sufficient value in seeking grants from the program.
Levelled the Playing Field in Tax Disputes
What if you were given a choice between settling a tax judgment you knew was unjust or fighting and beating the taxman in court only to be left poorer for it in the end? Not much of a choice is it? That was the situation in Arizona until NFIB helped pass House Bill 2131 this session raising the amount of fees for expert witnesses, certified public accountants, enrolled agents, attorneys and other representatives that taxpayers may reimburse when they prevail in a tax dispute with the state or locality.
Lengthened Time for Unemployment Insurance Challenges
NFIB worked with the Arizona Restaurant Association to pass House Bill 2347 giving employers more time to protest an unworthy claim of unemployment benefits by adding the word “business” before “days” in the law. This one-word change has the effect of excluding Sundays and state holidays from the calculation of the 10-day deadline employers have to register a challenge to benefits eligibility.
Made Small Businesses Eligible for Corporate Tuition Tax Credits
Small-business owners who file their income taxes as S corporations are now eligible to participate in a dollar-for-dollar state tax credit program previously available only to taxpayers who file as C corporations. These credits are for donations to K-12 school tuition organizations (STO) that use at least 90 percent of their contributions to provide scholarships or tuition grants to low-income, disabled or displaced children. Prior to passage of House Bill 2153, S corporation filers were only eligible to participate in the individual STO program that limits their donation/credit to $1,067 annually or $2,134 for a married couple filing jointly (2015). The only limit under the separate corporate STO program is an aggregate cap of $43 million (2015) in credits for the entire program. Under the NFIB-supported new law, S corporation taxpayers may now apply for credit preapproval from the Arizona Department of Revenue which awards credit certificates on a first-come-first-serve basis until all the $43 million is allocated.
Obtained Greater County Rule-Making Transparency
NFIB helped pass Senate Bill 1298 that requires counties to adopt rulemaking transparency procedures like the state’s, which include public notice and comment periods and voids any new county regulation that is created without complying with this new law.
Secured Municipal Uniformity in Bag Bans
NFIB worked with grocers, restaurants and commercial real estate allies to relieve city councils of the burden of having to contemplate adopting bans on certain types of containers like plastic bottles or bags as well as Styrofoam—the devil’s packaging. Several municipalities have indulged in passing these scientifically-dubious regulations that threaten to create a maddening patchwork of conflicting rules across the state that increases costs on small businesses while making efforts to attract out-of-state investment and job creation much more difficult. Senate Bill 1241 effectively preempts local governments from issuing their own bans.
Succeeded in Ballot-Clarity Efforts
Arizona’s taxing authorities will no longer be able to muddle the language explaining local ballot questions to hide the fact that the measure raises taxes. NFIB worked with the Arizona Tax Research Association to help pass House Bill 2109 and Senate Bill 1184 requiring that the actual ballot language and explanatory information provided in the official publicity pamphlets for municipal elections to approve a bond, sales tax or property tax measure must specifically tell the voters that the new spending initiative would be paid for with higher taxes and how much those new taxes amount to for the typical taxpayer.
Won a Small Business Seat on the Regulatory Review Council
In his State of the State Address, Governor Ducey laid down a challenge. “[W]e have a Regulatory Review Council that’s stacked with lobbyists? Who’s advocating for the small business person, the startup, the entrepreneur who can’t afford an attorney to navigate the endless maze of bureaucracy? I ask that you pass a bill requiring a small business owner on that Council and I’ll sign it.” NFIB made sure the echo of his challenge reverberated throughout the legislative session and eventually prevailed with passage of House Bill 2526.