Business Community Comments on Proposed State Budget

Dear Members of the Arizona Legislature:

As leaders of Arizona’s business community, we recognize the enormous task it is to craft a fiscally sound spending plan that meets the core responsibilities of state government. We believe the spending blueprint currently under consideration in the Senate takes a positive step in some aspects, but falls far short in some critical areas.

A prerequisite for any complete budget package is a student assessment aligned with Arizona’s College and Career Ready Standards. With our current assessment in its final year, parents will need a benchmark that indicates both a student’s and a school’s performance while also providing the student with an assessment of their readiness for college and work. An assessment cannot be negotiable; without it our entire education system is weakened. 

The importance of funding an assessment aligned with the state standards cannot be overstated. Without an assessment we will severely undercut accountability measures such as teacher and principal evaluations, A-F letter grades for schools and districts and Move on When Reading. These programs not only tell us how the system is performing, but present us with opportunities to improve. The absence of an aligned assessment would also harm Arizona’s reputation as a state friendly to school choice, as parents would no longer be able to easily compare one school’s performance to another.

We would urge you to resist the temptation to wait to fund an assessment until the state receives vendor bids for its development. The absence or uncertainty of funding could reduce the number of competitive bids, which will limit our choice of vendors and possibly increase the cost. Adopting a high quality assessment is too important to try and cut corners.

We also believe the Senate budget falls short in funding badly needed improvements to the state Department of Education’s data system. The $16 million proposal offered by the Executive is a better reflection of the system’s needs. Much of the data parents, teachers and the state use– including the Legislature – to understand student learning and school quality is generated by the ADE data systems. Without it, we are flying blind. It’s time to move this project forward rapidly. 

On the issue of protecting the state’s important military installations, the Executive budget wisely calls for $5.0 million for the Military Installation Fund. We would urge any final budget to include funding for this program, which balances private property rights with the needs of our military installations.

There are positive elements to the Senate budget. We are encouraged that the plan calls for $30 million in tax relief.

We strongly support the Executive’s desire to remove the sales tax manufacturers pay on their electricity consumption. We support extending that policy approach to manufacturers’ natural gas consumption, too. We are pleased to see the legislation that would result in this tax relief has already passed the Senate and is being considered in the House.

But we also believe strongly that any budget should extend tax relief to the insurance sector of our economy. The corporate tax reductions currently being implemented will make Arizona much more competitive in our efforts to attract high-wage jobs to the state. But those tax reforms have not been extended to insurance providers, as those companies are assessed an insurance premium tax, which is a gross receipts tax, not a tax on profits. Arizona’s 2.0 percent premium tax rate is a drag on our ability to continue to attract these good paying, career-track jobs. Now is the time to address the inequity in the tax treatment applied to the different sectors of the business community. Legislation to reduce the premium tax to 1.7 percent over three years has already passed the House and is awaiting consideration in the Senate.

We are also pleased that the Senate budget begins to reduce the shifting of resources out of the Highway User Revenue Fund. We have long opposed fund sweeps and we are hopeful that this is a step toward ending the practice.

We also appreciate that the Senate budget includes a final payment toward creating parity in funding for our state’s universities, while also providing some statutory structure to move to a performance-based funding model in fiscal year 2016. We would also urge the Legislature to continue to look for ways to increase research funding at our state universities, which has a positive multiplier effect on the entire state’s economy. 

The Senate budget begins an important debate over how state resources should be spent. We would welcome the opportunity to visit with any of you over these business community priorities as you begin budget discussions in earnest.



Todd Sanders                                                  Glenn Hamer
President and CEO                                         President and CEO
Greater Phoenix Chamber of Commerce        Arizona Chamber of Commerce and Industry


Tom Franz                                                       Ronald E. Shoopman
President and CEO                                         President
Greater Phoenix Leadership                           Southern Arizona Leadership Council