Quality Jobs tax credit repealed as part of budget compromise
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The budget negotiated by Gov. Katie Hobbs, House Speaker Steve Montenegro (left) and Senate President Warren Petersen repealed a tax credit for companies that create well-paying jobs. Photo: Jeremy Duda/Axios
A tax credit for businesses that create high-wage jobs in Arizona is now a thing of the past.
Why it matters: Arizona is focused on attracting good-paying major employers to the state and every incentive helps elbow out other states, who are after the same thing.
The big picture: The bipartisan budget deal reached by Republican lawmakers and Democratic Gov. Katie Hobbs included the repeal of the Quality Jobs Incentive Program.
How it worked: Businesses that created at least 25 jobs in urban areas or five jobs in rural areas could qualify for tax credits of up to $9,000 per position.
- There were minimum salary and investment thresholds for the tax credits, which varied depending on the scale of the project. But jobs had to pay at least the county median wage.
Catch up quick: The tax credit was enacted in 2011 as part of sweeping legislation intended to revitalize Arizona's economy during its recovery from the Great Recession.
- Originally scheduled to expire in 2017, it was amended to phase out in 2025.
State of play: Hobbs told reporters last week that she's concerned about the program's repeal, but she noted that other tax credits were on the table during budget negotiations as well.
- She emphasized that she was able to preserve the Arizona Competes Fund, which Hobbs said was a bigger priority, and Tucson's Rio Nuevo economic development district.
- "This was the compromise we were able to negotiate," Hobbs said.
The other side: Republicans supported the repeal of several "narrow income-tax credits" to free up funds for broader tax relief, and Hobbs agreed to repeal Quality Jobs to protect other tax credits she valued more, House Speaker Steve Montenegro (R-Goodyear) said in a statement provided to Axios.
- "Businesses invest in Arizona because Republican policies have made this a low-tax, pro-growth state and intend to keep it that way," he said.
Zoom in: Christine Mackay, president and CEO of the Greater Phoenix Economic Council (GPEC), credits the 2011 economic development package, including the Quality Jobs program, with bringing the manufacturing and bioscience boom the Valley has experienced in recent years.
Yes, but: It's hard to say whether Quality Jobs was the make-or-break incentive that brought any company here, she told Axios.
- "There's so many competing factors that I would really hesitate to say that without this one thing, that company wouldn't come," said Mackay, who called Quality Jobs an "important tool."
- Arizona Commerce Authority spokesperson Patrick Ptak said companies decide to come here based on a wide range of factors, including workforce, operating costs, infrastructure, market access and long-term business conditions.
- "Arizona remains highly competitive in these areas," he said.
Mackay said GPEC's bigger priority last legislative session was expanding a program that reimburses cities for expensive infrastructure improvements to manufacturing facilities.
- She said the program has been used in recent years for infrastructure for Amkor, Intel, LG and Taiwan Semiconductor Manufacturing Co.
- "We really viewed that as the tool that we couldn't lose," Mackay said.
Former House Speaker Kirk Adams, who helped shepherd the 2011 legislation to passage, credited the economic development package with turning around Arizona's economy after the Great Recession.
- "Changing course now risks slowing our momentum," he said.