Friday, February 22, 2013

Public Policy Update

City of Scottsdale’s Public Policy Department

The Chamber’s commitment to advocating for policies that support the business community and the residents of Scottsdale, the region and the state is very strong. We are members of the East Valley Chamber of Commerce Alliance, a group of seven chambers in the east valley that allocate resources to work with our lobbyists from the Dorn Policy Group to support worthy bills or defeat challenging bills at the State legislature. The East Valley Chamber of Commerce Alliance is the largest business lobbying group in the state.
Chamber CEO Rick Kidder regularly testifies at City Hall on issues of importance before the City Council, Boards and Commissions on behalf of the business community. The Public Policy Advisory Council of the Chamber, chaired by Steve Helm, is the body through which most policy issues flow and serves as a recommending body to the Board of Directors on issues of significance.

Significant City Issues
The new City Council met on February 12 in a work study session to discuss a proposed city bond proposal and the tourism master plan (to be unveiled at Scottsdale Forward on March 21) two major, each of which is of great importance to the business community.

The Proposed City Bond Program

A city must maintain and enhance its infrastructure in order to continue to serve the community well. The city’s staff has identified roughly $1 Billion in needs for our city, an amount well above the perceived desire for the city to address all at once.
The City Council appointed a Bond task Force, chaired by Chamber Board Member Bill Heckman, to review the capital needs of Scottsdale and make recommendations for the ones most urgently felt to be brought before the voters. Following months of work, the task force came to the Council with $240 million worth of projects grouped into four questions to be brought before the voters.
The City Council will determine ultimately the project list to be brought to the electorate and manner in which those questions will be asked and grouped. They can decide not to bring forth a bond program at all – an unlikely outcome.
The last bond request brought to the voters two years ago failed, despite the fact that the request was for roughly $30 million, leveraged against federal dollars that would have matched the city investment at a factor of 3 to 1.
Bond requests to the voters require active campaigns for passage. The 2000 bond program campaign was run by the Chamber, resulting in more than $300 million in new investment in Scottsdale’s infrastructure. It is likely that should the Council place bond questions on the November 2013 ballot, the Chamber Board will be asked to once again take the lead on a campaign in support of the citizens’ and businesses’ decision to task themselves for the improvements to our city.

Significant State Issue
Transaction Privilege Tax Reform

Prior to the beginning of this Legislative session, a Governor’s task force on TPT (sales tax) reform announced its recommendations which have now become a bill (House Bill 2657). Arizona’s transaction privilege tax system is among the nation’s most complex and challenging for businesses, and it is estimated that its complexity alone may be responsible for an extremely large non-compliance rate and too many opportunities for errors that could lead to substantial penalties.
Each city and town in Arizona has the potential for a different tax rate due to the addition of city sales taxes onto the state’s base rate and the portion of sales tax added by counties. All but a few cities and towns (Scottsdale and most valley cities among them) send sales tax dollars to the state to disperse city portion back to the point of sale city. Scottsdale’s portion is remitted by businesses directly to the city.
The goals of the task force and the legislation were to introduce greater simplicity to the system, make it easier for businesses to comply with taxing expectations and to provide a fairer playing field for businesses challenged by the potential of paying taxes to and audits from multiple jurisdictions.
The reforms have widespread support for the most part, but there are one or two pieces of the reform that many cities, including Scottsdale, are fighting hard. The most controversial is a reform to the construction sales tax system where the sales tax is paid directly to the municipality where the construction project is located regardless of where the materials were purchased by the contractor who now does not pay sales tax when getting materials. The sales tax is paid based on a formula, where a percentage of the finished project is deemed materials and a percentage is assumed to be labor.
Scottsdale and other municipalities do not want the sales tax system simplified for contractors (Pay where you buy) out of fear of the loss of substantial revenue from construction and no assurances that they will be held harmless in the process of the change.
For more information, contact Rick Kidder at the Chamber at

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