LEGISLATIVE UPDATE Legislature working to counter economic effects of pandemic
T
he Arizona Legislature in March passed a “skinny budget” to provide certainty for state government agencies, public schools, local governments, and government contractors dependent on state funding. The bills passed by the Arizona Legislature are similar to continuing resolutions that provide funding at current levels into the next fiscal year. Arizona Association for Economic Development (AAED) has been paying specific attention to this year’s legislation especially since the pandemic, COVID-19 has everyone’s attention and is an economic disruption. For economic development purposes, this means that the Arizona Commerce Authority and Arizona Office of Tourism will receive the same appropriations each office received last year. The Legislature also passed an additional $50 million in COVID-19 relief. The money will flow through the Governor’s Office and is to be used for economic assistance during the state of emergency including: • Housing assistance, including payments to prevent foreclosure or eviction. • Monies for entities to provide services for homeless people, including shelter, clothing, food and transportation. • Economic assistance to small businesses with less than 50 employees, health care providers and nonprofit organizations.
20 | May-June 2020
Nicole Snyder AAED
• Monies for food bank operations. In addition to passing a budget, the Arizona Legislature sent a key economic development bill to the Governor before it recessed. HB 2771 extends the income tax credits for qualifying investments in qualified facilities and qualified research activity. It was signed by Governor Ducey on March 13th. The bill includes the following provisions: 1. Specifies that capital investments made in a qualified facility up to 36 months before submitting an application for preapproval are included in the computation of a tax credit. 2. Allows the ACA to preapprove applicants as qualifying for income tax credits for investments made in qualified facilities for any taxable year until January 1, 2031. 3. Extends the corporate and individual income tax credit for qualifying investment and employment in expanding or locating a qualified facility until January 1, 2031.
4. States that an international operations center that is certified after December 31, 2018 may not claim a corporate tax credit for renewable energy investment. 5. Specifies that a minimum investment in renewable energy facilities must be completed within a three-year period beginning on the date the initial application is received or by January 1, 2031. 6. Extends the corporate income tax credit for qualified research activity until January 1, 2031. 7. Specifies that a corporate individual tax credit for qualified research activity that is claimed for taxable years beginning before January 1, 2022 may be carried forward for 15 years. 8. Specifies that a corporate individual income tax credit for qualified research activity that is claimed for taxable years beginning on January 1, 2022 may be carried forward for 10 years. 9. Provides that a credit carry forward for qualified research activity from taxable years beginning January 1, 2022 may be carried forward up to 10 years from the year in which the expenses were incurred. 10. Redefines international operations center as a facility or connected facilities under the same ownership that are subject to specific investment thresholds and that selfconsume renewable energy from a qualified facility. Another economic development bill of interest includes an extension of the existing angel investment tax credit. AAED will continue educating lawmakers about the need for the angel investment credit and other economic development tools. About AAED: Serving as the leading statewide advocate for responsible economic development in Arizona since 1974, AAED’s foundation has been rooted in three fundamental pillars that continue to affect positive change and increase Arizona’s competitive position to attract investment and create jobs. Nicole Snyder is president of the AAED and is the healthcare business development & marketing leader for Orcutt | Winslow.
