For the first time in a number of years, forecasting the upcoming legislative session is pretty straightforward. The state budget will be the single biggest issue that will dominate most of the legislature’s time, energy and focus. Our state budget woes have returned and it will feel like 2010 once again. Arizona is doing better, and our economy continues to rebound, but just not fast enough. Arizona is projecting a $520 million shortfall this fiscal year and is facing a looming $1 billion budget shortfall the following year. So, how did this happen you ask? First, Arizona’s voter-approved, temporary one-cent sales tax that helped Arizona recover from its economic tailspin expired in May 2013, and its repeal has been felt. Next, state revenue projections were a bit optimistic, therefore tax collections for the state are behind budgeted expectations. To make matters worse, Arizona now has a huge problem as Arizona schools are now calling for $1.3 billion they say the state owes the children of Arizona. Expect a long, challenging legislative session in 2015.
We can expect the state legislature to take on the budget by first tackling the core budget issue, how much to put into education. Once funding for education has been decided, the next challenge will be deciding how to divide those dollars between K-12, community colleges, universities and other career and technical training. On the topic of education, expect to see Common Core strongly under attack during this legislative session. The debate on Common Core is far from over and the potential to put an end to it has increased. A significant number of anti-Common Core lawmakers and state officials now occupy key positions of leadership in Arizona.
A topic that will be more exciting to follow than the budget will be what to do about new business models that now threaten existing Arizona industries, including tech companies like Uber and Lyft. This indeed is innovation and the free market working at its very best. However, what happens when lawmakers are faced with dealing with the consequences of innovation that threaten existing industries that employ many people, and generate sales tax revenues? We will soon find out.
Let’s talk beer for a moment. Are you a fan of craft breweries and thrilled that Arizona may be the center of the microbrewery universe? There is more than beer brewing in Arizona; there is a battle brewing over how much beer a microbrewery should be allowed to produce. Expect to see efforts from some of the larger breweries to ask the legislature to increase its cap on how much beer they can produce, while opposition may come from small brewers to keep the larger ones from guzzling up market share.
Perhaps the biggest challenge in forecasting the upcoming legislative session is the direction and theme that will be taken by the Ducey Governorship. As I write this column, Governor-Elect Ducey is busy working with his Transition Committee to build his administration and prepare for the upcoming session. I am eager to hear what Governor Ducey will say in his first State of the State address when the 2015 legislative session begins on January 12th. In the meantime, ASBA has its legislative priorities established for 2015, and I invite you to visit asba.com/advocacy to view our current Legislative Agenda.
Jerry Bustamante is senior vice president of Public Policy and Southern Arizona of the Arizona Small Business Association.
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