Property Tax - Reduction Signed Into Law Reducing commercial property taxes is a long-held policy priority for NAIOP. In 2021, we worked with a coalition of business organizations to advocate for lowering the rate down from 18%. NAIOP commissioned Rounds Consulting Group to conduct a study on the economic benefits of this policy change (download available below). Thanks to the efforts of Rep. Ben Toma, Sen. J.D. Mesnard, Sen. Vince Leach and many others, the state budget as signed into law reduces the assessment ratio by 2% to 16% over a two-year period. Income Tax - Reductions Signed Into Law NAIOP supported legislation to reduce income tax rates, especially those paid by small businesses that would be affected by the Proposition 208 income surcharge. The state budget as signed into law provides income tax relief for all taxpayers, including a provision to offsetthe difference caused by the Prop 208 surcharge.
SB 1783, sponsored by Sen. Mesnard, created a new, optional small business income tax structure. Businesses such as LLCs and passthroughs can opt into this system which starts at 3.5% in 2021, gradually lowering to 2.5% in 2025.
COVID Liability Protection Protecting employers, building owners and landlords from frivolous lawsuits related to COVID-19 is a priority for NAIOP. To fully reopen the economy businesses must feel secure that they will not be sued as long as they are abiding by CDC guidelines and all applicable laws to keep employees, customers and tenants safe. Fortunately, SB 1377, sponsored by Sen. Vince Leach, provides these assurances. Governor Doug Ducey signed this legislation into law on April 5, 2021.
Initiative Reform For the past several election cycles, out-of-state groups have invested heavily in ballot initiatives. In 2020, both Proposition 208, which increased income taxes to fund education, and Proposition 207, which legalized the recreational usage of marijuana for adults received most of their funding from contributors outside of Arizona. Out-of-state labor unions pushed an initiative that could have upended our state’s entire healthcare system had it not been kicked off the ballot by the courts. In the prior election cycle, billionaire hedge fund manager Tom Steyer underwrote an initiative that would have dramatically changed Arizona’s energy portfolio if it had passed.
This year, several referenda were introduced to return the initiative process to its original purpose as a tool of direct democracy for the residents of Arizona. Because the right to initiative is enshrined in the state Constitution, any changes will require a vote of the people in the 2022 election. NAIOP supported several measures that represent common-sense reforms. These include:
HCR 2016, sponsored by Rep. Tim Dunn. This measure would require that ballot initiatives be passed by 60% of voters rather than the current simple majority. Did not pass. Held in Senate.
HCR 2001, sponsored by Rep. John Kavanaugh. This measure would limit ballot initiatives to addressing a single subject. Passed and Submitted to Secretary of State on 6/30/2021. Will be on 2022 ballot.
SCR 1034, sponsored by Sen. Vince Leach. This measure would allow the legislature to amend an initiative that passed but was found by the Arizona Supreme Court to contain illegal or unconstitutional language. Passed and Submitted to Secretary of State on 6/28/2021. Will be on 2022 ballot.