Arizona is one of only four states that doesn’t have a uniform tax policy system that allows one point of contact and one point of audit for small businesses to pay the tax.

Fortunately, the time has finally arrived to fix a broken system that should have never gotten to be as bad as it is today. The Transaction Privilege Tax Simplification Task Force aimed to clear up the confusion and had drawn up 10 proposals for overhauling Arizona’s sales tax system. Only three of the 10 proposed changes require legislative action, but those three are now being opposed by many Arizona cities who promote themselves as being friendly toward business.

The tax overhaul is necessary to not only create a better economic development climate, but to also allow Arizona to take advantage of federal legislation to collect remote sales taxes from online transactions. This has been estimated to be in the hundreds of millions of dollars.

The bill includes a proposal to have the Arizona Department of Revenue collect sales taxes for all cities in Arizona, including 18 that currently collect their own transaction privilege taxes, and it would eliminate cities’ abilities to conduct their own transaction privilege tax audits of businesses. That function would also shift to the Department of Revenue.

Currently, a company that conducts business in multiple cities in the state is required to determine the tax rate, fill out the paperwork and pay the taxes for each municipality. For service related businesses, filling out the paperwork for the privilege to pay taxes has become a huge burden and a large part of monthly overhead. Some are remitting taxes to several jurisdictions every month.

For a state that proclaims that it is pro-small business, this is an odd way of showing it.

But cities have been worried about the measure’s impact on their finances. Currently, tax revenues are split with the municipalities where construction activity is taking place. Meanwhile, we have witnessed Arizona mayors delivering a single message to the legislature: We want our money! For them it’s not about easing the burden on their local businesses or running a more efficient city government. It has simply been about protecting what money they have.

The governor’s proposal has since been amended to allow municipalities to continue to tax construction activity while the tax on materials would be collected at stores wherever construction materials are purchased. So in theory, a subcontractor will pay the full retail tax on the materials at the store where they’ve been purchased, just as it happens with everybody else. The cost of the labor would then be rolled into the final and total cost of the construction, which would be subject to municipal taxation, which helps keep the municipalties’ revenue neutral.

While this compromise was expected to alleviate the cities’ concerns on lost revenues, municipalities smelled blood in the water and now want more. They say they want to have the authority for audits within their jurisdictions rather than turn over all audit authority to the state. It turns out municipalities are worried they might have to lay off their audit staffs so they’re advocating to keep that authority.

Unfortunately, this Legislative session has proven municipalities are not at all about tax simplification. They continue to hold their hand out for taxing hard-working small businesses generate.

Not all municipalities are joining this effort; Phoenix, for example, is not aggressively pursuing changes. But officials in Tucson, Oro Valley and Marana are doing nothing to distance themselves from the effort.

I encourage you make your own decision as to whether leaders of their local municipality truly have the best interests of your business in mind.

Rick Murray is CEO of the Arizona Small Business Association, which has a Southern Arizona office at 4811 E. Grant Road, Suite 262, in Crossroads Festival.

Source: Inside Tucson Business

Speaking at the State of Small Business Breakfast will be Governor Brewer, Secretary of State Ken Bennett, National Small Business Association President Todd McCracken and ASBA CEO Rick Murray.

"Declaring May as ‘Arizona Small Business Month’ celebrates our small business community for their great contributions to our State as entrepreneurs, innovators and leaders,” says Murray. "We thank Governor Brewer for honoring Arizona’s small business community in this way, and presenting this proclamation at our upcoming conference.”

Join the State of Small Business Breakfast on Thurs., May 16 at 8-9:00 a.m. at The Phoenician Resort (6000 E. Camelback Road, Scottsdale). The breakfast is part of ASBA’s 1^st Annual Arizona Small Business Conference, which will also feature the 20^th Annual Enterprise Business Awards Luncheon honoring the National Small Business Association award winners in Arizona, an all day conference with breakout sessions, Networking Mixer, and a Business Expo (free admittance).

To register, visit www.azsmallbizcon.com or call (602) 306-4000.

Source: AZ Business Magazine
Photo courtesy of AZ Business Magazine

The Mohave County GOP officially declared its opposition to Brewer’s Medicaid expansion on Saturday, and Gould told our reporter today the resolution is a warning to legislators representing his county not to support the governor’s proposal. If they do, they will face primary opponents and will give their challenger a lot of ammo to take them down, the Mohave GOP chairman said, adding that, in his heavily-Republican county, the general election is merely a formality. The warning applies to Ward, Gould said, though he added that he would be surprised if she changed her mind since her campaign was built on opposing Obamacare. (Ward has repeatedly said although she’s open to discussions with Brewer, her mind is set against the expansion.) Gould said Borrelli and Goodale are going to get challenged anyway just because House primaries are the norm in Mohave County, but if they support Brewer’s plan, "they’re going to give their opponents some pretty good material to work with.” Gould said roughly 100 PCs voted yes on the resolution. He heard two no votes.

Gould also offered a tip to legislators who are mulling the pros and cons of Brewer’s Medicaid expansion on how to resist the pressure to vote yes: Don’t get too attached to bills. Gould likened deep attachment to legislation to Lord of the Rings character Gollum’s compulsion to own the ring. The former senator surmised that Brewer will start vetoing bills to get what she wants, and legislators must be prepared to accept their proposal’s fate in order to resist the urge to capitulate and vote "yes” on the expansion. "Smeagol, the fallen hobbit that worships the ring – that’s what happens with legislators and their bills. The bill becomes ‘the Precious,’ and if you speak against the precious, they take it personally,” Gould said. "They ought to put the ring back in their pocket, because Frodo only gets enticed by the ring when he stares at the ring. So, quit staring at the ring.”

The Republic today gave a full-throated endorsement of Brewer’s Medicaid expansion plan, arguing that Republicans should trust their leader. "Conservatives who reject Brewer’s proposal should consider the business community’s strong support for this plan. The Arizona Chamber of Commerce is not a branch of the Jane Fonda fan club,” the editorial reads. The Republic went on to cite familiar arguments for expansion: Brewer’s plan will help address the costs of uncompensated care; it will continue health coverage for tens of thousands of people who would otherwise be cut off from AHCCCS in January; it makes mathematical sense since the feds will pay for the bulk of the expansion, with the rest of the money paid for via a hospital assessment, which cannot be passed on to patients; and, finally, it is the right thing to do. "People suffer needlessly when they lack access to timely medical care. Minor problems become major illnesses. Chronic conditions become catastrophic emergencies. People with mental illnesses who are not treated can become a danger to themselves or others,” the editorial concludes. "Whether you consider this from a human perspective or take a hard-headed economic view, the governor’s proposed Medicaid expansion is worth the political heartburn.”

The current debate on Medicaid expansion focuses on the political repercussions for Republicans who support Brewer’s plan, the fiscal impact to Arizona’s coffers, the national deficit and the pro-life arguments for or against it. But what’s not getting as much attention is the potential stimulus effects of drawing down $1.6 billion in federal funds annually at little or no cost to the general fund, an argument that UofA economist Marshall Vest tried to impress on members of the Finance Advisory Committee last week. In fact, both the centrist Grand Canyon Institute and ASU have concluded that the expansion would add more jobs and grow the economy. The Grand Canyon Institute study, which was released last September, said that covering residents who earn up to 133 percent of the poverty level would add 21,000 jobs, reduce unemployment by 0.7 percent and grow Arizona’s economy by nearly 1 percent in 2015, the first full year of implementation. The more recent ASU study reaffirmed the major outlines of the GCI report: full expansion would add 15,000 jobs by 2016, inject $2.8 billion in the Gross State Product between FY14 and FY16 and add $1.6 billion in disposable personal income in the same period. Additionally, the ASU study also suggested a positive impact on the state’s finances, increasing sales taxes by $40 million and individual income taxes by $31 million from FY14 to FY16.

Studies in other states have reached similar conclusions. A study commissioned by the Colorado Health Foundation showed that, in FY25-FY26, fully expanding that state’s Medicaid would mean adding 0.74 percent to the state GDP, injecting $4.4 billion in economic activity and increasing average household earnings by $608 (LINK). Additionally, the expansion would add roughly 22,400 jobs, of which 14,357 would be created in the first 18 months of implementation. Similar to the estimates in Arizona, full expansion would also cost Colorado’s state coffers less and it would generate more tax revenues without increasing the tax rates, the study suggested. In Missouri the expansion is projected to create 24,000 jobs by 2014 and add $9.6 billion in gross state product between 2014 and 2020 (mffh.org). Even more interesting, a RAND Health study, commissioned by the Arkansas Center for Health Improvement, suggests that Arkansas could see as many as 1,100 fewer deaths per year with the expansion. In 2016, the Affordable Care Act will bring roughly $430 million to the state, create about 2,600 jobs and decrease uncompensated care costs by $67 million, the study estimated. "If the state does not expand Medicaid, the direct net loss in payments would be $670 million dollars for the state in the out years. Thus, while the expansion of Medicaid is not without costs in later years, there is a net positive impact for the state’s economy,” the study said.

Source: Yellow Sheet Report
Items copyright 2013 Arizona News Service/Yellow Sheet Report.  Used with permission.

WASHINGTON – The economic environment is turning around for America’s small businesses despite some lingering challenges from the recession that hit the nation in 2008-2009, according to a new report released today by the U.S. Small Business Administration (SBA) Office of Advocacy, an independent office that serves as the voice for small business within the federal government.

"The Small Business Economy 2012 demonstrates that small businesses have been at the core of our economy’s growth over the past few years,” said Dr. Winslow Sargeant, Chief Counsel for Advocacy. "Thanks to hardworking small business owners across the country, 2011 represented the second full year of economic expansion since the peak of the recession in 2009, with small businesses representing half of the private-sector output. We still have a lot of work to do, but this report tells an inspiring story: output, business income and profits are rising for small businesses, and bankruptcies and unemployment are declining.”

The Small Business Economy, an annual report published by the Office of Advocacy for over 30 years, provides detailed information on the performance of America’s small businesses. For the second year in a row, Advocacy released the full report in an online format.

"This report provides a rich collection of information about small business contributions to the economy and trends over time, and is once again available in an online format, increasing the accessibility and usability of the information,” said Sargeant.

Highlights of the tables in this year’s report include the following:

Overall
§ Manufacturing sales, which dropped between 2005 and 2009, were up 11.7 percent between 2010 and 2011. That’s similar to the 11.2 percent increase in 2009-2010.

§ After falling from 2005 to 2009, the income of our smallest businesses (proprietorships) increased by 6.0 percent from 2010 to 2011. Corporate profits, which also declined in 2005-2009, increased by 7.9 percent in the same period.

§ Startups or births of employer firms were still below pre-downturn levels – 533,945 in 2010 compared with 668,395 in 2007, but they increased from 2009 to 2010. On the other hand, closings or deaths of employer firms, which reached a new high of 680,716 in 2009, declined to 593,347 in 2010.

Employment
§ Small firms with fewer than 500 workers outperformed large firms in net job creation in three of the four quarters of 2011, similar to a pattern that has existed since 1992 in periods when private-sector employment rose. In contrast, job losses prevailed in almost all firm sizes for the first quarter of 2008 through the first quarter of 2010.

Demographics
§ Among the self-employed, certain demographic groups saw large increases in 2010-2011, particularly Latino, Asian, black and urban self-employed workers and the 55+ age cohort that reflects the large baby boom generation.

Financing
§ Total business lending continued to increase by June 2012; the rate of decline slowed for small business loans of all size categories.

§ Funds raised by venture capital firms increased, and disbursements increased to levels comparable to those in 2006.


Click here to read or download a complete version of the full report.

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The Office of Advocacy of the U.S. Small Business Administration (SBA) is an independent voice for small business within the federal government. The presidentially appointed and Senate confirmed Chief Counsel for Advocacy advances the views, concerns and interests of small business before Congress, the White House, federal agencies, federal courts and state policymakers. Regional advocates and an office in Washington, D.C., support the Chief Counsel’s efforts. For more information, visit www.sba.gov/advocacy, or call (202) 205-6533.

 
Contact Information:

Brad Howard, Public Affairs & Media Manager

Phone: 202.205.6941

E-mail: Bradley.Howard@sba.gov

That is why, on Tuesday, when I listen to President Obama deliver the State of the Union, I will be careful to listen for him to discuss one issue in particular: "the State of the Debt.” To small businesses here in the Grand Canyon state, and across the country, the national debt is the most pressing issue. It is our hope that the president will directly address the debt, the deficit and the looming "sequestration” spending cuts that will devastate our state’s economy.

As a member of the business community, it is clear to me that policy instability and economic uncertainty have caused companies and organizations to be apprehensive about future growth opportunities. Businesses are simply unable to determine if it’s a sound investment to open a new facility in Phoenix or hire more workers in Flagstaff.

On Tuesday, the President needs to discuss and push for a deal that addresses the main drivers of this $11 trillion (and counting) calamity, and demonstrate a willingness to work with both Houses of Congress and both parties. They must forge a deal that tackles the deficit, reforms entitlement programs to make them solvent, revamps the broken tax code and creates a comprehensive solution to bend down the dangerous trajectory of our national debt.

Though we avoided going over the so-called "fiscal cliff” on the first of the year, our nation’s economic problems are far from solved. The eleventh-hour deal may have resolved the issue of income tax rates – for now, at least – but it did little to solve our spending addiction. In fact, it merely delayed the across-the-board sequestration cuts until March 1. Then, just a few weeks ago, the House and Senate approved a measure to temporarily suspend the debt ceiling, the amount of money Congress is legally allowed to borrow, until May 19.

Because Republicans and Democrats working together for the common good might as well have been political kryptonite for so long, it seems that Congress’ motto was, "Just say no,” and then pass a last-minute Band-Aid to avoid making the tough decisions. Now, because of their inability to work together, our lawmakers in Washington will face a series of self-inflicted crises over the next couple months.

The most rapidly approaching manufactured crisis is sequestration. While sequestration would at the lowest level reduce the deficit, it is an ill-conceived policy that many economists warn is too much deficit reduction, too fast, and could plunge our nation back into a recession. The nearly $500 billion in cuts to the defense budget alone could cost Arizona up to 50,000 jobs if it go into effect. Many of our state’s small businesses rely on contracts with the Department of Defense and companies like Boeing that support our military.

Rather than allow the sequester to be implemented, Congress needs to devise a calculated plan that makes rational spending reductions to less vital programs. Our leaders in Washington must find a way to once again forge an agreement that will address our short-term fiscal challenges, but to do so while also securing our fiscal footing over the long-term.

As a representative of more than 11,000 small businesses, I urge our elected officials in Washington to use these same tactics when addressing our national debt. Instead of working together and sharing resources they seem to only be interested in political posturing, which usually results in inaction. If the country is going to rein in this massive burden of debt, we must work together and leverage our strengths to solve this problem.

– Rick Murray is the CEO of the Arizona Small Business Association.

State budget

With a temporary 1-cent sales tax scheduled to end on June 1, expect the state budget to once again be an issue widely discussed and debated. Since the state expects an increase in revenues of more than 5 percent this year, state-run programs that were cut or reduced significantly will resurface and be promoted as priorities.

The relentless pressure to expand Arizona’s tax base by taxing services will continue and vigilance by those who oppose it will remain as strong as ever.

While Republicans’ control of the Legislature remains after last year’s elections, the margins are slimmer as Democrats picked up seats. Overall, expect the Legislature to shift a bit to the center with lawmakers becoming more cooperative across party lines in order to get things done.

Written by Jerry Bustamante. Jerry is senior vice president of public policy and oversees the Southern Arizona office of the Arizona Small Business Association, 4811 E. Grant Road, Suite 262, in Crossroads Festival, (520) 327-0222.

Source: Inside Tucson Business

Perhaps you have heard Arizona has more non-profit organizations per capita than most states. Maybe you have simply noticed the increasing number of community and business organizations. This is both a blessing and a curse.

A blessing because these organizations are doing good work serving our community. A curse because the pie to support them has gotten smaller.

Although each organization serves a specific purpose or niche, there are a couple of reasons why we have seen an increase in new organizations over the last five to 10 years. First, the barrier to entry is not hard to overcome. It doesn’t take much to start a nonprofit in Arizona. Second and more significant in my opinion, is the efficient means by which to communicate with stakeholders. Social media and email marketing tools such as Constant Contact and Infusionsoft have made it easy to effectively communicate to the masses, and the cost is minimal.

Do you remember getting a printed newsletter from your chamber of commerce or trade association? Monthly newsletters are practically nonexistent these day, yet not that long ago, they were the primary source of communications for organizations. They were expensive, too. Most organizations could not afford to mail a newsletter to promote their programs and events, so those that did got the attention and attendance.

Competition for membership and sponsorship dollars is at an all-time high. Changing demographics in the workplace are also playing a stronger role. Baby Boomers were arguably the best thing to happen to business groups, Rotary clubs and other civic organizations. Baby Boomers are loyal and willing to commit long term. As Baby Boomers leave the workforce decreases, and are replaced by Gen X and Millennials, an organization’s value proposition needs to change accordingly.

What we offer, how we communicate our message, and the way we deliver it are more crucial than ever. Belonging to a civic or business group because it is "the right thing to do” is quickly fading. Business professionals don’t stick around in the same places as long as they used to; so meeting their current needs, and being flexible and willing to adapt is essential to an organization’s ability to sustain a high level of relevance.

Relevance is what sells memberships and keeps people engaged. An organization can’t be everything to everyone. It can’t cover all bases (politically and socially), and throwing programs at the wall to see what will stick is a recipe for disaster.

The Arizona Small Business Association (ASBA) is no exception. Having been in existence for 40 years is no guarantee that we will be around for the next 40 years. We must remain relevant.

Not that long ago, ASBA’s Southern Arizona office looked and functioned like it was the Eastside Chamber of Commerce, and many referred to us as that. Today, we are a very different organization. We have proactively reinvented ourselves to serve a unique purpose and not duplicate activities.

As a statewide business organization, our vantage point is from a higher altitude, and we are much more focused now. I describe ASBA as a statewide buying group that leverages the purchasing power of 11,000-plus small businesses to help them save money on everything from paper clips to medical insurance. We help our members make money by connecting them through a unique social media tool that promotes them and helps them get found.

Finally, we are a political organization that strongly believes what is good for Arizona small businesses is good for Arizona. Our lobbying efforts are also focused statewide. You will find us camped out at the state Capitol when the Legislature is in session, because that is where we are concentrating our efforts and can make the biggest impact

It’s all about relevance and the perpetual quest to increase it.

At the end of the day, a non-profit organization is no different than a for-profit business. It has customers, bills to pay and needs to stay in business and succeed. Perhaps the biggest upside to having so many organizations in our state — while the size of the pie remains the same — is that we have become highly efficient and more in tune to the needs of our members and community. Those that fail to change will cease to exist.

Jerry Bustamante is senior vice president of public policy and oversees the Southern Arizona office of the Arizona Small Business Association, 4811 E. Grant Road, Suite 262, in Crossroads Festival, (520) 327-0222.

Source: Inside Tucson Business

Statement by Governor Brewer

PHOENIX – Today, Governor Jan Brewer notified the Obama administration that the State of Arizona will not pursue the creation of a state-based Health Exchange. Instead, Arizona will participate in a federally-operated Exchange, according to the guidelines of the Patient Protection and Affordable Care Act.

Written by Jerry Bustamante. Jerry is senior vice president of public policy and oversees the Southern Arizona office of the Arizona Small Business Association, 4811 E. Grant Road, Suite 262, in Crossroads Festival, phone (520) 327-0222.

Source: Inside Tucson Business

Written by Jerry Bustamante, senior vice president of public policy and oversees the Southern Arizona office of the Arizona Small Business Association, 4811 E. Grant Road, Suite 262, in Crossroads Festival, phone (520) 327-0222.

 Source: Inside Tucson Business

• Take an inventory of your child’s personal property.
• Keep the receipts of valuable items.
• Make a video of the dorm room or apartment after you’ve set it up.

Personal Liability Coverage

Jerry Bustamante, Sr. VP, Public Policy + Southern Arizona Region, ASBA

The 2012 Election Season in Arizona has now kicked into high gear following last week's Primary Election and then Labor Day weekend. Expect an increase in political television commercials and radio spots as the infusion of cash from the national parties begin their efforts to influence Arizona voters.

This is no ordinary election season - a Presidential election year always increases voter turnout. For this reason, it is very important that pro-business voters not stand on the sidelines as spectators, but get out there and vote.

ASBA has studied all of the ballot initiatives and would like to share with you our position on three that directly impact all Arizona businesses.

Jerry Bustamante

Sr. VP, Public Policy + Southern Arizona Region

Arizona Small Business Association

One of those innovators is Dr. Alan Roga, a practicing physician and founder of Stat Doctors, a rapidly growing e-health company headquartered in Scottsdale, Arizona. "As a board-certified physician in emergency medicine, I saw first hand how rising health care costs are affecting people in all walks of life. I constantly spoke with patients who were worried about their ability to pay for their healthcare and I worked in hospital emergency rooms that were struggling to deliver quality care in the face of increasing demand from non-emergency cases. The system had reached a tipping point. It was time for change."

Written by: Dan Burrus

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ASBA members: you just pay for your doctor visit– ASBA will cover the set up and monthly Stat Doctors membership fees! It pays to be a member of ASBA.
Questions? Call ASBA at 602-306-4000 or visit www.asba.com/statdoctors.