This column originally appeared in The Phoenix Business Journal.
“There’s no such thing as a free lunch.” That old phrase is just as true today as ever before, especially when it comes to economic development.
Take a look at Arizona. Over the past seven years, we’ve seen our economy explode and diversify.
During the 2008 recession, our economy was largely limited to construction and growth, and as a result, we were hit hard. Those are still big industries, but Arizona has a lot more going on today.
Silicon Valley companies are flocking here. We are the driverless car capital of America. Mega projects like Intel’s expansion and Taiwan Semiconductor Manufacturing Company’s $12 billion fab are seismic wins. And Carvana is a homegrown modern success story. Our manufacturing and health care sectors are among our fastest growing industries.
And this has all happened as other states we compete with have poured more and more money into incentives to attract businesses.
We have some natural advantages: An incredibly beautiful state and amazing weather all add up to a great quality of life.
But policy also matters – and on that front, Arizona has been a national leader, largely thanks to Governor Doug Ducey and legislative leaders.
While other states like California, New York and even Texas have focused on government giveaways, Arizona has focused on good meat and potato policies – and now other states are now copying us.
Universal licensing recognition means you can come from any state in the country and work in Arizona without having to get the permission of government bureaucrats. We’ve slashed regulations — the hidden tax of government. We passed the lowest flat tax in America, and also made important reforms to business taxes to reduce the property tax burdens on businesses both larger and small and provide predictability.
These policies are permanent reforms that job creators can literally take to the bank. Meanwhile, the giveaways in other states eventually expire and evaporate.
Look to Texas. In the past, it’s been a model of job growth and free market principles. But they embraced short-term incentives over good long-term policies. In fact, one of Texas’ the more lucrative incentives — Chapter 313 — will expire at the end of this year. The result: Businesses are scrambling and some are even having the rug pulled out from under them. And of course there’s New York, where $1 billion in tax credits to Amazon resulted in a huge public backlash. Inevitably, the businesses who were promised these prizes are left to clean up the mess.
Arizona, in contrast, offers low taxes, light regulation and metric-based incentives that businesses can plan for and account for. Arizona’s approach to economic development was designed to protect both taxpayers and businesses. The Arizona Commerce Authority — that works to attract employers — and the Arizona Chamber of Commerce and Industry, which represents businesses, work hand-in-hand. They have a customer service approach to economic development.
This more conservative and predictable approach means we have to work that much harder to land big economic development wins, but when business leaders do the math, it’s a no brainer.
And that’s the reason all of Texas’ ex-businesses will soon be located in the Grand Canyon State.
Danny Seiden is president and CEO of the Arizona Chamber of Commerce & Industry