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Despite objections from fiscally conservative legislators, the Senate approved on Monday a measure that would allow businesses that meet certain requirements to pay a lower property tax.
 
The bill’s backers have pitched the measure as another tool to help Arizona attract and retain companies here.  
 
Sen. Michele Reagan, the Scottsdale Republican who sponsored the bill, has previously said many businesses are waiting to see if the bill passed in order to “determine whether they are going to set up shop in Arizona or not.”
 
But critics said the measure creates a skewed tax system and gives special consideration to a small set of businesses.
 
They argued that since the property tax incentive is not offered to all, it’s unfair to smaller businesses that can’t come up with enough capital or hire a certain threshold of employees to qualify – thereby keeping the tax incentives away from them.

The measure, SB1041, easily passed with a bipartisan 24-6 vote.
 
Just like the debate over an earlier “jobs bill,” Reagan’s measure brought to the fore the ideological clashes within the Republican Party. Some view tax incentives as an indispensable economic tool that puts the state in a better position to attract investments, while others regard such tax breaks as pay outs to particular groups of people.
 
“The signal that we send is that Arizona is a state where if you have enough lobbyists and you have enough money, you can come down here and you can buy yourself a special carve out (and) get yourself a special deal,” said Sen. Ron Gould, R-Lake Havasu City.
 
The measure, SB 1041, allows qualifying businesses to have their property assessed under Class 6, which applies a 5 percent assessment ratio.
 
Typically, commercial property is assessed under Class 1, which applies a 20 percent assessment ratio. 
 
To qualify for a Class 6 assessment, companies must invest at least $5 million and create at least 25 new positions in urban areas. In any other location, businesses must invest $1 million and create at least five positions.
 
Under the bill, businesses can qualify for the lower property tax through the middle of 2017. Once a company qualifies, its certification for a Class 6 assessment is good for 10 years.