Tax breaks for economic development were hotly debated during the recent Democratic Primary for Mayor, and they continue to be a really hot topic for many Tucson voters.
Recently, I had a two-hour meeting with a Tucson woman who is hopping mad about the GPLETs (Government Property Lease Excise Tax) that are being used to incentivize real estate development in Tucson’s Central Business District. She’s upset because, as the city is offering more and more business tax breaks, they want her and her neighbors to voluntarily assess themselves additional taxes to fix their own roads and add safety features. She rightly pointed out that she pays all of her taxes and has supported road-related bond issues– so why should people like her pay more, while businesses pay less? I agree with her.
During the course of our discussion, she tipped me off to the upcoming Sept. 17 Tucson Mayor and Council Study Session and Meeting, which includes several public hearings and potential decisions about different annexations and economic development incentives– including a GPLET deal for the apartments to be built on the O’Malley’s property on 4th Ave. (Regarding annexations, you’ll remember that a Catalina Foothills annexation plan was recently killed by the City Council, with only Mayor Rothschild voting for it. Are there rumblings of change?)
The city, the county, the state, and the federal governments all over a variety of business tax breaks. Understandably, businesses try to compete for and lobby for as many tax breaks from government as possible– since tax breaks help their bottom line.
The bottom line is: Are the GPLETs, the TIFs (tax increment financing districts, like Rio Nuevo), the Opportunity Zones (Trump’s plan to help “elite investors”), and the free land giveaways growing our local economy and creating jobs?
Or are the multiple layers of tax giveaways just vehicles to funnel tax revenue toward real estate development, while the rest of the economy slogs along and the long-term cost/benefit of incentives is unclear?
As I’ve said many times before, the prudent course would be to step back, take a look at the local tax incentive landscape, determine what is working and what is just costing us money, and do an honest assessment of what the people of Tucson are gaining from the giveaways. (We already know that as GPLETs flourish, rents are going up; people and small businesses are being displaced; and county government and school districts lose property tax revenue.)
Also… why the crush of incentive deals before the election of the new mayor and two new city council members? Is there a reason why these major economic decisions can’t wait until the new Mayor and Council take over? (After all, it’s probable that Democrats will retain control and that the new mayor will be moving over just a few chairs after she is sworn in.)
Timing Is Everything…
At a recent Arizona Department of Revenue tax and economic outlook conference, economist and Goldwater Institute fellow James Rounds said that we [Arizona decision makers] “have to be smarter regarding when to incentivize” and that cities and towns “have to figure out when to let go” of tax incentives as economic drivers.
Every tax cut has a “positive impact on the economy”, according to Rounds, but the impact of other economic drivers– like increased K-12 funding, investment in universities, and workforce development– may be more beneficial. (Can I get a “Hallelujah”?)
If you think the City of Tucson should put the breaks on — or at least slow down on– more economic development tax incentives, come and voice your opinion at the Sept. 17, 2019 Mayor and Council Study Session and/or to the regular Mayor and Council meeting at City Hall, 255 W. Alameda in downtown.
Tucson Mayor and Council Study Session Agenda, 2 p.m., here.
Highlights: The study session agenda includes two executive sessions– one related to an agreement between the University of Arizona and the City of Tucson regarding the North Randolph Golf Course and the other about development of the Ronstadt Transit Center. The agenda also includes a sustainability report; the GPLET Economic Analysis of 127. S. 5th Ave.; improvements to A Mountain; and a lot more.
Tucson Mayor and Council Meeting Agenda, 5:30 p.m., here
Highlights: This agenda is ridiculously long and packed with important discussions and potential decisions. One of the GPLET tax deals on the Sept. 17 meeting docket is for the apartments that will be built at 213 N. 4th Ave. (the O’Malley’s lot). Consideration of raising the purchasing age of tobacco to 21 is on the same agenda modifications to both the GPLET incentive program and the primary jobs incentive program; multiple public hearings on annexations; multiple economic development deals; a few intergovernmental agreements; and a lot more. [Eat dinner before you come. It will be a long one.]
If you can’t show up to the meetings, you can contact the Mayor and Council by phone or email to give your opinion.
Stay vigilant, my friends!
Types of Business Tax Incentives offered by the City of Tucson, here.
List of Tucson GPLET Projects (1999-2017), here.
Mayor and City Council Meeting Schedule, here.