The Arizona State Legislature passed a bill earlier this year allowing licensed restaurants, bars, and liquor stores the opportunity to sell mixed cocktails to-go. This new market will expand Arizona’s to-go and delivery industry. 

To-Go Alcohol 2021 was one of the largest changes to Arizona Liquor law in the form of HB 2773 to the Arizona Restaurant Association. The bill will provide any business that obtains an approved lease the ability to sell mixed cocktails for off-premise consumption. 

Following the onset of the COVID-19 pandemic, restaurants, bars, and liquor stores across the state faced closures and shut-downs, but Gov. Doug Ducey signed an executive order in March 2020 legalizing the sale of spirits to-go. The sale of alcohol to-go becomes permanent with the implementation of HB 2773, even after the pandemic ends.

Upon signing HB 2773 Gov. Ducey , “House Bill 2773 will make sure restaurants and bars have the opportunity to expand operations and meet the needs of their customers, especially after weathering the effects of the pandemic.”

The bill gives businesses two different ways to access this new market, one for mixed cocktails and one for packaged goods. Mixed cocktails refer to any drink combined on the premises of the business that contains liquor and one other ingredient. Packaged goods refer to liquor, wine, beer, or other types of spirituous liquors that are in the original container. 

The legislation was sponsored by Chander state Rep. Jeff Weninger, a restaurateur. 

“Many businesses were hard hit by the pandemic, but smart policies like permitting to-go beverages helped keep many afloat,” Weninger at the time of the bill’s passage. “House Bill 2773 will help bars, liquor stores and restaurants grow, and it will attract new businesses to our state. This is a major win for Arizona’s food and beverage industry, and I thank Governor Ducey for signing this legislation.”

Beginning October 1, bars and liquor stores were able to start selling mixed cocktails to-go. Restaurants that are licensed to sell alcohol are able to apply for a lease granting them the ability to participate in this new way of selling. If a restaurant is approved by the Department of Liquor Licenses and Control (DLLC), the business will be assigned an automatic yearly renewable lease for to-go cocktails. Restaurants will have to pay a fee of $200 for the application and a fee of $2,500 for the lease.

The to-go mixed cocktails must be sold in a container that is clean, approved by the national sanitation organization, and does not exceed 32 ounces. There is no limit to how many containers one can buy in an order, but each individual container must be under 32 ounces. These containers must only be filled with the drink on the premises of the business after it has been ordered. It must also have a ‘tamper-proof seal,’ all government warning labels, and the business’s logo or name. 

In a similar fashion to restaurants, any bar is given the ability to sell packaged goods to restaurants for off-premises consumption on a lease. The DLLC must approve the lease and there is a $200 application fee. Beer and wine bars only can sell beer and wine, whereas bars can sell beer, wine, and other spirituous liquors to restaurants. 

Both bars and restaurants are also given the ability to do alcohol deliveries, directly from the business or utilize a third-party delivery system only during the hours of 6:00 am to 2:00 am of the next day. Any third-party service must register with the DLLC before starting to deliver alcohol on behalf of businesses.  

Any time an order is placed for both to-go cocktails and packaged goods, a business or third-party delivery system is allowed to ask for age verification and documentation requirements.

The new law still ensures that restaurants follow certain regulations regarding alcohol distribution. Restaurants must maintain a 40/60 ratio of food to alcohol, all employees must be given liquor training, restaurants may receive no more than 30% of their total alcohol sales from to-go sales, and they must make sure that all to-go alcohol sales include food.

The Arizona Restaurant Association has cheered the new law.

“Restaurants, bars and liquor stores throughout the state will have the opportunity to drastically expand their operations thanks to the signing of House Bill 2773,” Arizona Restaurant Association President and CEO Steve Chucri said. “To-go cocktails will help businesses bring in revenue and attract new customers, and it will draw new restaurants and bars to our state. My thanks to Representative Weninger for sponsoring the legislation, and to Governor Ducey for signing it.”

Further information and guidelines are expected to come out from The Department of Liquor Licenses and Control and the DLLC later this month.If you’d like to read more, check out

Author: Flannery Sloan, Arizona Junior Fellow

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As the state House of Representatives prepares to take up debate on the state budget, legislators should keep in mind the following: 

1. A flatter income tax is better. It removes negative incentives that reduce productivity and investment. 

2. If the Legislature does nothing to blunt the negative impact of the nearly 78% income tax increase from Proposition 208’s new surtax, there will be a negative effect on small businesses and on the state’s ability to attract and grow both small and large businesses in the future. 

3. If the Legislature does nothing to change our tax code, state and local governments will still lose revenue. Proposition 208 has forced the state into an income tax structure that is uncompetitive. 

We have long been proponents of a flatter income tax structure. If a state is going to impose an income tax, we believe a flat tax is the best system. 

A flatter tax decreases the potential for lost productivity typically present with a progressive income tax system, so a switch to a flat tax lessens the disincentive to work and invest locally. 

A flatter tax system also recognizes that progressive systems tend to be enormously lopsided, relying on a small base of taxpayers to pay a substantial amount of the tax. Currently, according to the Joint Legislative Budget Committee, 4.75% of Arizona income taxpayers in the highest income brackets pay 48.5% of all income taxes in the state. Under Proposition 208, these taxpayers (at least 50% of which are small businesses) are responsible for 100% of the income tax surcharge, increasing their total liability to 55% of all income taxes collected. 

We have also seen several new tax revenue sources in recent years amounting to a substantial amount of extra tax. These new revenues come from sales taxes on sales by third party sellers on internet marketplaces, and from taxes resulting from the legalization of recreational marijuana and sports betting. New tax cuts should be warranted commensurate with these new revenue streams when they place the state in a structural surplus. 

Arizona is facing a pending economic development headache caused by the implementation of the tax surcharge. As any economic development professional will tell you, deals and investments are won at the margins. New businesses, both large and small, with higher income job opportunities have come to the state in increasing numbers over the last few years, with capital expenditure commitments that have exceeded all expectations. They came based on a set of economic conditions that, importantly, included our tax structure. Then, we changed it to their disadvantage.  

Higher income taxes won’t mean we lose every deal going forward, but it means we will lose those deals at the margin that are sensitive to changes in the tax structure. This could mean we lose out on companies hiring professionals with advanced degrees or headquarter locations that bring executives and their high salaries.  

A small number of high‐income taxpayers pay a large share of tax. Losing even a small percentage of them has an outsized impact on tax collections. And many who will be affected are also small business owners. If they vote with their feet and leave the state, or future small businesses and other high earners decide not to come, we are worse off.  

Something must be done to “unring” the bell and signal to people and companies that they are welcome in Arizona to thrive and prosper without unnecessary and burdensome taxation. We need to retain our pro‐growth reputation and remain competitive.  

The state Senate passed a flatter income tax structure that addresses the looming impacts to many small business owners. The House should do the same. 

Danny Court is a principal and senior economist with Elliott D. Pollack & Company

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The federal Paycheck Protection Program officially ended on Monday but there still are many programs available to help small businesses, including grants for business assistance groups to support socially and economically disadvantaged entrepreneurs. 

The new program, launched by the U.S. Small Business Administration (SBA), is offering grants of up to $5 million to nonprofits, chambers of commerce, and tribal and government agencies to conduct outreach to small businesses that were left out of previous federal relief efforts.

“These businesses – the smallest of the small in rural and urban America, and those owned by women, people of color, or veterans – have suffered the greatest economic loss from this pandemic,” said Isabella Casillas Guzman, administrator of the , in announcing the launch. 

Arizona U.S. Senator Mark Kelly was among those who fought to include the program in the recent to help disadvantaged entrepreneurs, particularly in rural and tribal areas.   

“I’ve spoken to small businesses in every corner of Arizona. Far too many of them, especially tribal and minority-owned businesses and those in rural communities, have been unable to get the support they need,” Kelly said, adding that the pilot includes assistance in Spanish for business owners.

Organizations can apply for grants of up to $5 million 

Business assistance programs can use the Community Navigator grants for to help small businesses get the resources and support they need. This can include hiring staff dedicated to outreach activities and hiring culturally and linguistically knowledgeable experts – certified public accountants, attorneys, and other professionals – to work with business owners to complete applications for programs. 

Grant awards will range from $1 million to $5 million for a two-year performance period. Applicants have until July 12, 2021, to submit their applications at . 

For more information, visit . 

Many other grants, loans, programs available   

A number of other programs are available for small businesses, including these SBA programs: 

R&D accelerator competition The SBA recently launched its 6th annual to recognize “the most innovative organizations with inclusive approaches towards supporting entrepreneurs in research and development.” Prizes go to successful applicants focused on assisting women entrepreneurs, minority entrepreneurs, entrepreneurs building technologies to address key policy issues such as clean energy and supply chain resilience, or an underserved target group identified by the applicant such as rural, veterans and individuals with disabilities. Applications are being accepted until June 25.

Business development to compete for federal contracts The program connects “socially and economically disadvantaged” small businesses with opportunities to compete for federal contracts, get assistance with navigating federal contracting, create joint ventures with mentor companies and receive training and development help. 

HUBZone Program The works to give more contracting opportunities to small businesses located in HUBZones, which are typically areas with above-average economic development needs. To qualify, a company’s principal office must be located in a HUBZone, about a third of employees must live in a HUBZone, and the company must be at least 51 percent owned and controlled by U.S. citizens, a Community Development Corporation, agricultural cooperative, Native Hawaiian organization, or Indian tribe.

Service-Disabled Veteran-Owned Small Businesses Program The works with veteran-owned small businesses to help them receive federal contracts. To qualify, a small business must be at least 51 percent owned, controlled and managed day-to-day by one or more service-disabled veterans. 

Small Business Innovation Research and Small Business Technology Transfer These were created to help small businesses compete with larger companies in the areas of research and technology. These programs provide grants to companies to help create physical and digital tools for federal agencies like the Department of Defense. Examples include advanced chemical compositions, military-grade sensors, radar devices, lasers, health monitoring tools, and high-tech clothing.

Women-Owned Small Business Federal Contracting program The program helps women-owned businesses compete for federal contracts in industries where women-owned small businesses are underrepresented. A list of qualifying industries includes bakeries, commercial and industrial building construction, oil and gas pipeline construction, roofing contractors, sewage treatment facilities, tax preparation services and more. More information is available at:

Even more…

To learn more about the many programs available for small businesses, the U.S. ���ϳԹ��� of Commerce has compiled a list of more than than 30 grants, loans and programs at:

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A bill to protect Arizona businesses, schools, healthcare providers, government agencies, and others from frivolous Covid-19 lawsuits took another step forward Wednesday when the state House Judiciary Committee approved the measure. 

The legislation, Senate Bill 1377, is needed to ensure that responsible businesses and employees, particularly those on the frontlines of the pandemic, are not targets of meritless lawsuits, said the sponsor of the bill, Sen. Vince Leach, R-Saddlebrooke, who testified at the hearing. 

As federal lawmakers have failed to pass protective legislation, about half the states have taken the matter into their own hands and passed Covid liability protection bills, Leach said.   

“In other words, they are seeing the effect of ‘sue and settle’ — going after entities from schools to businesses to the medical community,” he said. 

Safe harbor from unwarranted litigation

Judiciary committees from both houses have approved the legislation. The bill offers protection from reckless litigation for businesses and others who act in “good faith” to implement reasonable policies to protect their customers, clients and patients. 

SB 1377 also offers protection for injuries that result from indirect causes, such as a patient who was unable to get admitted to a hospital when healthcare facilities were barred from performing non-elective surgeries during the public health emergency. 

Under the legislation, plaintiffs would have to prove “clear and convincing evidence that a person or provider failed to act or acted with wilful misconduct or gross negligence” in order to win a civil suit. 

Representatives from industry, education, healthcare testify 

A number of representatives from the business, education and the healthcare community spoke on behalf of the bill at the hearing.

While the bill offers “targeted and reasonable” liability protection for responsible entities, it does not protect “bad actors,” said Courtney Coolidge, vice president for government affairs at the Arizona ���ϳԹ��� of Commerce and Industry. 

“SB 1377 is not blanket immunity. It protects responsible actors working diligently under extraordinary circumstances while preserving reasonable recourse for truly bad actors,” Coolidge said.  

The bill also does not provide a new shield for employers, she said, and specifically exempts any claims that are already subject to the workmans’ compensation statute.

National law firms spending millions on ads to lure clients 

As businesses and employees continue to work on the frontlines to operate and respond to the crisis, many are in fear of malicious lawsuits, said Coolidge and others who testified at the hearing.  

Litigation tracking organizations show that their fears are not unfounded. Millions of dollars are being spent by plaintiffs-firms on television ads, a “clear indication of what’s to come,” Coolidge said. 

According to a report issued last month by the , plaintiff-side law firms funneled an estimated $34.4 million into television ads last year to attract COVID-19 clients. 

The report shows that 176,053 television ads offering legal services or soliciting legal claims mentioning COVID-19 aired in the U.S. from March through December 2020. The biggest spender is a large national firm that spent $10.5 million airing 70,000 ads advertising pandemic-related matters. 

Small businesses most vulnerable 

Mike Huckins, vice president of public affairs for the , also spoke on behalf of the bill at the hearing, stating that small businesses are among the most vulnerable to meritless claims.

“This bill is important to all businesses, but especially crucial to small businesses, many of whom our chamber represents,” Huckins said. “Those small businesses don’t have the legal resources necessary to protect themselves from frivolous lawsuits. 

“This bill will give them a lifeline in order to help businesses recoup after pandemic as long as they adhere to common sense health guidelines.”

Since the federal government has failed to pass a national law for liability protection, now is the time for Arizona to step up, he said.

“It’s time that Arizona lived up to its business-friendly reputation and join 25 other states that have already enacted the legislation.” 

The legislation is not without its detractors. Barry Aarons, a lobbyist for the Arizona Trial Attorneys Association, voiced opposition to the bill, saying it places the standard for proof so high that legitimate medical malpractice claims will be almost impossible to litigate.

Thousands of employers support liability protection

Meanwhile, stakeholder groups have spent months working with legislators to craft SB1377. Language in the bill is similar to other liability laws passed in Arizona and other states. Governor Doug Ducey, in his State of the State address, also identified the need to protect job creators and health care workers against predatory COVID exposure lawsuits. 

To read the bill’s full text, go to: .

Organizations supporting the bill

A coalition of nearly 100 businesses, trade associations, schools, nonprofits, health providers and other organizations in Arizona support SB 1377 including:

21st Century Healthcare

Alliance of Arizona Nonprofits

American Academy of Pediatrics, Arizona Chapter

American Heart Association

American Property Casualty Insurance Association

Americans for Prosperity

Amigos Trade Association

Apache Junction ���ϳԹ��� of Commerce

Arizona Academy of Family Physicians

Arizona Alliance of Boys and Girls Clubs

Arizona Assisted Living Homes Association

Arizona Association of Community Managers

Arizona Association of Health Plans

Arizona Association of Providers for People with Disabilities

Arizona Automobile Dealers Association

Arizona Automotive Wholesalers Association

Arizona Bankers Association

Arizona Board of Regents

Arizona ���ϳԹ��� of Commerce & Industry

Arizona Chapter National Safety Council

Arizona Charter Schools Association

Arizona Council of Human Services Providers

Arizona Dental Association

Arizona Farm Bureau Federation

Arizona Foot and Ankle Medical Association

Arizona Health Care Association

Arizona Hispanic ���ϳԹ��� of Commerce

Arizona Hospital and Healthcare Association

Arizona LeadingAge

Arizona Licensed Beverage Association

Arizona Lodging and Tourism Association

Arizona Manufacturers Council

Arizona Medical Association

Arizona Mining Association

Arizona Multihousing Association

Arizona Nurses Association

Arizona Optometric Association

Arizona Osteopathic Medical Association

Arizona Petroleum Marketers Association

Arizona Pharmacy Association

Arizona Realtors

Arizona Restaurant Association

Arizona Retailers Association

Arizona Rock Products Association

Arizona School Risk Retention Trust, Inc.

Arizona Small Business Association

Arizona Soccer Association

Arizona State Association of Physicians Assistants

Arizona State University

Arizona Technology Council

Arizona Trucking Association

Associated General Contractors of America Arizona Chapter

Buckeye ���ϳԹ��� of Commerce

Building Owners and Managers Association of Greater Phoenix (BOMA)

Carefree Cave Creek ���ϳԹ��� of Commerce

Chandler ���ϳԹ��� of Commerce

Chubb Insurance

City of Surprise

City of Yuma

Coconino County

County Supervisors Association of Arizona

East Valley ���ϳԹ���s of Commerce Alliance

Education Finance Reform Group

Experience Scottsdale

Fountain Hills ���ϳԹ��� of Commerce

Fresenius Medical Care North America

Gilbert ���ϳԹ��� of Commerce

Glendale ���ϳԹ��� of Commerce

Greater Flagstaff ���ϳԹ��� of Commerce

Greater Florence ���ϳԹ��� of Commerce

Greater Oro Valley ���ϳԹ��� of Commerce

Greater Phoenix ���ϳԹ��� of Commerce

Greater Phoenix Economic Council

Greater Phoenix Leadership

Green Valley Sahuarita ���ϳԹ��� of Commerce & Visitor Center

Health System Alliance of Arizona

Home Builders Association of Central Arizona

HonorHealth

InvisionAZ

Lake Havasu Area ���ϳԹ��� of Commerce

League of Arizona Cities and Towns

Marana ���ϳԹ��� of Commerce

Mesa ���ϳԹ��� of Commerce

Mutual Insurance Company of Arizona

National Association of Industrial Office Properties, Arizona Chapter

National Federation of Independent Business 

Nationwide Mutual Insurance Company

Northern Arizona University

Page-Lake Powell ���ϳԹ��� of Commerce

Peoria ���ϳԹ��� of Commerce

Pharmaceutical Research and Manufacturers of America 

Phoenix Formulations

Prescott Valley ���ϳԹ��� of Commerce

Queen Creek ���ϳԹ��� of Commerce

Republic National Distributing Company of Arizona

Republican Liberty Caucus of Arizona

Scottsdale ���ϳԹ��� of Commerce

Southern Arizona Home Builders Association

Southern Arizona Leadership Council

Southwest Valley ���ϳԹ��� of Commerce

Southwest Veterans ���ϳԹ��� of Commerce

State Farm Insurance Companies

Surprise Regional ���ϳԹ��� of Commerce

Tempe ���ϳԹ��� of Commerce

Total Spectrum

Town of Queen Creek

Tucson Metro ���ϳԹ���

United Dairymen of Arizona

United Services Automobile Association 

University of Arizona

Valley Partnership

West Valley ���ϳԹ���s of Commerce Alliance

Western Plant Health Association

Wickenburg ���ϳԹ��� of Commerce

Wine and Spirits Wholesalers Association of Arizona

Yavapai County Contractors Association

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Last June, the survey showed relatively high optimism among Black and African American small business owners, with 7 out of 10 saying their current financial situation was somewhat or very good. However, another statistic in the survey highlighted an issue that has continued to challenge Black and African American business owners and other diverse business owners in general: more than one third or 35% of Black and African American business owners said they had some level of difficulty accessing credit.

As we celebrate Black History Month, it is as important as ever to acknowledge this ongoing challenge faced by the Black and African American business community and consider solutions to help shift the landscape for better equity and prosperity.

Assessing the problem

According to the National Bureau of Economic Research, Black-owned small businesses are closing at nearly twice the rate of the industry placing a spotlight on the lack of access to credit.

The first step in solving any problem is acknowledging it exists. These businesses are often smaller in terms of number of employees, payroll and startup capital, and they may not have established banking relationships. These factors make them much more susceptible to economic downturns and challenges as they stage a comeback.

Creating an ecosystem of support

Making more credit options available to diverse business owners can be the difference between a business’ survival and its closure. In addition to traditional lending, working with Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) can create an ecosystem of support that provides additional avenues to access capital. These institutions specifically work with underserved populations, including those in low-to-moderate income areas and minority populations.

Supporting these organizations and their mission is at the heart of the creation of our (OBF), Wells Fargo’s industry-leading effort that has donated roughly $400 million to support nonprofits who serve small businesses. 

The OBF provided additional capital for these institutions to continue their important work in supporting diverse business owners. As the larger financial industry continues to work toward solutions to tackle inequity in access to capital, these organizations are critical to bridging the access gap to help smaller and diverse-owned businesses achieve their goals.

Beyond accessing capital

As our work continues toward solving the issue of access to capital, it is also important to highlight the additional challenges outside of (but related to) accessing capital that must be tackled for these businesses to truly thrive. In addition to accessing capital, training, technical support, and long-term resiliency planning are needed to help diverse small business owners find ways to pivot their business models and reimagine their products and services so they can meet the needs of an evolving economy. These actions, coupled with more equitable access to capital can accelerate the recovery of the wider small business ecosystem, creating numerous pathways for entrepreneurs to seek the help they need.

The path forward

As we look ahead, there’s very little about the future that seems predictable right now. As we move forward, let’s start with the things that can be controlled, such as putting customers first, being a community leader, and understanding the to establish good banking relationships. While success is not guaranteed, taking these steps will help to move us in the right direction.

Wells Fargo is committed to improving access to credit for Black and African American business owners, which can be accomplished through effective partnerships and holistic solutions. By working together, communities, financial institutions and business owners can continue to move toward a more equitable landscape where business owners can thrive and prosper.

Don Pearson is the Wells Fargo Lead Region President

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After an abbreviated legislative session last year due to Covid-19, Arizona lawmakers stepped into the 2021 session this week under pressure to enact policies to steer the state to full economic recovery in the coming months. 

Covid relief will be the first order of business, said the incoming chair of the House Commerce Committee, Rep. Jeff Weninger (R-Chandler). 

“Covid is number one and that’s twofold: rolling out the vaccine and taking care of people, and making sure businesses can survive and thrive and they’re not damaged and go out of business for something that was completely out of their control,” he said.  

Getting the word out about existing and new federal relief programs to help  companies and individuals affected by the pandemic is also a top priority, Weninger said.

Third term as Commerce Committee chair 

Weninger, a small business owner who operates restaurants across metro Phoenix, is serving his third consecutive term as the chair of the Commerce Committee, which oversees regulatory activities that impact industries. 

During his tenure, Weninger has sponsored and co-sponsored numerous business-related bills. Among them, bills to create tax credits to spur affordable housing, expand telemedicine coverage, attract high-tech industry, and institute crowd-funding legislation to give small companies greater access to capital.

Weninger spoke to ���ϳԹ��� about what he foresees as top priorities for the 2021 session. 

Adopt business-friendly policies to attract industry, jobs 

In addition to COVID relief, maintaining Arizona’s reputation as a “tax friendly and regulatory friendly” state will be a high priority to continue to attract a diversity of industry and high paying jobs, Weninger said.

“That is why we have been so successful for the past six years. We’ve had a renaissance of businesses moving here and expanding here and growing here and that is why our budget is in the incredible shape it is in today,” he said, referring to the state’s $1 billion rainy day fund. 

Lessen negative impact from Prop. 208 tax hike 

The passage of Proposition 208 moved Arizona up to one of the highest income tax states for certain earners and small business owners, Weninger said. 

The intent was to provide new funding for education. But tens of thousands of small businesses that file their taxes under the individual tax code could be affected as well. That threatens to severely hamper the state’s ability to retain and attract investment, he said.   

Lawmakers are brainstorming solutions to mitigate some of the impacts, particularly for small companies with 500 or fewer employees. Expect to see some tax reforms to help.  

“The voters voted it in, so how do we keep our budget in a safe place and make us attractive for this mass exodus from California and other states,” Weninger said. “We want to make sure we have policies in place that won’t have them just driving right by Arizona on their way to Texas. 

“We’ve done a great job for a while making sure that doesn’t happen, but we need to find a way to make sure that doesn’t happen with Prop. 208.”

Protection from frivolous lawsuits, regulatory reform, telemedicine

Others goals this session will be to enact legislation to protect responsible companies and organizations from frivolous COVID-19 lawsuits, promote expansion of virtual and digital services like telemedicine, and implement regulatory reforms to reduce costs on companies and individuals. 

Expect bills to close student achievement gaps, fund workforce initiatives, and improve water and transportation infrastructure, he said.  

Alcohol-to-go compromise to push up restaurant, bar profits

As a restaurant owner who had to adapt to survive the pandemic disruptions, Weninger is seeking solutions to aid the struggling bar and restaurant industry as well. One proposal is to expand alcohol-to-go for a variety of establishments. 

“We’re talking about a compromise, a new right for restaurants, bars, grocery stores that don’t have the option right now,” he said. “The bars have been hit very, very hard and they were actually completely shut down for a while, so we don’t want to take a privilege outright that they have had already — and their licenses cost a lot more.”

Federal relief programs for individuals, businesses 

For individuals and businesses financially struggling because of Covid-19, Weninger is strongly encouraging them to apply for existing and new federal relief programs including the Paycheck Protection Program and Employee Retention Tax Credit.   

For more information about these and other programs, go to: . 

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Supporting small businesses still struggling during the pandemic, bolstering the state’s stressed healthcare system, and reducing the influence of out-of-state interests on Arizona’s ballot initiative process are some of the top items on the Arizona ���ϳԹ��� of Commerce and Industry’s wish list for state legislators this year.  

The ���ϳԹ��� revealed these and a host of other policy recommendations Friday during its annual 2021 Legislative Forecast Luncheon. Governor Doug Ducey and legislative leaders also discussed their priorities at the event.

“The health crisis has upended not only the Arizona economy but the entire world in this global pandemic,” said Glenn Hamer, president of the Arizona ���ϳԹ���. “Arizona has weathered this pandemic downturn just about better than any state and, as I’ve said many times, our governor has had just the right touch as we have weathered this once-in-a-century event.

“But some of our industries like tourism and hospitality continue to struggle.”

Hamer praised “heroic” healthcare providers and workers in saving lives. He also decried the violent protest that took place at the nation’s Capitol last Wednesday, resulting in five deaths. 

Almost 900 attend event to hear recommendations from business, lawmakers 

The ���ϳԹ��� and the Arizona Manufacturers Council hold the event every year to release their of policy recommendations as well as hear from the governor and legislative leaders about their priorities for the legislative session that kicks off today.��

Almost 900 people attended the virtual event including dozens of local, state and federal elected officials and business and community leaders. Hamer thanked the sponsor of the event, Cox Communications, for providing the internet infrastructure that has proved essential for thousands of job creators and their employees to continue thriving during one of the “most disruptive economic periods in history.”

Gov. Ducey calls on everyone to prevent the spread   

This year’s short-term priorities were quite different from last year when state leaders grappled with topics like how to keep up with mushrooming population growth and the booming economy. 

This year, ensuring Arizona citizens receive Covid-19 vaccines quickly and bringing the economy to full recovery were top goals of all who spoke. 

Governor Doug Ducey made several remarks about his priorities for the session. Arizonans’ health is the number one priority now. Getting Arizona citizens vaccinated is critical, he said. 

“This is a modern medical miracle that I don’t think anyone could have foreseen in March,” Ducey said about the successful race to get a vaccine for the deadly virus. “Not only do we have the vaccines here from Pfizer and Moderna and others on the way, they are in the state and they are going into people’s arms.”

Ducey, whose 97-year-old grandmother just received her vaccine, said elderly citizens and health care and essential workers will be vaccinated first before the general public at large. 

Government will also focus on helping the underserved populations in tribal and rural areas.

Communicating that this vaccine is safe and effective is another priority to “get us back to normal as quickly as possible,” the governor said.   

Catching students up post pandemic 

As vaccines roll out, providing resources to education to bring children back up to speed in academics is another important step for economic recovery, Ducey said. Jobs and the economy will naturally follow, he said, and “no state is better positioned than the state of Arizona” to succeed.

Other priorities mentioned by the governor were to continue to work to strengthen relations with Mexico, secure public safety and commerce at the border, and champion Arizona tourism and exports on the world stage. 

Legislative leadership focused on covid, education, small businesses, jobs 

The event also featured a “fireside chat” with Senate President Karen Fann, Senate Minority Leader-elect Rebecca Rios, Arizona House Speaker Rusty Bowers, and House Minority Leader-elect Reginald Bolding, who spoke about what their priorities will be for the session. 

All stated that helping citizens and businesses recover from the pandemic is a major goal. Pressing issues include helping the unemployed get back to work, preventing families from being evicted from their homes, attracting and retaining business and industry, supporting education, and funding infrastructure like broadband access and highway construction.  

���ϳԹ��� business agenda unveiled 

At the event, the ���ϳԹ��� and Manufacturers Council provided digital copies of comprehensive policy recommendations for the year. Hundreds of goals with business in mind include topics around education, free trade, civil justice reform, workforce development, the environment and water resources, transportation, tourism and much more. 

Dawn Grove, chair of the ���ϳԹ���’s , said that “first and foremost” priority will be recovery from the pandemic and mitigating the impact from Proposition 208. 

The proposition, adopted in November, created a new tax for top earning individuals and couples, but also is expected to affect tens of thousands of small businesses. These are “pass through” entities, meaning they do not file their income taxes as corporations. Instead, they file under the individual tax code. 

Under the new law, Arizona’s top income tax rate has jumped from thirteenth lowest in the nation to the ninth highest, going from 4.5 to 8 percent, a 78 percent increase, affecting individuals who earn $250,000 and joint filers who earn $500,000. Small business owners who file under the individual tax code are subject to the tax as well. 

The new tax rate could not only hurt Arizona’s small businesses — companies with 500 or fewer employees — but it could dampen investment here, Grove said. 

Among measures being proposed to help the small business community and keep the state a desired location for new industry are reductions in commercial property taxes. 

���ϳԹ��� officials will also be pressing state lawmakers to enact laws to protect employers, cities and towns, and organizations from “predatory” Covid-19 lawsuits. 

Reforming state ballot initiative process another high priority

���ϳԹ��� officials also will be calling on the Legislature to continue to work in a bipartisan manner, pass laws to promote educational excellence in schools, and to reform the state’s ballot initiative law that has been overtaken by out-of-staters, Grove said. 

“Arizona’s propositions, as you know, once passed can almost never be changed even when they cause the opposite of their intended results,” Grove said. “We can and we must do better together. Our second priority will be to advance reforms to protect our initiative system from out-of-state agendas and enhance the credibility of the system. 

“While recent reforms have added some rigor to the citizen initiative system, Arizona’s system remains attractive to out-of-state groups to use our ballot box to implement policies not in Arizona’s best interest, in part because they know it’s so easy to pass here and so hard to change.”

To read the full business agenda from the ���ϳԹ��� and Manufacturer’s Council, go to:�� .��

The post Policy goals, optimism dished up at Arizona ���ϳԹ���’s 2021 Legislative Forecast Luncheon appeared first on ���ϳԹ���.

This holiday season the country should have a renewed sense of hope as our frontline workers continue receiving the first round of COVID-19 vaccinations and now with the passage of an additional round of COVID relief, the second largest relief package in our nation’s history following the CARES Act.  

After months of delay, Congress late Monday overwhelmingly passed containing $900 billion in COVID relief and $1.4 trillion to fund the government through September 30, 2021.  

The COVID relief package delivers needed relief for American businesses, nonprofits, and families hit hard by the pandemic. 

Learn more about what this relief means for you and/or your business with a few significant highlights of the package below.  

• RELIEF FOR INDIVIDUALS AND FAMILIES:

1. Direct payments to individuals
   Individual adults will receive $600 for those making up to $75,000 a year on their 2019 tax returns, $1,200 for couples making up to $150,000, and $600 for each dependent child. Individuals earning between $75,000 and $99,000 would receive a partial payment.��

2. Extended aid for unemployed workers
   Extends unemployment benefits for jobless workers, who will receive up to $300 per week through March 14^th.  This includes the Pandemic Unemployment Assistance (PUA) which provides UI benefits to workers who traditionally are ineligible.��
   ��
3. Rental Assistance
   Provides $25 billion in rental assistance to help pay past due rent, future rent, and utility bills. Extends the existing CDC eviction moratorium through January 31, 2021. The Treasury Department will disperse the rental assistance to states via a formula based on population.����

• CONTINUED LIFELINE FOR SMALL BUSINESSES: ��

4. Extends and expands the Paycheck Protection Program (PPP)
   Provides renewed funding of $284 billion and extends the program to March 31. Will provide forgivable loans to both first- and second-time small business borrowers. The bill expands eligibility of the program for 501(c)(6) nonprofit and destination marketing organizations. It authorizes hard-hit small businesses with fewer than 300 employees and at least a 25% drop in gross receipts over a specified period to receive a second loan. The bill dedicates a portion of the funding specifically for low-income communities and sets money aside for loans from community-based and minority-owned lenders.
   
   The bill makes some changes to the program to reduce the maximum loan amount from $10 million to $2 million and expands how funds can be used. While the requirement that 60% of the PPP loan must be used for payroll remains in place, Congress added four additional categories for qualified expenses: 1) operations expenses for items such as software and computing, 2) supplier costs for goods essential to the operation of the business, 3) worker protection expenses such as items need to protect workers and customers to comply with CDC guidance i.e. plexiglass, expansion of outdoor dining etc., 4) property damage expenses as result of riots.��
   
   While the CARES Act specified that forgiven PPP loans would not count as taxable income, the new package clarifies that businesses can deduct expenses paid with forgiven PPP loans.��

5. Expands the Economic Injury Disaster Loan (EIDL) Program��
   Provides $40 billion to extend the Small Business Administration EIDL grants through December 31, 2021 and sets aside $20 billion for employers in low-income areas with 300 or less employees who experience at least a 30% economic loss, allowing them to receive a $10,000 grant. Authorizes individuals who previously received a partial EIDL grant to receive an additional payment for a combined total of $10,000. Importantly it removes the requirement for EIDL emergency grants to be deducted from the calculation of PPP loan forgiveness.��

Are you a small business that needs help navigating these new changes and impacts to your existing relief? The to answer your questions that will continue to be updated as more information becomes available.   

• TARGETED BUSINESS SUPPORT:

6. Live venue grant program ����
   Provides $15 billion for the Small Business Administration to concert venues, independent movie theaters, live entertainment venues, museums, and cultural institutions who demonstrate at least a 25% decline in revenue.
   ��
7. Transportation and travel support
   Includes $45 billion for relief to transit agencies, airlines, airports, state departments of transportation, the motorcoach industry and Amtrak. Includes $15 billion to cover airline salaries and benefits through the end of March, $1 billion for airline contractor payrolls, and $2 billion for airports and airport-based business.
   ��
8. Support for the agriculture community & food supply
   Provides $12 billion to crop farmers, cattle ranchers, and rural communities.

• TAX PROVISIONS PROVIDE RELIEF AND STIMULATE ECONOMIC RECOVERY

9. Employee Retention Tax Credit (ERTC)
   Extends the ERTC to July 1 and increases the refundable payroll tax credit from a maximum of $5,000 to $14,000 by changing the calculation from 50% of wages paid up to $10,000 to 70% of wages paid up to $10,000 for any quarter.��

10. Low-Income Housing Tax Credit (LIHTC)��
    Increases allocations to states for LIHTC which subsidizes the construction and rehabilitation of housing developments that have strict income limits for eligible tenants and their cost of housing.����

11. Employer-side Social Security Payroll Tax Credits
    Extends through March 2021 to offset paid sick and family leave related to the coronavirus created Families First Coronavirus Response Act.  

12. Deduction for Business Meals
    Expansion of the deduction for business meals to 100% for 2021 and 2022. 
     
13. Tax Extenders
    The bill included tax extenders for 32 of the 33 tax provisions that were set to expire at the end of 2020 including the permanent extension of lower excise tax rates for beer, wine and spirits, and the 5-year extension of tax incentives for investing in low-income areas and hiring workers from disadvantaged groups.  

• SUPPORT FOR SCHOOLS AND CHILDCARE ORGANIZATIONS TO CONTINUE SAFE OPERATIONS

14. K-12 schools and higher education support ��
    Provides $82 billion in funding for schools and universities to assist with reopening which includes $54.3 billion for K-12 schools and $22.7 billion for higher education.����

15. ��Safe opening of childcare ��
    $10 billion for childcare centers to help providers safely reopen and $250 million for Head Start providers.����

• COMBATING THE VIRUS WITH ADDITIONAL HEALTHCARE SUPPORT

16. Vaccines, Testing & Tracing��
    Provides a total of $63 billion for vaccine distribution, testing, tracing and other health-care initiatives. Of this amount, $22.4 billion will go to states for testing, tracing and COVID mitigation programs, of which $2.5 billion is dedicated as grants targeting rural areas and communities of color.��

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Arizona’s state Senate Finance Committee met last week to discuss what the new tax law that resulted from passage of Proposition 208 last month will mean for the state’s economic future and what can be done to offset potential negative consequences. 

While the new tax is meant to tax the wealthy to help fund education, it has an unintended consequence: It will affect tens of thousands of small businesses as well. 

That could have dire consequences for Arizona’s economic health, said the chair of the committee, Senator J.D. Mesnard (R-Chandler), who scheduled the meeting to hear from legislative budget analysts and others on what the impact will be. 

“We don’t want to become a flyover state,” Mesnard said when referring to Arizona’s future economic development prospects.

Arizona now in top 10 for high income tax bracket

Before the new tax was approved, Arizona’s top income tax rate was the 13th lowest in the nation. Now, economists calculate the state has the ninth highest rate in the U.S. 

“Having the ninth highest income tax rate, the 11th highest combined average sales tax rate and high business property tax, you can’t have all those things at the highest end and not have at some point a collapse in economic growth,” said Mesnard, who is working with fellow lawmakers and others to find ways to lessen the impact on business and protect Arizona’s ability to attract investment. 

Initiative almost doubled top tax rate

Under the new tax law, Arizona’s top income tax rate went from from 4.5 to 8 percent – a 78 percent increase for individuals who earn $250,000 and joint filers who earn $500,000.  

Businesses that file under the individual tax code instead of the corporate tax code are also impacted. Corporate filers are not affected by the tax increase. 

Positive and negative impacts of the new tax 

At the committee hearing, Hans Olofsson, longtime chief economist for the Joint Legislative Budget Committee (JLBC), laid out the potential outcomes from the new 3.5 percent surcharge.

Using a static analysis that doesn’t account for potential secondary budgetary impacts, Olofsson estimates that the state will gain about $874 million in tax revenues for education the first year.  

Olofsson said the majority of the taxes, 75 percent, will go to increase teacher and staff salaries. With more money in their pockets, they could spend more and that will push up sales tax collections, he said. 

On the negative side, high income earners could decide to leave the state, Olofsson said. Higher tax rates also could reduce incentives for businesses to locate or expand in Arizona. 

High income tax states end up losers in the long run 

National economist Steven Moore also spoke at the meeting about what happens when states raise their income tax rates.  

Moore and fellow economist and researcher Dr. Arthur Laffer conducted an analysis for the Arizona ���ϳԹ��� of Commerce & Industry to determine just that. The report, “Arizona’s Proposition 208 Loses Jobs and Harms Small Businesses,” analyzed how tax rates have affected states over the past 30 years.  

Almost all states with lower tax rates perform better

According to Moore and Laffer’s research, almost all states with low or zero income tax rates performed better in most economic indicators than those states with high tax rates. 

High tax states saw less revenue for government responsibilities, including education. An analysis of the 11 states that introduced income taxes since the 1960s shows they are at the “very bottom of performance” in not only economic and population growth, but revenue for public services. 

Harsh implications for Arizona

Using data from other states, the economists measured the impact Arizona’s Proposition 208 would likely have on jobs, wages, interstate migration, tax revenue collections, state competitiveness, and small businesses.

They found that all areas would likely suffer, making “Arizona residents poorer and the state’s economy less competitive.” 

Among their findings:

•An estimated 200,000 jobs and about $25.5 billion in personal income would be lost over the  next 10 years. 

• Fifty percent of the tax would be borne by small business owners and operators that typically generate from half to two-thirds of the jobs in a state.  

• Arizona’s economic competitive position among the 50 states would fall from No. 10 to No. 16.

•The state would lose 700,000 people in net in-state migration over just the next decade.

Arizona needs to find ways to keep growing

Glenn Hamer, the president and CEO of the Arizona ���ϳԹ���, also spoke at the meeting to encourage state lawmakers to find a way to fund education without harming the backbone of the state’s economy, small businesses. 

Before Proposition 208, Arizona was among the fastest growing states and “always seemed to be a finalist when it came to big corporate announcements,” Hamer said. 

Now, it will have a much harder time competing with other states that have lower or zero income taxes, he said. 

“This is something that affects all of us,” Hamer said. “We need to figure things out so we can fund education in a sustainable way, but we don’t want to do something to hurt our economy and the incredible growth we’ve all enjoyed and experience with this dramatic change.”

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Small businesses in Arizona, those with 500 or fewer employees, are not so small when it comes to economic output, according to a new report commissioned by the Arizona Small Business Association (ASBA). 

In fact, before the pandemic, they employed more than half the state’s workforce and produced $191.4 billion in annual economic activity, almost half the annual state GDP, the report shows. 

“I’ve been studying the economy in Arizona for two, two-and-a-half decades at this point, and I didn’t really appreciate the extent of small businesses’ impact on the economy until we got into these numbers. It was very impressive,” said economist Jim Rounds, president of Rounds Consulting Group, Inc., which conducted the analysis for ASBA. 

Report illustrates how important small companies are to state

ASBA commissioned the report to illustrate how important small companies and sole-proprietor businesses are to Arizona and how important it is to help them survive the final throes of the pandemic.

Among the findings:

• Small companies account for 99.4 percent of all businesses in the state. Of the 595,764 businesses, 592,485 are small companies��
• Approximately 486,000 of these small companies are self-employed operators��
• Small companies employ about 1.6 million of Arizona’s 2.9 million workers��
• Small businesses create $71.3 billion in annual wages and income������
• Small companies generate $10 billion in tax revenues for state and local governments annually

Rounds, who analyzed U.S. Census Bureau business data from 2017 for the study, said the figures illustrate the important role small businesses play in the state’s overall business ecosystem, including supporting large business attraction and expansion. 

New ‘Arizona Speaks’ to advocate for business recovery policies  

ASBA released the report at the kickoff of its new effort, Arizona Speaks: The State of Small Business, to find ways to advocate for and help struggling companies make it through the next several months as COVID-19 vaccines are rolled out worldwide. 

The effort is supported by Arizona Gov. Doug Ducey’s Office, and ASBA will continue to work with Rounds Consulting Group to quantify the full impact that small businesses have on the economy and recommend policies that will be beneficial to Arizona’s small business recovery into a state of small business report.  

More than 70 percent of state’s small businesses hurt 

Former Gilbert mayor Jenn Daniels, who moderated the event where the report was released, said state policy decisions made now can have a significant impact on the ability of Arizona small businesses to recover from the COVID-19 pandemic and again lead the state’s economic well-being.

According to the study, a majority of Arizona small businesses reported being negatively affected by COVID-19. U.S. Census survey data identified that nearly 42 percent of small businesses believe it will take more than six months to return to the previous year’s business level. 

Some of the issues short- and long-term that need to be addressed are workforce training, affordable housing, increasing the average wage amount, and assistance for small businesses hurt by the new Proposition 208 income tax hike, Rounds said. Rural areas also have a much higher percentage of small businesses than urban, posing challenges for lawmakers representing these areas.

Next decade could be Arizona’s best 

With hard work on everyone’s part, Rounds predicts a bright future moving forward. 

“If we can identity and work with groups like ASBA and their connections with other organizations as well, I think we’ll be able to identify good public policy moving forward to not only deal with COVID-19 recovery, which we will be out of soon, but also over the next decade so we can we make this one of the biggest expansions in the state history.” 

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