Senate Bill 1403 – Arizona’s Next Step to Manufacturing Leadership

Kudos to State Senator Barbara Leff of Paradise Valley and other sponsors, for introducing and championing Senate Bill 1403, for “Renewable, High-Wage Industry Incentives.”  Senator Leff, who chairs the Senate Commerce and Economic Development Committee, has long been a strong advocate for strengthening Arizona’s manufacturing and high-tech  economy. 

The bill provides for a combination of tax credits and property tax reclassification for companies that manufacture renewable energy products, and that in doing so create above average wage jobs, provide significant health insurance benefits and invest $25M or more in capital in Arizona.  It has been thoughtfully crafted, reflecting the learning from earlier subsidy programs that were disappointing or became unaffordable because they were not clearly defined, did not have appropriate limits to state spending and paid out benefits regardless of the results.  From the business community, GPEC (Greater Phoenix Economic Council) in particular, under the leadership of its chairman, Michael Bidwill, and CEO, Barry Broome, also deserve great credit.  GPEC has made the bill a centerpiece of its efforts to reverse declining economic trends in the State by recognizing both the essential role of manufacturing to the future  economic health of Arizona, and also this crucial moment in time when renewable energy firms are selecting locations from which they will operate, probably for decades to come.  Arizona can and should be in the forefront of these locations.  Supporters of the bill spoke clearly and persuasively that Arizona’s business and government interests need to work together to bring Arizona’s practices in attracting new manufacturing to a level where our state can compete effectively with other US states to whom we have lost many new manufacturing operations.  It is a tribute to the legislative leaders that even in the heat of the budget crisis they were able to bring this bill to successful passage.

Transmitted to Gov. Brewer on July 1, SB 1403 is said to have a good chance of being signed into law by the Governor.  The Arizona Republic, in an editorial this week urged this action.  Although the Governor’s office has not indicated support, there appear to be few, if any, voices in opposition.  The Governor should sign this bill.

Senate Bill 1403 can be an important first step for Arizona into a future where we begin to retrace the successful steps of the past that made the United States a manufacturing leader.  We need to challenge the conventional thinking that says that the future of our country is as a “services” economy, and that it is inevitable that only other countries will be economically successful in producing the high value goods that Americans desire.  Renewable energy products are a fitting place to start on this journey back for Arizona.   As we think about the next steps of this renewal, we need to be thinking about how to help companies who come to Arizona thrive, by surrounding them with Arizona’s best talent, educational and other resources that will be required for them to compete, win and grow, from a home base in Arizona.  Much as a plant grows best with the careful preparation of the soil and nutrients around its fledgling roots, we need to think in this way about those new manufacturers who we will attract to Arizona based on SB 1403.

Producing a Home Run for Arizona Manufacturing.  While an abundance of sunshine does not directly translate into an advantage in the manufacturing of renewable energy products, it should start to provide a significant competitive advantage for R&D and manufacturing based in Arizona if the large-scale production of renewable energy takes hold in our state.   There is nothing better than a local, demanding and sophisticated consumer base to spur the excellence of suppliers of those products. 

The Arizona Corporation Commission has provided the impetus for this to happen, with its mandate passed in 2006 that requires Arizona utilities to provide a growing percentage of their power from renewable sources, rising annually from 1.75% in 2008 to 15% in 2025, and some on the ACC are calling for an even more aggressive goal of 25%. 

What would be a home run for Arizona would be to not only attract the best of the renewable energy product manufacturers here, catalyzed by the passage of SB 1403, but also to see the widespread deployment of those very products to meet Arizona’s renewable energy goal.