Tag Archives: arizona small business association

online sales tax issue

Legislative Session Improves Business Landscape in Arizona

The Arizona Small Business Association (ASBA), the largest trade association in Arizona representing over 11,000 member businesses in all 15 counties, tracked 65 bills during Arizona’s 51st Legislature (Jan. 14 – June 13, 2013), eight of which were Priority Bills. ASBA has announced all eight Priority Bills passed.

“We have a strong sense of responsibility to our members and Arizona’s business community,” states Jerry Bustamante, ASBA sr. vice president of public policy. “We understand that our actions influence how our elected officials vote and that our members hold us to a high standard.”

To advocate for businesses throughout Arizona, ASBA focused on five legislative priorities: 1) Taxation, 2) Regulation, 3) Economic Development, 4) Health Care and 5) Education.

“Bills signed into law such as HB 2147 and 2324 are excellent examples of a good public policy that, collectively, make Arizona more business-friendly and provide relief to existing businesses,” says Rick Murray, CEO of ASBA. “HB 2111, commonly known as TPT, on the other hand, is a single bill that will make a dramatic contribution that will completely change the landscape in which businesses operate. TPT will provide a much needed overhaul to an overly burdensome tax system.”

Bustamante adds, “ASBA is proud to have been part of, and have taken a leadership role in, the coalition of business groups that fought to reform TPT and bring much-needed relief to Arizona.”

The following were ASBA’s 2013 Priority Bills:

HB 2111: Transaction Privilege Tax Change (TPT)

  • Sponsor: Rep. Debbie Lesko, LD 21
  • Summary: This is the Transaction Privilege Tax (TPT) simplification bill that intends to significantly reform how sales taxes are collected in Arizona. The intent of the bill is to provide Arizona businesses with, and return Arizona to, a single organization that manages all tax and audit activities. The Arizona Department of Revenue would be charged with creating an online portal to provide a single location to get a TPT permit, file TPT returns and make TPT payments for all jurisdictions in the state.
  • Result: After much debate and compromise, HB 2111 passed out of the House with a 58-1 vote, passed out of the Senate with a 29-0 vote on the legislature’s final day and will soon arrive on Governor Brewer’s desk to be signed into law.

HB 2147: Unemployment Benefits; Proof; Eligibility

  • Sponsor: Rep. Warren Petersen, LD 12
  • Summary: This bill is the latest effort to reform how unemployment benefits are delivered in Arizona and attempts to level the playing field where businesses have been at a disadvantage. This bill provides much-needed relief to Arizona businesses by shifting the burden of proof on an applicant who resigned their employment but claims they were fired. Unemployment insurance applicants, rather than the employer, will have to demonstrate that they involuntarily left employment.
  • Result: HB 2147 passed out of the House with a 34-24 vote, passed out of the Senate with a 17-12 vote and was signed into law by the Governor.

HB 2324: TPT Exemption; Leases; Affiliated Companies

(Municipal Tax Code; Leases)

  • Sponsor: Rep. Eddie Farnsworth, LD 12
  • Summary: This bill exempts commercial leases from TPT tax when the owner of the business and the building being leased is one in the same. Municipalities and special taxing districts are prohibited from levying a transaction privilege or use tax on gross income derived from leasing real property between affiliated companies, businesses or persons, or by a reciprocal insurer. Cities that do collect such taxes may continue to require payment until October of 2013.
  • Result: HB 2324 passed out of the House with a 58-0 vote, passed out of the Senate with a 29-0 vote and was signed into law by the Governor.

HB 2336: Taxation; Retail Classification; Cash Equivalents

  • Sponsor: Rep. Tom Forese, LD 17
  • Summary: This bill exempts a number of items referred to as “cash equivalents” purchased in advanced in a dollar value denomination from retail TPT tax. These cash equivalents are gift cards, vouchers, money orders and traveler’s checks. No TPT is paid to buy a gift card, but TPT is paid when a gift card is used to purchase goods.
  • Result: HB 2336 passed out of the House with a 59-0 vote, passed out of the Senate with a 29-0 vote on the legislature’s final day and will soon arrive on Governor Brewer’s desk to be signed into law.

HB 2599: Procurement Code; Amendments

  • Sponsor: Rep. Justin Pierce, LD 25
  • Summary: This bill amends Arizona’s procurement code to more closely scrutinize state employees involved in purchasing decisions who move back and forth between government and private sector jobs. The bill also makes technical changes in how the state selects the winner of an RFP, and its overall intent is for government to operate more like the private sector.
  • Result: HB 2599 passed out of the House with a 59-0 vote, passed out of the Senate with a 24-0 vote and was signed into law by the Governor.

SB 1168: Internal Revenue Code Conformity

  • Sponsor: Steve Yarbrough, LD 17
  • Summary: This bill makes changes to Arizona’s income tax laws to ensure that they conform to the federal IRS code in effect as of January 1, 2013.
  • Result: SB 1168 passed out of the Senate with a 28-0 vote, passed out of the House with a 58-0 vote and was signed into law by the Governor.

SB 1169: Prop 117, Conformity

  • Sponsor: Steve Yarbrough, LD 17
  • Summary: This bill makes various changes to the Arizona revised statutes in order to conform to Proposition 117 (property tax assessed valuation; limitation), which was passed by Arizona voters during the 2012 general election. Proposition 117 had nothing to do with the tax rate, but caps at five percent the maximum increase in property value that taxable real property can grow in a certain year.
  • Result: SB 1169 passed out of the Senate with a 28-0 vote, passed out of the House with a 58-0 vote and was signed into law by the Governor.

SB 1233: Limited Liability Companies; Ownership Interests

  • Sponsor: Senator Adam Driggs, LD 28
  • Summary: We refer to this bill as the estate planning bill. This bill amends the Limited Liability Company Act by adding a new provision that governs members as it relates to forms of ownership. An interest in a limited liability company (LLC) may be held by two or more people as joint tenants with right of survivorship, or by a married couple as community property with right of survivorship, except as prohibited or restricted in an operating agreement.
  • Result: SB 1233 passed out of the Senate with a 28-0 vote, passed out of the House with a 56-0 vote and was signed into law by the Governor.

ASBA develops its policy positions and statements through its Public Policy Committee, which is comprised of ASBA members providing volunteer leadership and key ASBA staff. Under the direction of ASBA’s Board of Directors, the Public Policy Committee is charged with conducting research, surveying the membership, developing ASBA legislative priorities tracking bills and taking action to influence the passage or defeat of bills. Learn more about ASBA and its role in public policy, visit www.asba.com or call 602-306-4000 or 520.327.0222.

sales.tax

Arizona Business Community Supports HB2111

The undersigned organizations and businesses want to express their strong support for the passage of HB2111 with the floor amendment that will be offered by Senator Steve Yarbrough. This final amendment represents major concessions to address concerns that have been expressed by the city representatives.

This final amendment reflects the cities’ request for a separate online portal for the collection of sales taxes in the 18 non-program cities. In addition, the amendment reflects the cities’ demand to maintain the authority to audit single-location businesses in their city. Lastly, the amendment removes all of the changes to prime contracting tax except for the trade and service contractors.

While the Yarbrough amendment reflects major concessions to the cities that undermine some of the important reforms recommended by the Transaction Privilege (Sales) Tax Simplification Task Force, we believe this final proposal still reflects historic progress that deserves final passage.

The Senator Yarbrough floor amendment will provide for the following:

* Single Point of Administration – the Department of Revenue (DOR) will become the single point of administration and collection of TPT. However, at the request of the cities, there will be a separate online portal for the 18 non-program cities. Despite this concession, the cities remain opposed because they want to continue to require businesses making paper sales tax remissions to pay the state and city separately. Their proposal provides most small businesses no administrative relief from making multiple payments to multiple jurisdictions each month.

* Single and Uniform Audit – DOR will administer a standardized state audit program where all state and city auditors are trained and certified by DOR. Despite major concessions from the business community to allow cities to continue to audit local businesses, the cities continue to push for further changes that will undermine much needed reforms to standardize state and local audits.

* Trade/Service Contracting Reform – Service contractors working directly for an owner to maintain, repair, and replace existing property would pay tax on materials at retail and not be subject to the Prime Contracting Tax. During Task Force deliberations, the cities repeatedly conceded that this area of the prime contracting tax was problematic and should be changed. However, after almost a year of study and discussion, they have offered a change to the taxation of service contractors that provides no administrative relief and couples that change with a request that the state give the cities $80 million from use tax collections.

Arizona’s chaotic and dysfunctional sales tax system has been the subject of considerable controversy at the Capitol for over 30 years. The creation of the Task Force, as well as the appearance for the first time that the cities recognized the need for reform, gave Arizona businesses great hope that this system would finally be reformed. We strongly encourage state policymakers to pass a sales tax reform bill that is grounded in sound tax policy and focuses on reducing the extraordinary compliance costs on Arizona businesses.

Kevin McCarthy, President, Arizona Tax Research Association
Michelle Lind, Chief Executive Officer, Arizona Association of REALTORS
Bas Aja, Executive Vice President, Arizona Cattlemen’s Association
Glenn Hamer, President & CEO, Arizona Chamber of Commerce
Steve Macias, Chairman, Arizona Manufacturer’s Council
Francis McAllister, Chairman, Arizona Mining Association
Courtney LeVinus, Arizona Multihousing Association
Michelle Allen Ahlmer, Executive Director, Arizona Retailers Association
Steve Chucri, President/CEO, Arizona Restaurant Association
Rick Murray, Chief Executive Officer, Arizona Small Business Association
Steve Zylstra, President & CEO, Arizona Technology Council
Greg Turner, Vice President, Senior Tax Council, Council On State Taxation (COST)
Lisa Rigler, President, Small Business Alliance AZ
Todd Sanders, President & CEO, Greater Phoenix Chamber of Commerce
Tom Franz, President, Greater Phoenix Leadership
Connie Wilhelm, President, Home Builders Association of Central Arizona
Tim Lawless, Chapter President, NAIOP
Farrell Quinlan, Arizona State Director, NFIB
Ronald E. Shoopman, President, Southern Arizona Leadership Council
Scot Mussi, President, The Arizona Free Enterprise Club
Matt Beckler, Vice President, Treasurer & Chief Tax Officer, Apollo Group, Inc.
Steve Barela, State & Local Tax Manager, Arizona Public Service
Steve Trussell, Executive Director, Arizona Rock Products Association
Michael DiMaria, Director of Legislative Affairs, CenturyLink, Inc.
Gayle Shanks, Owner, Changing Hands Bookstore
Michelle Bolton, Director of Public Affairs, Cox Communications
Nikki Daly, Owner, Flair! Salons
David Karsten, President, Karsten’s Ace Hardware
Reuben Minkus, Minkus Advertising Specialties
PetSmart, Inc.
Tina Danloe, General Manager, Pima Ace Hardware
Molly Greene, Senior Government Relations Representative, Salt River Project
Les Orchekowsky, President & Co-Owner, Sierra Ace Hardware, Inc.
Ann Seiden, Administrator/Corporate Public Affairs, Southwest Gas Corporation
Joseph Hughes, Director of Government Affairs, U.S. Airways
Walgreens Co.

Glenn Hamer is president and CEO of the Arizona Chamber of Commerce and Industry. The Arizona Chamber of Commerce and Industry is committed to advancing Arizona’s competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans.

Rick Murray, chief executive officer of the Arizona Small Business Association.

ASBA’s CEO Ready for a close-up

Rick Murray followed an eclectic path to becoming chief executive officer of the Arizona Small Business Association in February of 2012.

After college, he worked as a broadcast news photographer before starting a small advertising agency and production company, which grew into a sports production company before he ended up back in broadcast news, this time in front of the camera as a business and education reporter.

The bonds he developed in journalism led to jobs heading up the community and government relations department for the Albuquerque Public Schools, leading the New Mexico State Fair, working as the executive director of the New Mexico Dental Association, and then growing the Arizona Dental Association by nearly $2 million by developing relationships with businesses for mutual success.

Az Business caught up with Murray to talk about small business in Arizona.

Az Business: What have you learned in your first year as CEO of ASBA?
Rick Murray: What has surprised you the most about your position? The thing that has surprised me the most is how little the business community knows about the Arizona Small Business Association.  We have estimated there are nearly 400,000 small businesses in Arizona. Only 11,000 of them have discovered the tremendous value of membership through discounted products and services like office products, shipping, credit card processing, and health and dental insurance, just to name a few. Businesses are saving thousands of dollars a year using our endorsed programs. These are real dollars that goes back into the pockets of hard working business owners.  We are sort of the AAA of small business. We understand that small business owners rarely have a chance to come up for air so we need to do a better job of reaching out to them communicating the value of the Arizona Small Business Association.

AB: How does ASBA decide what its legislative priorities will be each year?
RM: Our legislative priorities do not change much from one year to the next because our efforts are concentrated on what we have determined are the most important policy issues concerning Arizona small business which are: taxation, regulation, economic development, healthcare and education. Each legislative session is different and not all of our policy priorities will be a priority to the current legislature. Not much happened in healthcare the previous two years for example, while this year healthcare has become the single biggest issue with the governor’s proposal to expand Medicaid. Next year it might be education or economic development.

AB: What are ASBA’s legislative priorities for 2013?
RM: We knew coming into this legislative session that reform of the Transaction Privilege Tax (TPT), Arizona’s way of collecting sales tax, was going to be a major issue which we are strongly advocating for. It didn’t happen overnight either, much work was done in previous years which as lead us up to this point and we are confident we will have some success this year simplifying our complicated tax code. Improving the regulatory environment for Arizona businesses has been a long standing priority for ASBA, especially in the area of employer/employee relations. Unemployment benefits is an area where too many undue burdens have been placed on businesses making it difficult to comply. Bills such as HB 2147 that alleviate some of the burden on businesses and shifts some responsibility on an applicant seeking unemployment benefits, helps level the playing field and makes it easier for businesses to comply with the law. We are also supporting the Governor’s plan to expand Medicaid in Arizona.

AB: How has the Arizona Small Business Association’s focus on public policy changed over the last decade?
RM: The change has been significant. The biggest change has been our renewed commitment to advocating for Arizona small businesses and making public policy one of the major strengthens. We are committing more time and resources to our public policy efforts today than ever before and are in it for the long haul.  The other major change is that we are now concentrating our efforts at the state level and some at the federal level. There was a time we use to get pulled into local policy issues but today you will no longer find us at City Hall or at County Board of Supervisor meetings. We strongly believe that the local chambers of commerce across the state should take the lead on local issues and advocate for their local business community. As a statewide business organization, we are better positioned to advocate for Arizona businesses at the state level where not enough advocacy for small businesses was previously taking place. Each year we are getting stronger as well as our membership/clout grows and our relationship with other business groups and elected officials continues to grow.

AB: Where do small businesses fit into the overall economy of Arizona?
RM: Small business is the economic driver for not only Arizona, but the entire country. Without small business, there is no economy. Never before has small business played such a pivotal role in an election season as in 2012, with candidates of every political persuasion promising their support of and ties to the small business community. But what really matters is what lawmakers are doing to move our economy forward. Between the ever-present economic uncertainty, the failure of Congress to truly address the deficit and widespread confusion over the Affordable Care Act, there are very few incentives to start or grow a small company.   ASBA will continue to encourage government at every level to embrace the entrepreneurial spirit of small business owners who must lead, innovate and make tough decisions every day—always with the bottom line in sight.

AB: How friendly is Arizona to small businesses?
RM: On the surface, Arizona is very business friendly. Tax reform has been a priority for Arizona lawmakers for the last decade. Arizona has reduced the personal income tax rate and the tax rates for business property and research and development. Last year, Governor Brewer and legislative leadership passed legislation that reduces taxes to business property, both real and personal, as well as capital gains and corporate income tax. Today we are taking on the biggest challenge in reforming the sales tax in Arizona. TPT reform will make it easier for small business to pay sales tax.  But many cities oppose the move for fear of a loss in revenue and have been fighting it despite the fact that Arizona has the most complicated sales tax system in the country. These cities need to realize who pays the majority of these taxes (small business) and start working to improve the system rather than protecting their bureaucratic kingdoms.

AB: What is your five-year economic outlook for the small business sector in Arizona?
RM: Small-business owners today are feeling less optimistic about the outlook of their own firms and the overall U.S. economy than they did this time last year, according to our most recent economic report. Despite modest gains in the number of small businesses projecting U.S. economic expansion, the overwhelming majority, 86 percent, still believe the U.S. economy will be flat or recessionary in the coming year. Just over one-third (38 percent) anticipate their firms will grow in the coming year — the lowest this indicator has been since the National Small Business Association has began asking this question in December 2009. Additionally, many economists are concerned when the Affordable Care Act in implemented in January, it could add tremendous downward pressure to an already sluggish recovery, wiping out any gains we may have seen. In spite of this, Arizona businesses seem to be ahead of the curve compared to the rest of the country. As we see the credit market lighten up and the real estate market improve, we will see greater consumer confidence which is always a good sign for small business.

Rick Murray, chief executive officer of the Arizona Small Business Association.

ASBA's CEO Ready for a close-up

Rick Murray followed an eclectic path to becoming chief executive officer of the Arizona Small Business Association in February of 2012.

After college, he worked as a broadcast news photographer before starting a small advertising agency and production company, which grew into a sports production company before he ended up back in broadcast news, this time in front of the camera as a business and education reporter.

The bonds he developed in journalism led to jobs heading up the community and government relations department for the Albuquerque Public Schools, leading the New Mexico State Fair, working as the executive director of the New Mexico Dental Association, and then growing the Arizona Dental Association by nearly $2 million by developing relationships with businesses for mutual success.

Az Business caught up with Murray to talk about small business in Arizona.

Az Business: What have you learned in your first year as CEO of ASBA?
Rick Murray: What has surprised you the most about your position? The thing that has surprised me the most is how little the business community knows about the Arizona Small Business Association.  We have estimated there are nearly 400,000 small businesses in Arizona. Only 11,000 of them have discovered the tremendous value of membership through discounted products and services like office products, shipping, credit card processing, and health and dental insurance, just to name a few. Businesses are saving thousands of dollars a year using our endorsed programs. These are real dollars that goes back into the pockets of hard working business owners.  We are sort of the AAA of small business. We understand that small business owners rarely have a chance to come up for air so we need to do a better job of reaching out to them communicating the value of the Arizona Small Business Association.

AB: How does ASBA decide what its legislative priorities will be each year?
RM: Our legislative priorities do not change much from one year to the next because our efforts are concentrated on what we have determined are the most important policy issues concerning Arizona small business which are: taxation, regulation, economic development, healthcare and education. Each legislative session is different and not all of our policy priorities will be a priority to the current legislature. Not much happened in healthcare the previous two years for example, while this year healthcare has become the single biggest issue with the governor’s proposal to expand Medicaid. Next year it might be education or economic development.

AB: What are ASBA’s legislative priorities for 2013?
RM: We knew coming into this legislative session that reform of the Transaction Privilege Tax (TPT), Arizona’s way of collecting sales tax, was going to be a major issue which we are strongly advocating for. It didn’t happen overnight either, much work was done in previous years which as lead us up to this point and we are confident we will have some success this year simplifying our complicated tax code. Improving the regulatory environment for Arizona businesses has been a long standing priority for ASBA, especially in the area of employer/employee relations. Unemployment benefits is an area where too many undue burdens have been placed on businesses making it difficult to comply. Bills such as HB 2147 that alleviate some of the burden on businesses and shifts some responsibility on an applicant seeking unemployment benefits, helps level the playing field and makes it easier for businesses to comply with the law. We are also supporting the Governor’s plan to expand Medicaid in Arizona.

AB: How has the Arizona Small Business Association’s focus on public policy changed over the last decade?
RM: The change has been significant. The biggest change has been our renewed commitment to advocating for Arizona small businesses and making public policy one of the major strengthens. We are committing more time and resources to our public policy efforts today than ever before and are in it for the long haul.  The other major change is that we are now concentrating our efforts at the state level and some at the federal level. There was a time we use to get pulled into local policy issues but today you will no longer find us at City Hall or at County Board of Supervisor meetings. We strongly believe that the local chambers of commerce across the state should take the lead on local issues and advocate for their local business community. As a statewide business organization, we are better positioned to advocate for Arizona businesses at the state level where not enough advocacy for small businesses was previously taking place. Each year we are getting stronger as well as our membership/clout grows and our relationship with other business groups and elected officials continues to grow.

AB: Where do small businesses fit into the overall economy of Arizona?
RM: Small business is the economic driver for not only Arizona, but the entire country. Without small business, there is no economy. Never before has small business played such a pivotal role in an election season as in 2012, with candidates of every political persuasion promising their support of and ties to the small business community. But what really matters is what lawmakers are doing to move our economy forward. Between the ever-present economic uncertainty, the failure of Congress to truly address the deficit and widespread confusion over the Affordable Care Act, there are very few incentives to start or grow a small company.   ASBA will continue to encourage government at every level to embrace the entrepreneurial spirit of small business owners who must lead, innovate and make tough decisions every day—always with the bottom line in sight.

AB: How friendly is Arizona to small businesses?
RM: On the surface, Arizona is very business friendly. Tax reform has been a priority for Arizona lawmakers for the last decade. Arizona has reduced the personal income tax rate and the tax rates for business property and research and development. Last year, Governor Brewer and legislative leadership passed legislation that reduces taxes to business property, both real and personal, as well as capital gains and corporate income tax. Today we are taking on the biggest challenge in reforming the sales tax in Arizona. TPT reform will make it easier for small business to pay sales tax.  But many cities oppose the move for fear of a loss in revenue and have been fighting it despite the fact that Arizona has the most complicated sales tax system in the country. These cities need to realize who pays the majority of these taxes (small business) and start working to improve the system rather than protecting their bureaucratic kingdoms.

AB: What is your five-year economic outlook for the small business sector in Arizona?
RM: Small-business owners today are feeling less optimistic about the outlook of their own firms and the overall U.S. economy than they did this time last year, according to our most recent economic report. Despite modest gains in the number of small businesses projecting U.S. economic expansion, the overwhelming majority, 86 percent, still believe the U.S. economy will be flat or recessionary in the coming year. Just over one-third (38 percent) anticipate their firms will grow in the coming year — the lowest this indicator has been since the National Small Business Association has began asking this question in December 2009. Additionally, many economists are concerned when the Affordable Care Act in implemented in January, it could add tremendous downward pressure to an already sluggish recovery, wiping out any gains we may have seen. In spite of this, Arizona businesses seem to be ahead of the curve compared to the rest of the country. As we see the credit market lighten up and the real estate market improve, we will see greater consumer confidence which is always a good sign for small business.

AB-DigitalIssueFeatured

AZ Business Magazine May/June 2013

AZ Business Magazine May/June 2013

Good economic news abounds

Michael GossieThis is one of those issues of Az Business magazine that
was really fun to put together because it’s brimming with positive economic news.

We learn in the residential real estate outlook — that runs in conjunction with the announcement of the winners of the Arizona Real Estate Achievement (AREA) Awards — that we can expect Phoenix-area home prices to keep soaring in 2013.

“The residential market continues to improve,” said Elliot Pollack, CEO of Elliott D. Pollack & Company, a real estate and economic consulting firm. “The excess supply is dwindling. While population flows are still way below normal, demand is increasing. The result — higher resale and new home prices — helps the economy because fewer homeowners are under water and people feel better off (the wealth effect). These positive trends should continue over the next year and beyond.”

In our Arizona Small Business Association supplement, we learn that big banks are approving small business loans at the highest rate in more than two years. “With an improving economy, Wells Fargo is … providing more dollars to help small businesses stay competitive today and for the long term,” said Jennifer Anderson, business banking manager for Wells Fargo Arizona.

Now that’s a pretty good sign about our economic recovery.
Michael Gossie Signature

Michael Gossie, Managing Editor

Read more articles from this issue.

Take it with you! On your mobile, go to m.issuu.com to get started.

Jan Brewer

Brewer Declares May ‘Arizona Small Business Month’

Arizona State Governor Janice K. Brewer approved the Arizona Small Business Association’s (ASBA) proclamation to declare May 2013 “Arizona Small Business Month.” The proclamation will be presented at ASBA’s 1st Annual Arizona Small Business Conference on May 16 at The Phoenician Resort in Scottsdale during the “State of Small Business Breakfast.”

Speaking at the State of Small Business Breakfast will be Governor Brewer, Secretary of State Ken Bennett, National Small Business Association President Todd McCracken and ASBA CEO Rick Murray.

“Declaring May as ‘Arizona Small Business Month’ celebrates our small business community for their great contributions to our State as entrepreneurs, innovators and leaders,” says Murray. “We thank Governor Brewer for honoring Arizona’s small business community in this way, and presenting this proclamation at our upcoming conference.”

Join the State of Small Business Breakfast on Thurs., May 16 at 8-9:00 a.m. at The Phoenician Resort (6000 E. Camelback Road, Scottsdale). The breakfast is part of ASBA’s 1st Annual Arizona Small Business Conference, which will also feature the 20th Annual Enterprise Business Awards Luncheon honoring the National Small Business Association award winners in Arizona, an all day conference with breakout sessions, Networking Mixer, and a Business Expo (free admittance).

To register, visit www.azsmallbizcon.com or call (602) 306-4000.

Jan Brewer

Brewer Declares May 'Arizona Small Business Month'

Arizona State Governor Janice K. Brewer approved the Arizona Small Business Association’s (ASBA) proclamation to declare May 2013 “Arizona Small Business Month.” The proclamation will be presented at ASBA’s 1st Annual Arizona Small Business Conference on May 16 at The Phoenician Resort in Scottsdale during the “State of Small Business Breakfast.”

Speaking at the State of Small Business Breakfast will be Governor Brewer, Secretary of State Ken Bennett, National Small Business Association President Todd McCracken and ASBA CEO Rick Murray.

“Declaring May as ‘Arizona Small Business Month’ celebrates our small business community for their great contributions to our State as entrepreneurs, innovators and leaders,” says Murray. “We thank Governor Brewer for honoring Arizona’s small business community in this way, and presenting this proclamation at our upcoming conference.”

Join the State of Small Business Breakfast on Thurs., May 16 at 8-9:00 a.m. at The Phoenician Resort (6000 E. Camelback Road, Scottsdale). The breakfast is part of ASBA’s 1st Annual Arizona Small Business Conference, which will also feature the 20th Annual Enterprise Business Awards Luncheon honoring the National Small Business Association award winners in Arizona, an all day conference with breakout sessions, Networking Mixer, and a Business Expo (free admittance).

To register, visit www.azsmallbizcon.com or call (602) 306-4000.

5 C's of Credit

ASBA addresses issues facing small business in 2013

January 7, 2013 – The Arizona Small Business Association (ASBA) will offer a forum for Arizona small business owners and supporters of the small business community to discuss the critical issues facing small businesses this year at the 2013 Small Business Outlook.  ASBA’s annual event will be highlighted by a panel of industry leaders who will delve into important topics such as public policy, sales tax, healthcare in Arizona and access to capital.  The event will be held Thursday, Jan. 17at The Phoenician in Scottsdale.

Panelists for the 2013 Small Business Outlook include:

  • Jerry Bustamante, Senior V.P. of Public Policy + Southern Arizona, ASBA
  • Michael Hunter, Director of Legislative Affairs and Special Advisor on Tax Policy & Reform, Office of the Arizona Governor Janice K. Brewer
  • Don Hughes, Policy Advisor for Health Care, Office of the Arizona Governor Janice K. Brewer
  • Craig Jordan, Lender Relations Specialist, Arizona District Office
  • John Oates, Head of State Government Affairs, Cigna

Rick Murray, CEO of ASBA, states, “At our Small Business Outlook, our expert panel will explore the main issues expected to rule the headlines and dominate the dialogue this year.”

One such topic is public policy. Panelist Jerry Bustamante, senior vice president of public policy for ASBA, will discuss why he predicts there will be more cooperation across party lines. He comments, “We are entering Arizona’s Legislative session with more clarity this year, in comparison to the many questions left unanswered at this time last year.”

Michael Hunter, director of legislative affairs and special advisor on tax policy and reform for the Office of the Arizona Governor Janice K. Brewer, can explain, for example, how the Fiscal Cliff being averted affects Arizonans and what the new tax bill means to small business owners. Also from the Office of the Arizona Governor Janice K. Brewer, Don Hughes, policy advisor for health care, can speak about new health care policies.

Cigna Head of State Government Affairs John Oates will discuss health care policy as well. He is responsible for legislative and regulatory advocacy in the states, and formerly served as a legislative aide in the Texas House of Representatives, a health policy analyst in the Texas Senate, a health policy advisor in the Governor’s office and as the Committee Director for the Senate Health Services.

Arizona District Office Lender Relations Specialist Craig Jordan will cover the topic of access to capital. Jordan will comment on the Small Business Association’s role in providing capital access to small businesses, loan production information, and the enhancements to programs and loan programs that currently exist.

The 2013 Small Business Outlook will commence at 7:30am and conclude at 10:00am on Thursday, Jan. 17.  The Phoenician is located at 6000 E. Camelback Road, Scottsdale, AZ 85251. To register for the event, please visit asba.com/outlook or call (602) 306-4000.

The Arizona Small Business Association (ASBA) is the largest trade association in the state representing 11,000+ member businesses, and over ½ million employees in all 15 counties. ASBA members enjoy access to significant group discounts, countless opportunities to do business with each other, a wide array of insurance products, and active advocacy efforts on public policy issues to protect their businesses. Discover more at www.asba.com or by calling 602.306.4000 or 520.327.0222. Join ASBA. Be amAZed®

Affordable Patient Care Act - AZ Business Magazine November/December 2011

Affordable Patient Care Act May Cause Businesses To Drop Healthcare Insurance

Although most small businesses in Arizona aren’t dropping their healthcare insurance plans right now, some are thinking about doing it when the Obama administration’s Affordable Patient Care Act is fully implemented in 2014.

Meanwhile, many small business owners are also looking for new plans that will save them money, but may also slash benefits for their employees.

“We’re not seeing a dramatic drop in coverage as of today, but small businesses are asking a lot of questions about the health care reform act,” says Jeff Stelnik, senior vice president of strategy, sales and marketing for Blue Cross Blue Shield of Arizona, which has more small group customers than most other health insurers in the state.

“Companies with from two to 49 employees are also thinking about whether it makes sense for them to drop their coverage. Those with from 50 to 100 employees and beyond are less likely to do that.”

On one hand, the smallest companies — from two to 49 workers — are not required to provide insurance for their employees in 2014 and are not subject to any penalties. Those with 50 or more employees will face fines for failing to do so. So that in itself makes it easier for the smallest firms to cancel coverage.

Another incentive for small businesses to end insurance benefits is that many now offer plans with high deductibles, ranging from $3,000 to $5,000, and requiring “strong” co-payments. These types of plans don’t meet the minimum requirements under the Affordable Patient Care Act. That means that as of 2014, they must upgrade their plans at great expense in order to keep insuring employees. Although some federal tax subsidies will be available to help small companies, it is still expected to be costly for small businesses to provide more generous health benefits to employees.

But even though the smallest businesses are considering dropping health insurance, “they absolutely would like to keep it if they can,” Stelnik says.

“If small employers drop coverage, they will probably give employees a bump in pay — another $50 to $75 in their paychecks,” says Thomas Katsenes, president of Katsenes Insurance in Phoenix. “But that’s not going to help those employees much when they go out to buy health insurance.”

One of his clients, who owns several fast-food franchises, is considering canceling an insurance plan it has for managers; the business does not cover other employees. The franchise corporate office provides no health insurance. “Those businesses most affected are the ones with fewer employees,” Katsenes says.

The full impact of the health reform legislation may not hit until 2014, but some changes already phased in have helped raise current health insurance costs by 15 percent and more, according to Katsenes.

“They’ve already phased in the mandated no-cost wellness benefits (like free mammograms for women) and the unlimited lifetime maximum costs for the insured, and they’re requiring coverage up to age 26 for children,” he says. “All these changes translate into higher premiums.”

Another broker, Bob Padgett, president of the Padgett Insurance Agency in the Phoenix area, hasn’t seen any cancellations yet, but some of his clients are looking at plans with $10,000 deductibles as well as partially self-funded insurance plans.

“Some businesses are reducing coverage for their employees, passing more of the cost on to them or no longer offering coverage,” says Donna Davis, CEO of the Arizona Small Business Association, a group in which 85 percent of the membership has 100 or fewer employees.

“In a recent survey of our members, 74 percent indicated that the cost of healthcare was a significant challenge to the future of their businesses,” she says. “Most businesses have seen consistent year-over-year increases even before the Affordable Patient Care Act was enacted.”

Some employers are investigating defined benefit plans that allow six doctor visits per year and pay a limited amount per day for hospitalization, Katsenes says. “I may have a client who will be going for that soon. He has 15 employees to insure.

“It’s unknown what lies ahead for small businesses,” Katsenes adds. “So far we’ve dealt with about 900 pages of regulations and another 100,000 pages lie ahead.”

[stextbox id=”grey”]For more information about the Affordable Patient Care Act, visit healthcare.gov.[/stextbox]

Arizona Business Magazine November/December 2011

 

Arizona Small Business Association seeks new CEO

Arizona Small Business Association Seeks New CEO

After engineering a successful turnaround as CEO of Arizona Small Business Association, Donna Davis announces today she will not be renewing her contract, which ends December 31. She will continue to lead the organization and assist with the on boarding of a new CEO through January 31, 2012.

ASBA’s Board of Directors has formed a search committee to begin the process of finding her successor.

“It has been a privilege to lead ASBA and to serve the small business community. I have enjoyed advancing ASBA, helping our members, and connecting with organizations throughout Arizona and the nation,” Davis says. “With the completion of ASBA’s turnaround, the time has come to recruit new leadership to advance the organization.”

During this turnaround period, in an extremely challenging economy, Donna has fulfilled every goal set with the Board of Directors,” says Lynn Paige, Chairwoman of ASBA’s Board of Directors. “She has worked with the Board to capitalize on all her amazing talents and leaves behind a legacy of excellence for us all to follow,” she adds.

Donna has done amazing things for ASBA members and small business owners around Arizona. Under her direction, the association reinvented itself and more than doubled its membership.

“We wish her well in her new endeavors and look forward to a smooth transition,” says ASBA Board Vice Chairman Joe Higgins.

In the last three years, the organization’s membership has grown from 2,700 to more than 11,000 business members, the financials are in the strongest condition in the organization’s 40-year history, the staff is extremely competent and dedicated, and the culture is energized.

“As a change agent, my role is completed, and it is time for me to entertain other professional opportunities.  In the meantime, it is business as usual,” Davis adds.

For more information about the Arizona Small Business Association, visit www.asba.com.

 

Credit Unions Big Boose to Small Business - AZ Business Magazine September/October 2011

Credit Unions Could Be A Big Boost To Small Business

Every week while driving to work I notice an increasing number of empty store fronts. A local restaurant, boutique or consulting firm that was there last week, is no longer there today. It makes me wonder how many of those local small businesses could have survived had they applied and been approved for a small business loan at credit unions.

According to the Arizona Small Business Association, there were just about 381,000 small businesses in Arizona in 2008. Think about how many more small businesses there could be if Arizona’s 49 credit unions had the ability to increase their business lending and offer new business loans.

Think about how many jobs that could create. Now think about the potential positive impact that could have on our economy.

Eighteen Arizona credit unions, about a third in the state, provide member business loans.

However, the current statutory cap is set at 12.25 percent of assets.

Many credit unions have refrained from entering the business lending arena because the 12.25 percent cap prevents them from earning sufficient income to cover the cost of starting up and maintaining a business lending portfolio.

Legislation in the Senate, S 509, has been introduced by Sens. Mark Udall  (D-Colo.), Olympia Snowe (R-Maine) and Charles Schumer (D-N.Y.);  and on the House side, HR 1418 introduced by Reps. Ed Royce (R-Calif.) and Carolyn McCarthy (D-N.Y.). If passed, both bills would increase the business lending cap to 27.5 percent of current assets.

If enacted, legislation raising the current statutory cap of credit union small business lending (from the current 12.25 percent of assets to 27.5 percent of assets) could result in $13 billion in new lending and 140,000 new jobs in just the first year nationwide and $144 million in new lending and 1,600 new jobs in Arizona, according to Credit Union National Association estimates.

“We hear from business owners all the time that have solid plans and want to grow, but the big banks won’t even talk to them,” says Paul B. Stull, senior vice president Strategy & Brand for Arizona State Credit Union. “Increasing credit unions ability to lend to these businesses is needed now more than ever. We can get the economy moving again, but the current economic gridlock is holding us back.

“Local financial institutions, like credit unions, know our markets very well. We understand Arizona and we know how to make Arizona loans for Arizona people.”

The unique benefit to this legislation is no U.S. taxpayer dollars would be needed; nor would any new government programs need to be created.

When other lenders pulled back during the financial crisis, credit unions stepped up to the plate and continued to lend. And even though credit unions are the only financial institution imposed with a statutory cap, member business loans have grown 3 percent in Arizona over the past year, compared with other financial institutions which have decreased an average of 7 percent. Many credit unions, however, may soon be approaching the statutory cap of 12.25 percent of current assets.

The average credit union small business loan in Arizona is $220,000; these are indeed loans to small businesses. With so many local small businesses struggling, these loans are increasingly necessary to support our local economy so it can once again thrive.

With less than 2 percent of the market, it’s important to note that credit unions pose no threat to commercial banks. Small businesses are often turned away from commercial banks because they are too small. This is where credit unions have the ability to fill in the gap.

Credit unions have a long history and good track record with their members of making small business loans, and making them prudently.

Since 1997 the net charge off rate for credit union small business loans in Arizona has been roughly one-fourth the average of other financial institutions (0.23 percent vs. 0.93 percent), and in 2011 averaged 70 percent of other financial institutions (0.91 percent vs. 1.29 percent).

Treasury, Obama Administration and our federal regulator, the National Credit Union Administration, are all in favor of this legislation.  Those standing in the way are only impeding a path to sustain the growth of local economies by supporting small businesses and the jobs that they bring to our communities.

“Arizona needs jobs, businesses need loans to grow and now is the time for Congress to increase credit unions ability to meet those needs,” Stull says. “This is a quick fix to create jobs at no cost to the taxpayer. We are asking Congress to prove their commitment to growing jobs and this is one piece of legislation that does just that.”

For more information about credit unions, visit www.azstcu.org.

 

Arizona Business Magazine September/October 2011

Advance And Retain Women’s Role In The Financial Field - AZ Business Magazine Nov/Dec 2010

Two Valley Groups Are Working To Advance And Retain Women’s Role In The Financial Field

It wasn’t so long ago that a typical business meeting at a banking or financial institution was dominated by the good ol’ boys network. Well, not anymore. Today, you are likely to see more women among the dark suits at the table.

“I have watched women evolve,” says Deborah Bateman, executive vice president of specialty banking and marketing at National Bank of Arizona, and a founder of the Women’s Financial Group. Bateman boasts a professional background spanning more than 40 years in the banking industry.

“Early in my career, I think we tried to mirror men,” she says. “Over time, women have recognized the skill sets they can bring to business, such as collaboration, connecting, coaching (and) creating value inside Corporate America.”

Women’s roles in the banking and finance sectors are widening, and the proof is in the numbers. In 2009, according to the U.S. Department of Labor, 54 percent of American women were employed in fields related to financial activities. This includes finance and insurance, banking and related activities, securities, commodities, funds, trusts and other financial investments. In Arizona, the percentage of women working in the finance and insurance industry also is significant. U.S. Census data shows there are actually more women than men working in these industries.

Although women have come a long way from their beginnings in these formerly male-dominated sectors, it is an ongoing struggle. According to the U.S. Census Bureau, the disparity in salaries for men and women is significant.

In the Phoenix Metro area, during the third quarter of 2009, women made up 14.4 percent of the 35-44 age work force in finance and insurance (private sector) versus 10.4 percent for men. However, women in these fields average a monthly salary of $4,350, compared to men’s $6,643. For women aged 45 to 54, the salary gap grows even wider. In this age group, men on average earn 64 percent more.

“Women need to be more assertive about asking for money and tooting their own horn,” says Donna Davis, CEO of the Arizona Small Business Association (ASBA) and a member of the Women’s Financial Group. “It’s OK to promote your organization, it’s OK to ask for money and to ask for more.”

However, Emily Amparan, vice president of development at Factors Southwest, says she thinks the numbers don’t reflect the real gains women are making.

“I always hold those figures suspect, as I rarely encounter hindrances to make money and achieve success in the financial field,” she says. “I think if you believe it to be so, it probably is … however, the most successful women in the finance industry don’t pay any mind to talk of obstacles, as they forge ahead to make their own path.”

Helping women make their own paths in the financial sector is the mission of a number of organizations emerging all over the Valley. For example, Bateman founded an internal mentorship program at National Bank of Arizona in 2009, that quickly expanded to outside industries and individuals. Later renamed the Women’s Financial Group, the organization’s focus is to bring together women of all professional backgrounds to promote financial planning, mentoring, business services and networking.

Bateman says she hopes the Women’s Financial Group can serve as a catalyst for women to succeed and attain higher positions in banking and finance without compromising their identities.

“For years and years, we would dress in tailored blue suits and wear ties,” Bateman recalls. “Women can be women in the business world. It brings enormous value to business, to their organizations and to the community.”

In addition, Davis says the group can help “women become more savvy financial business people.”

At a recent Women’s Financial Group event, women of diverse backgrounds, both personal and professional, filled the room. Some women were just beginning their careers and some were veterans with decades of experience. But all were there with a mission: to pave the way for future success in their respective financial careers.

Another group aimed at women in the financial sector is Women in Banking, the local chapter of the national Risk Management Association. Founded in 2006, its first meeting took place at a Chevy’s restaurant with 14 business women in attendance. Today, the group includes 50 to 80 bankers, consultants, marketers and business owners from around the Valley. And despite its name, the committee encourages men to join and attend its events.

“There is definitely a need for a professional organization that brings business and banking together for positive networking,” says Amparan, who is a member of the organization’s leadership team.

Along with helping women plot their careers in financing, Women in Banking is a strong supporter of Fresh Start Women’s Foundation, a nonprofit organization dedicated to helping women in areas such as career change, personal growth, family relationships and more. The group collects clothes for donation and works to raise money to sponsor Fresh Start’s annual golf tournament and fashion show.

That type of commitment to all women in the community is just one example of the impact women professionals in finance are making.

“Women in business are tremendous bridge builders and relationship makers,” Amparan says. “Banking and finance has become more of a warm, open environment to the credit of professional women across the state and country. People are starting to take notice of the successful way women are starting to do business and build relationships.”

Arizona Business Magazine Nov/Dec 2010

Many Arizona Small Businesses And Banks Say A Federal Loan Program Isn’t Needed - AZ Business Magazine Nov/Dec 2010

Many Arizona Small Businesses And Banks Say A Federal Loan Program Isn’t Needed

President Barack Obama has signed a bill that aims to increase small business lending. But it’s not exactly popular among Arizona’s small companies and community banks. They question whether a multibillion-dollar loan fund created by the legislation will achieve its goal.

The Small Business Jobs and Credit Act of 2010 will establish a $30 billion Small Business Lending Fund within the U.S. Treasury. The Treasury will use that money to purchase preferred shares in small- to medium-size banks that voluntarily participate in the program, injecting new capital that the banks would be encouraged to lend to small businesses. The more loans the banks make, the lower the dividend rate they pay the Treasury.

“As a small business owner, I am allergic to government intervention,” says Charlie O’Dowd, president of Westcap Solar, a Tucson company that sells and installs solar photovoltaic and solar hot-water systems. “I don’t think that this legislation is going to be any more effective than the TARP (Troubled Asset Relief Program) legislation. In this economy, it’s not that there isn’t money to be borrowed. It’s qualifying for the loan that’s the problem.”

The new law also gives John P. Lewis a bad taste in his mouth. Lewis is president and CEO of Southern Arizona Community Bank in Tucson, and a member of the FDIC’s Advisory Committee On Community Banking.

“Last January, the committee had a robust discussion (on the legislation),” Lewis says. “The committee said, ‘We don’t want to be a part of this.’ Community banks don’t need the additional capital. I have more money than I know what to do with. I need qualified borrowers.”

O’Dowd and Lewis describe a situation that is frustrating for both and that neither believes government policy will resolve. O’Dowd says small businesses’ sales are slow, impacting their ability to qualify for loans. Lewis says his loan demand is flat because there are fewer qualified borrowers.

The Arizona Small Business Association points to a wary small business community that’s in no mood to take on more debt. Earlier in the recession, small businesses tried in vain to obtain bank loans, but now they are in survival mode, says Donna Davis, the association’s CEO.

“Bank loans are not at the top of their list now,” Davis says. “Some businesses have lending fatigue. They just gave up (trying to get loans). Now they are focused on lack of sales. If sales don’t pick up, if work doesn’t pick up, they won’t seek credit. If they can boost sales and profits, then they can justify hiring and expanding.”

One outside observer sees a triumvirate of doubt that the legislation will not mitigate. Dennis Hoffman, professor of economics at Arizona State University’s W. P. Carey School of Business, says this recession has caused consumers, businesses and banks to lose their confidence. Lacking the good credit risk they saw five years ago, banks have “pulled in their oars,” Hoffman says. Creditworthy businesses fret so much over the economy, they don’t even apply for loans. Recession-scarred consumers remain stingy.

“We need to climb this wall of worry to get out of this morass,” Hoffman says. “This is a market-based, private-sector issue that will have to work itself out.”

Gail Grace, president and CEO of Sunrise Bank of Arizona headquartered in Phoenix, doesn’t sense much support for the legislation among Arizona’s banks, and wonders how many community banks would be able to participate.

“Community banks in Arizona are stressed and many may not even qualify for this program,” Grace says. “You will still have to have a fairly healthy bank to qualify for this.”

Not everyone has a dim view of the law. Robert Blaney, Arizona’s Small Business Administration district director, notes that the law will increase the SBA’s loan guarantee from 75 percent to 90 percent, easing banks’ risk on those loans. The law also will lower fees and raise the SBA’s maximum loan amount from $2 million to $5 million. There are thousands of small business owners nationwide that were waiting for the lending bill to become law, Blaney says.

One of those is Benefits By Design, a Tempe company that sets up health benefit plans for small businesses. The company’s president, Kristine Kassel, says there is a need for loans and it would be helpful if just two community banks expanded their small business lending. She adds that any amount of new credit that can be extended to small businesses is a good thing.

Banks interested in acquiring low-cost capital might be attracted to the Treasury fund and they might be enticed by the built-in incentives to direct new-found capital into small business lending, says Dan Stewart, Arizona market president for Mutual of Omaha.

But then he echoes what others say: “The (law) doesn’t encourage banks to take on more credit risk, so qualified borrowers are the key.”

    By the Numbers
    The Small Business Jobs and Credit Act of 2010



  • Establishes a $30 billion Small Business Lending Fund within the U.S. Treasury
  • Treasury will use money to purchase preferred shares in small- to medium-size banks that voluntarily participate in the program
  • SBA’s loan guarantee would increase from 75 percent to 90 percent
  • The SBA’s maximum loan amount would increase from $2 million to $5 million

Arizona Business Magazine Nov/Dec 2010

Health Care Reform in Arizona - AZ Business Magazine Nov/Dec 2010

Business And Community Leaders Are Trying To Figure Out What Health Care Reform Will Mean In Arizona

For government and business, providers and patients, the U.S. health care reform legislation promises a new world of costs and care.

Most individuals without insurance will be able to get it. Those who have insurance already probably will have to pay more for it. Hospitals, doctors and others in the front lines of health care will begin to change long-established ways of doing business. State governments and many businesses, already battered by recession, will face new costs and possibly some benefits.

But beyond these generalizations, little is certain about what health care reform will mean in Arizona and across the country. The bill is vague in many areas and leaves important details of implementation to be determined by federal regulators and other officials in the weeks and months ahead.

“Quite frankly, we won’t know the financial impacts until we move through the process and see what the federal government and insurance companies do,” says Donna Davis, chief executive officer of the Arizona Small Business Association (ASBA).

Barry Broome, president and chief executive officer of the Greater Phoenix Economic Council (GPEC), says it is too early know what the bill will mean.

“It sounds very good to be able to cover the uninsured, but what the costs are and how they are going to be distributed are still not clear,” he says.

Marjorie Baldwin, director of the School of Health Management and Policy and assistant dean at Arizona State University’s W. P. Carey School of Business, says it is important to note that the law’s primary purpose is to cover the uninsured.

“This bill is about access,” Baldwin says. “It’s designed to cover the uninsured. There is much less in it about quality of care and little about cost controls.”

On what the price tag for health care reform will be, Baldwin says, “The one safe prediction is that it is going to cost much more than anticipated.”

Hospitals and doctors
Whether the health care overhaul is ultimately deemed a success will be determined to a large extent by what happens inside the nation’s hospitals, clinics and doctors’ offices.

Peter Pavarini, a health care lawyer for Squire, Sanders and Dempsey and an adviser to health care organizations, believes hospitals are actually well-positioned to adapt to the new law.

“Hospitals have been anticipating something happening for some time,” Pavarini says. “Hospitals have the resources to prepare better than some of the other players in the health care system.”

Several provisions in the law are expected to lead to a dramatic shift in the way hospitals are paid by insurance. Under the existing system, providers receive set rates for specific medical procedures. The new law moves toward a system in which hospitals receive a set amount for treating an overall condition or a so-called “bundled payment.” This shift is expected to require more detailed treatment plans, coordinated care and closer cooperation among hospitals and physicians.

“With the bundled payments, you have to have a more integrated approach and an approach that aligns physicians and hospitals,” says Suzanne Pfister, vice president of external affairs at St. Joseph’s Hospital and Medical Center in Phoenix.

The hospital already has been moving in this direction, according to Pfister. St. Joseph’s has forged a series of partnerships with area health care organizations, including outpatient and short-stay providers United Surgical Partners and SimonMed Imaging
.
“We are continuing to look at moving from acute care to a continuum of care,” Pfister says.

Pavarini believes the new payment systems for Medicaid and Medicare will bring big changes to care at hospitals. When the system is in place, hospitals will get a set payment for delivering all of the care a patient receives from 72 hours before admission to 30 days after discharge, he notes.

“That’s a whole different model from what we have now,” Pavarini says. “This means it’s not good enough just to get the patient in and out of the hospital. It means testing can’t be duplicative. And it means patients better be ready for discharge when they’re released.”

Pavarini says doctors and hospitals will need to cooperate more closely as the law is implemented. He sees hospitals forging formal alliances with physician groups and appointing more practicing physicians to their boards of directors.
A more basic concern for hospitals is how much they will be paid. Because expansion of Medicaid is a key feature of the law, hospitals are concerned about long-term revenue.

“Payments are going to shift more to the level of Medicaid, and Medicaid has not been a particularly good payer,” Pfister says.

Officials at Phoenix-based Banner Health, one of the largest nonprofit health care systems in the country, are still examining the legislation to assess its consequences.

“This reform is primarily about health insurance, not health care reform,” the organization said in a statement. “It will result in expanded AHCCCS (Medicaid) coverage in Arizona and access to insurance, but the need remains to address reducing the cost of health care.”

The bill includes a number of provisions that will increase the role of primary-care physicians. Medicaid fees will go up for primary-care doctors, who also will be eligible for bonuses from Medicare.

St. Joseph’s is concerned about being able to find enough physicians as health care reform is implemented in the coming years, according to Pfister.

“Arizona has fewer physicians per capita than the national average, so we face that already. Arizona does not have enough primary-care physicians and even some specialists,” she says.

The larger hospitals that have formal ties to physicians and other providers probably will fare best under health care reform, according to Pavarini. But he believes smaller, more isolated hospitals will struggle and some will close.

“Arizona has a number of smaller hospitals in less populated areas,” he says. “I think the outlying hospitals in rural communities could have difficulty.”

Businesses
While all businesses will be affected by the health care reform law, some will feel it more than others. Probably least affected will be firms that already provide health insurance now and have a pool of employees large enough to allow the companies to self-insure.

“For most large businesses, fundamentally there’s not a lot of change,” says Keith Maio, president and chief executive officer of National Bank of Arizona. “For us, we’ll have to be a little more paperwork conscious.”

ASU’s Baldwin says the principal effect on large employers will be slightly higher expenses, as they absorb some of the cost of the system’s expanded coverage.

“For larger employers, the law is not going to mean a big difference, but they are going to see their costs go up,” she says.

Smaller businesses though will face new uncertainties, and, for some, significant new costs.

“I would say that there is a cloud of concern generally for small businesses,” says Maio, whose bank has many small business customers. “People who have been through the recession and are still slugging it out have learned to survive. But they still have trouble seeing how they can get back to where they were . That’s why something like the health care bill can have such an impact.”

The law offers a complex mix of incentives and penalties designed to spur employers to offer health insurance. In 2014, employers with 50 or more workers who do not provide coverage will face penalties of $2,000 or $3,000 per employee. Some employers who provide insurance and have fewer than 50 workers will be eligible for tax credits.

“In a sense there is both a carrot and a stick,” says Bradford Kirkman-Liff, professor in the School of Health Management and Policy at W. P Carey. “The idea is to create a very strong incentive to provide insurance.”

The tax credits could offset as much as half of the insurance costs for some employers, Kirkman-Liff notes.

“Arizona has a high number of small employers. Many of them don’t provide health insurance, but some do. This would give them a reason not to drop it,” he says.

The law also instructs states to establish insurance exchanges, where small employers and individuals can purchase policies from insurance companies. The exchanges are designed to bring down the cost of insurance by combining groups of buyers into large pools.

But even with government subsidies and insurance exchanges, some businesses will find the burden too large, according Maio.

“The greatest impact will be on those that employ entry-level employees,” he says. “Arizona has a lot of lower-wage businesses who won’t be able to afford to provide insurance. I think some will opt to pay the fine. Then what have you accomplished?”

Another problem that Maio sees is the 50-employee threshold for the coverage requirement. Employers with fewer than 50 can escape penalties for not providing insurance.

“Have you given them a disincentive to adding people?” he asks.

Davis at ASBA says most business owners are focused on short-term challenges and do not have a clear picture of how the law will affect them.

“For some small businesses who fit the prescribed requirements, it will help offset some of their costs,” Davis says. “For others, it simply won’t.”

AZ Companies to Watch

Celebrating Second-Stage Entrepreneurial Companies

Presented by the Arizona Small Business Association in conjunction with the Edward Lowe Foundation

Gov. Jan Brewer

The businesses of the 2009 class of Comerica Bank Arizona Companies to Watch represent the determined, innovative spirit necessary to advance our great state. I am especially pleased to extend my congratulations and gratitude to this year’s recipients.

This prestigious recognition celebrates second-stage companies that employ from 10 to 100 people and generate between $750,000 and $100 million in gross annual revenue. These businesses are beyond the startup phase, possessing the capacity for significant growth, generating jobs and innovating new products and services. They make extraordinary contributions to our economy and to our communities.

The focus I have both as governor and as an Arizonan is where our state will be in the coming decade with regard to economic opportunities for our children and families — this is very real to me. Cultivating and sustaining stable jobs must be our highest priority. We must continue to take care of Arizona companies so they stay and grow jobs in our state.

Arizona, the nation and the world have been impacted by slowing economic conditions. It presents significant challenges — but also opportunity. Many of the companies we recognize today are seeing positive results. These companies are vital contributors to Arizona’s economic health and are critical to the well-being of the Arizona business community.

Arizona is a unique landscape ripe with opportunities for businesses. Please join me in honoring the 2009 Comerica Bank Arizona Companies to Watch recipients. We celebrate your current achievements and look forward to your future successes.

With appreciation,
Janice K. Brewer
Governor, State of Arizona

Edward Lowe Foundation

When Ed and I founded the Edward Lowe Foundation in 1985, we wanted to encourage entrepreneurship and a vibrant U.S. economy. In recent years, the foundation has concentrated its efforts on two key audiences: 1) Second-stage companies powered by entrepreneurs that have moved beyond the startup phase and are focused on growth issues rather than survival; and 2) entrepreneur support organizations (ESOs) that assist second-stage businesses and are the catalysts for growing their economies from the inside out by helping existing companies in the community.
To serve these audiences, we have developed a variety of tools and initiatives. In many ways, Companies to Watch creates a pipeline for these programs by identifying outstanding second-stage companies.

Celebration and recognition — Companies to Watch generates greater visibility in the marketplace, drawing attention to second-stage companies as a whole and to individual businesses. Honorees tell us that the program has boosted confidence levels for them with existing customers and suppliers. It has led to new opportunities for many firms. And for second-stage CEOs who spend so much time cheering on the troops, the award is a rare pat on their backs.

Life beyond the awards ceremony — Honorees have taken advantage of other Edward Lowe Foundation programs, such as our PeerSpectives roundtables and leader retreats at Big Rock Valley in Michigan. In fact, we’ve created a retreat format especially for Companies to Watch that gives newly named and past honorees a chance to meet and learn from each other.

Finding peers — This kind of networking is important because second-stage companies typically fly under the radar screen. By their very nature, second-stage entrepreneurs are fixated on their businesses, pressed for time and skeptical of joining groups. This makes it hard for them to find peers to share best practices.

It also make it difficult for ESOs to reach out to second-stagers. And even though many ESOs originally focused on startups, more organizations — such as the Arizona Small Business Association — are starting to target second-stage companies because of their immediate, sustainable impact on the economy. Through its application and nomination process, Companies to Watch helps ESOs discover new clients to serve, better assess their needs and tailor resources especially for these growing businesses.

What’s more, Companies to Watch creates a ready-made pool for researchers and policymakers to study second-stage entrepreneurs and track their impact. This is especially true in Arizona, which now counts four classes of honorees.

By helping second-stage entrepreneurs on their growth journey, and by helping ESOs expand their reach and capacity, the foundation hopes to be a catalyst for innovation and change. For even though Ed supported entrepreneurship broadly, he always believed that it was the second stage that was the greatest source of job creation. He would be delighted with the foundation’s focus on this important group, because the success of second-stage companies benefits not only the local communities i, n which they do business, but our entire nation.

Darlene Lowe
Chairman,
Edward Lowe Foundation

ASBA

The Arizona Small Business Association (asba) is honored to present the 2009 Comerica Bank Arizona Companies to Watch awards program. The program celebrates second-stage entrepreneurs and is done in association with the Edward Lowe Foundation. A special thank you to all our sponsors, including the event title sponsor, Comerica Bank.

Congratulations to this year’s remarkable honorees. This award is given to high-performing, second-stage businesses that boost economic growth and generate jobs in Arizona. It highlights the significant impact of second-stage companies on the state’s economy.

Over a four-year period ending in 2008, this year’s recipients have generated nearly $630 million in revenue and added 460 employees, a 148-percent increase in revenue and an 83-percent increase in jobs. That translates into 36 percent annual revenue growth and 23 percent annual growth in employees since 2005. If 2009 projections hold, these companies will have generated $849 million in revenue and added 559 employees in five years.

This has been a tough year for many businesses. There are many attributes that contribute to a company’s success. Perhaps the most important reason for small businesses’ survival is flexibility. When course correction needs to be made, small companies can pivot quickly. This ability to rapidly adapt and deploy new strategies often affords them a competitive edge over their larger corporate counterparts.

On behalf of all the members, staff and board of directors at asba, we extend our enthusiastic congratulations. We admire your courage, creativity and resiliency in these challenging times. Thank you for making Arizona a more vibrant place to work and live.

All the best,
Donna Davis
Chief Executive Officer
Arizona Small Business Association