Tag Archives: Ron Butler

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GPEC announces Board of Directors for FY 2014

The Greater Phoenix Economic Council (GPEC) today announced the appointment of its Board of Directors for the 2014 fiscal year, as approved by the Executive Committee.

Alliance Bank of Arizona CEO James Lundy will continue to lead the Board of Directors as chairman.

“As the economy continues to improve, GPEC’s team of results-driven board directors will work to ensure the region not only maintains its trajectory but also pushes toward a more diversified and sustainable economy that is less dependent on growth industries like real estate and construction,” Lundy said. “I’m honored to work with this talented group of professionals and look forward to a productive year.”

Rounding out the Board’s leadership is SCF Arizona President and CEO Don Smith and Empire Southwest Executive Vice President Chris Zaharis as vice chairs, APS Vice President and Chief Customer Officer Tammy McLeod as secretary and Bryan Cave, LLP Partner R. Neil Irwin as treasurer.

New Board Directors include: Steve Banta, CEO of Valley Metro; the Honorable Denny Barney, District 1 Supervisor for the Maricopa County Board of Supervisors; Scott Bradley, Area Vice President for Waste Management; Mark Clatt, Area President for Republic Services; the Honorable Vincent Francia, Mayor of the Town of Cave Creek; Dr. Ann Weaver Hart, President of the University of Arizona; Bill Jabjiniak, Economic Development Director for the City of Mesa; the Honorable Michael LeVault, Mayor of the Town of Youngtown; Rich Marchant, Executive Vice President, Global Operations for Crescent Crown Distributing; Ryan Nouis, Co-Founder and President of Job Brokers; and Eric Orsborn, Councilmember for the Town of Buckeye.

“GPEC’s success is largely driven by its strong Board of Directors, all of whom reflect the region and state’s most accomplished professionals,” GPEC President and CEO Barry Broome said. “Every single one of them truly cares about our market’s success and serves as a community thought leader when it comes to competitiveness.”

Mayors from GPEC’s member communities and the organization’s Nominating Committee are responsible for nominating and appointing Board Directors. The one-year terms are approved during GPEC’s Annual Board meeting.

GPEC FY 2014 Board of Directors:

James Lundy – Chairman
CEO
Alliance Bank of Arizona

Don Smith – Vice Chair
President and CEO
SCF Arizona

Chris Zaharis – Vice Chair
Executive Vice President
Empire Southwest

Tammy McLeod – Secretary
Vice President and Chief Customer Officer
Arizona Public Service Company

R. Neil Irwin – Treasurer
Partner
Bryan Cave, LLP

William Pepicello, Ph.D. – Immediate Past Chair
President
University of Phoenix

Barry Broome
President and CEO
Greater Phoenix Economic Council

Richard C. Adkerson
President and CEO
Freeport McMoRan Copper & Gold

Jason Bagley
Government Affairs Manager
Intel

Ron Butler
Managing Partner
Ernst & Young LLP

Brian Campbell
Attorney
Campbell & Mahoney, Chartered

Michael Crow, Ph.D.
President
Arizona State University

Kathleen H. Goeppinger, Ph.D.
President and CEO
Midwestern University

Derrick Hall
President and CEO
Arizona Diamondbacks

Sharon Harper
President and CEO
The Plaza Companies

Ann Weaver Hart, Ph.D.
President
University of Arizona

Don Kile
President, Master Planned Communities
The Ellman Companies

Paul Luna
President and CEO
Helios Education Foundation

Rich Marchant
Executive Vice President, Global Operations
Crescent Crown Distributing

David Rousseau
President
Salt River Project

Joseph Stewart
Chairman and CEO
JPMorgan Chase Arizona

Hyman Sukiennik
Vice President
Cox Business

Karrin Kunasek Taylor
Executive Vice President and
Chief Entitlements Officer
DMB Associates, Inc.

Gerrit van Huisstede
Regional President Desert Mountain Region
Wells Fargo

Andy Warren
President
Maracay Homes

Richard B. West, III
President
Carefree Partners

John Zidich
Publisher & President
The Arizona Republic

Chuck Allen
Managing Director, Gov’t & Community Relations
US Airways

Steve Banta
CEO
Valley Metro

Denny Barney
County Supervisor-District 1
Maricopa County Board of Supervisors

Jason Barney
Principal and Partner
Landmark Investments

The Honorable Robert Barrett
Mayor
City of Peoria

Timothy Bidwill
Vice President
Vermilion IDG

Scott Bradley
Area Vice President, Four Corners Area
Waste Management

Norman Butler
Market Executive
Bank of America Merrill Lynch

Mark Clatt
Area President
Republic Services

Jeff Crockett
Shareholder
Brownstein Hyatt Farber Schreck

Wyatt Decker, M.D.
CEO
Mayo Clinic Arizona

George Forristall
Director of Project Development
Mortenson Construction

The Honorable Vincent Francia
Mayor
Town of Cave Creek

Rufus Glasper, Ph.D.
Chancellor
Maricopa Community Colleges

Barry Halpern
Partner
Snell and Wilmer

G. Todd Hardy
Vice President of Assets
ASU Foundation

Lynne Herndon
Phoenix City President
BBVA Compass

Linda Hunt
Senior VP of Operations and President/CEO
Dignity Health Arizona

William Jabiiniak
Economic Development Director
City of Mesa

The Honorable Robert Jackson
Mayor
City of Casa Grande

The Honorable Linda Kavanagh
Mayor
Town of Fountain Hills

The Honorable Andy Kunasek
County Supervisor, District 3
Maricopa County Board of Supervisors

The Honorable Michael LeVault
Mayor
Town of Youngtown

The Honorable John Lewis
Mayor
Town of Gilbert

The Honorable Marie Lopez Rogers
Mayor
City of Avondale

The Honorable Georgia Lord
Mayor
City of Goodyear

Jeff Lowe
President
MidFirst Bank

Paul Magallanez
Economic Development Director
City of Tolleson

Kate Maracas
Vice President
Abengoa

The Honorable Mark Mitchell
Mayor
City of Tempe

Ryan Nouis
Co-Founder & President
Job Brokers

Ed Novak
Managing Partner
Polsinelli Shughart

Eric Osborn
Councilmember
Town of Buckeye

Rui Pereira
General Manager
Rancho de Los Caballeros

The Honorable Christian Price
Mayor
City of Maricopa

Craig Robb
Managing Director
Zions Energy Link

The Honorable Jeff Serdy
Councilmember
City of Apache Junction

Steven M. Shope, Ph.D.
President
Sandia Research Corporation

James T. Swanson
President and CEO
Kitchell Corporation

Richard J. Thompson
President and CEO
Power-One

Jay Tibshraeny
Mayor
City of Chandler

John Welch
Managing Partner
Squire Sanders

Dan Withers
President
D.L. Withers Construction

The Honorable Sharon Wolcott
Mayor
City of Surprise

GENERAL COUNSEL
Bryant Barber
Attorney at Law
Lewis and Roca

taxes

Tax reform aims to help small businesses

During the State of the Union address, President Obama said that tax reform is a key issue for small businesses today. Specifically, the president stressed that many small businesses are overwhelmed with administrative tasks associated with tax filing and deserve the opportunity to focus on strategic areas of their business that could help them grow and hire more workers.

“For many businesses, the complexity of the tax code is challenging,” said Ron Butler, partner at Ernst & Young in Phoenix. “Small businesses and entrepreneurs incur significant costs to interpret and apply federal tax rules and regulations and to produce the required information necessary to prepare accurate returns. They would benefit from a system that modernizes and simplifies their tax compliance and reporting obligations.”

According to the National Federation of Independent Business, tax compliance costs are 65 percent higher for small businesses than for big businesses, costing small business owners $18 billion to $19 billion per year.  In addition, nearly nine out of ten small businesses rely on outside tax preparers. With about half of the private sector workforce employed by a small business — a total of nearly 60 million Americans — these costs, along with tax rates as high as 44.6 percent, carry a heavy burden for small businesses.

“Record keeping and record retention are probably the most overwhelming administrative tasks (for small businesses),” said Donna Witherwax, tax partner at Grant Thornton in Phoenix. “Not only do they contribute to unproductive costs, they also divert attention from the more important tasks a small business owner should focus on. Small businesses often lack the resources to fully understand how the tax law affects their business.”

To put the need for reform succinctly: “Tax reform presents an opportunity to achieve tax code simplification and improve our nation’s present fiscal path,” Butler said.

To help put us on a better path, the House Ways and Means Committee released a set of proposals in March that are aimed at reforming tax laws for small businesses. As part of a broader, comprehensive tax reform package that would significantly lower rates for small businesses, the proposal would reform and try to simplify tax compliance for small businesses and provide certainty with respect to the ability of small businesses to recover certain costs immediately. These include widely supported reforms such as permanent Section 179 expensing and expansion of the “cash accounting” method, amongst other provisions.

“The most important thing for lawmakers to focus on in this tax reform is re-establishing rate equality,” Witherwax said. “That is, making sure that the current tax rate applied to income earned by an active small business that is organized as a partnership, S corporation or sole proprietorship is no higher than the rate applied to income earned by a normal C corporation. Normally, I would say they should focus on making it easier for small businesses to comply by providing simple and direct rules and additional safe harbors, as well as focusing on minimizing the record keeping burden. But this is not a normal tax reform process.”

Witherwax said the tax reform that is currently being discussed in Washington began as a quest to reduce the statutory corporate tax rate in order to address the disadvantage U.S multinationals face in competing with the multinationals of other nations as a result of the U.S. rate.

“There are good reasons to do that,” she said. “But reducing corporate rates alone would disadvantage those active small businesses that operate as partnerships, S corporations or sole proprietorships. Leaving their rate where it is while reducing the rate of their larger C corporation competitors would put these small businesses at a competitive disadvantage. A disadvantage that would be exacerbated  if the revenue lost by reducing the corporate rate is offset by changes that eliminate some of the business tax benefits that small businesses rely on. For these reasons, in this tax reform, rate equality is the most important thing.”

The good new is that the discussion draft released by the House Ways and Means Committee is designed to provide more uniform tax treatment for pass-through businesses such as sole proprietorships, partnerships and S corporations. The draft also includes proposals that would spur investment in equipment needed to grow business operations by providing permanent expensing of investments and property; would simplify tax and accounting practices by expanding the use of the simpler “cash accounting” method to businesses with gross receipts of $10 million or less; would provide relief for start-up and organizational costs by establishing a unified deduction for these expenses; and make tax compliance easier for partners and S corporation shareholders by reordering and simplifying the due dates of tax returns for partners and S corporations.

To create reform that’s going to work, experts say, it’s vital that they solicit first-hand feedback.

“Lawmakers should ask small business owners and their tax advisors what changes they want,” said John Hanson, a tax attorney with Sacks Tierney in Phoenix. “ They are best suited to propose worthwhile changes because they are dealing with these issues daily.”

Dave Camp, R-Mich., chairman of the tax-writing House Ways and Means Committee that released the set of proposals aimed at reforming the tax laws for small businesses, said he encourages small business owners and stakeholders to review the discussion draft and to share feedback with their lawmakers and the Ways and Means Committee.

“More Americans get their paycheck from small businesses than any other type of business or government,” Camp said in a statement. “If we really want to strengthen our economy and put more money in the pockets of American workers, we must fix the Tax Code and how it treats small businesses. In addition to all the complexity these Main Street businesses face, Washington currently taxes them at top rates nearly 10 percentage points higher than their corporate counterparts. That’s simply unfair to small businesses … These are the businesses we see every day, where so many of our friends, family and neighbors work … They need and deserve a Tax Code that works for them.”

THE IMPACT OF REFORM

Ron Butler, partner, Ernst & Young: “A broader, comprehensive tax reform package that lowers rates and simplifies tax rules for individuals, small businesses and corporations could be a driving force for economic growth and job creation in the American economy.”
John Hanson, tax attorney, Sacks Tierney: “Tax reform that reduces the compliance burden on small business owners will allow them to invest more resources in their businesses, become more profitable and create more jobs.”
Donna Witherwax, tax partner, Grant Thornton: “It depends on the tax reform we get.  If business rate equivalency can be restored, and a more efficient tax code adopted, small business could be a winner.”

Curtis A. Hildt, tax managing partner, Deloitte Tax LLP: “Small businesses will be able to focus their efforts toward business operations instead of weaving their way through a complex tax system.”

Funding Startup Companies Jumpstart Economy

GPEC boosts state’s economy by attracting more foreign direct investment

The Greater Phoenix Economic Council’s California 50 program — which aimed to fly 50 Golden State CEOs to Phoenix for an opportunity to tour and explore the region’s business-friendly environment — proved to be so popular that they expanded it to 100 a week after its launch.

But it may be GPEC’s pitch to CEOs even farther away that makes the biggest impact on Arizona’s economy.

“GPEC is focused on a specific region in China, defined by Shanghai and 10 other cities connected by high-speed rail,” says Ron Butler, managing partner at Ernst & Young in Phoenix and co-chair of GPEC’s International Leadership Council. “This region (known as the ‘Z Corridor’) features China’s largest concentration of industries, including solar, medical device, IT, pharmaceuticals, high-tech manufacturing and chemicals. GPEC has made tremendous strides over the past several years in China, particularly with solar and renewable energy companies. Now, the organization is looking to leverage those relationships and expand into other, capital-intensive industries.”

GPEC’s effort is significant, Butler says, because export industries and foreign direct investment (FDI) drive economic growth, create wealth within the region, and tend to be capital-intensive operations that pay higher-than-average wages. Currently, FDI accounts for 73,000 jobs in Arizona and the state saw a 235 percent increase in FDI from 2005-2010, from just over $270 million to more than $904 million.

“By focusing on the Z corridor, a zone known for its solar, high-tech, bio-medical, and chemical industries, GPEC has identified a region that can appreciate what Arizona and — more importantly Arizona workers — can do well,” says Ilya A. Iussa, assistant professor of law at Phoenix School of Law.

But it’s not just investment from China that is giving Arizona an economic boost within the solar and renewable energy industries. In addition to China’s Suntech, the region has seen investments from Spain’s Rioglass and Abengoa, England’s Faist, Germany’s Solon, France’s Saint-Gobain, and Canada’s Cosma International.

“GPEC smartly targets the regions and countries that represent significant growth opportunities, like Canada, China and Western Europe, and works these markets with effective marketing and business development strategies,” Butler says. “Now, with a more concentrated effort underway in China and successful positioning as both a leader in the U.S. solar market and an on-the-record supporter of expanded free trade with China, the Greater Phoenix region is poised for amplified growth in FDI, particularly from China.”

Despite its success, experts says Arizona still has some work to do.

“Our neighboring states and biggest competitors far outrank us in national FDI and export-trade rankings,” Butler says. “California is first for FDI and second for exports, while Texas is second for FDI and first for exports. As such, we must continue evaluating our market for additional FDI and export industry opportunities, and look for ways to increase our competitiveness in these areas.”

Lawmakers have identified one area that needs to be addressed to gain a competitive edge on other states.

“One of the first things we should do is focus on developing a highly educated workforce that will attract companies and businesses looking to move their headquarters,” says Rep. Matt Salmon, R-5. “In addition, it is equally important for us to create a pro-business environment and that comes by reducing harmful regulations that hamper economic growth. Both would increase Arizona’s role in the global economy.”

In order to be increase its global presence and become more competitive with neighboring states like California and Texas, Butler says Arizona must increase the number of export industries operating in the state.

“We can increase our competitiveness for these types of investments,” he says, “with a targeted economic development program for export industries, similar to the Renewable Energy Tax Incentive Program (SB1403), which has brought significant investments to the region and the Qualified Facilities Tax Credit (HB2815), which expanded the successful renewable energy program to include qualified, export-based investments.”

Financial Statements

Momentum builds to soften accounting standards for private companies

Private companies say they need to stop being treated like public companies. And now the accounting world has begun to listen to their complaints.

The debate about whether to soften accounting standards for private companies has gone on for years, but this time it seems to be moving toward action, although slowly. But this past summer, the parent organization of the Financial Accounting Standards Board (FASB) created a new Private Company Council to discuss possible changes in the U.S. Generally Accepted Accounting Principles, better known as GAAP.

The theory behind the move is that the GAAP standards may not always be necessary for private companies, particularly small and medium-size businesses. The council will develop a framework for deciding whether the users of private company financial statements have unique needs and will look at ways to reduce the complexity and cost of preparing private company financial statements as is now the case under GAAP.

Private companies contend that since they don’t raise capital from the public, they shouldn’t have to meet the same expensive accounting standards that publicly traded companies do. In many cases, they are also much smaller than public companies.

Right now, the FASB is seeking feedback on possible changes that could be proposed by this new council.

“They’re only at the talking stage in these standards,” said Ralph Nefdt, managing partner in the Phoenix office of the accounting firm of Grant Thornton. “But it’s a very important debate for standard setters.”

At the same time, the American Institute of Certified Public Accountants has issued its own proposed Financial Reporting Framework that small and medium-size privately held businesses could use to prepare their financial statements when U.S. GAAP is not required. The AICPA is seeking comments on this proposal and expects to finish this framework by 2013.

In the case of the AICPA, a company’s management would have to decide whether or not to use the framework, and the institute would not have authority to require its use, said Ron Butler, Arizona managing partner for Ernst & Young.

“Auditors’ reports for financial statements prepared under the proposed framework would indicate that they were prepared on a non-GAAP basis,” Butler said.

Among major concerns about softening standards for statements is that many companies might report a very different financial performance under the new framework. And whether lenders, creditors and other users of financial statements would accept statements prepared under the AICPA’s proposed framework remains to be seen. “Many contracts, regulations and laws require the use of U.S. GAAP,” Butler said.

In other words there might be risks for businesses in using the AICPA framework because banks and investors might not accept anything other than GAAP standards. Some accountants might also resist the change.

But the AICPA’s plans could bring changes sooner. “This new framework could speed up the processes where an accounting change could occur,” said Richard Goldenson, managing partner of CliftonLarsonAllen’s southwest region based in Phoenix.

He also said that the framework could simplify standards for small and medium-size businesses but not reduce them: “The accounting principles comprising the framework for small and medium-size entities are intended to be the most appropriate for the preparation of the financial statements based on the needs of the financial statement users. Financial institutions in many cases do not require GAAP-based statements.”

Many small and medium-size businesses could realize cost savings because often they do not have the resources and expert staff to implement complex accounting requirements.

Some of the other key features of the AICPA proposal:
    It would be a principles-based framework, available for incorporated businesses and unincorporated.
    It is based on accounting principles commonly used or previously used for financial reporting.
    Historical cost would be the primary measurement basis.
    Fewer disclosures would be required than under U.S. GAAP.
    Fewer adjustments may be needed to reconcile tax return income with book income.
    It is intended to be used regarding issues that face small and medium-size businesses.

If the framework moves ahead as proposed, accountants, companies and regulators would have to go through an education process so that financial reports would be carefully executed. A company that wants to use the framework would need substantial lead time to switch over.