The Arizona Legislature gaveled into its regular session on Monday, January 8, 2024. As 2024 is an election year, legislators expect a shorter session, leaving more time to campaign for the November election.

The Arizona Association for Economic Development (AAED) anticipates several economic development issues to take priority at the State Capital this year, many of which we will actively work on.

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Arizona Commerce Authority continuation 

Arizona has what is known as a Sunset Review process. It requires the Legislature to periodically review the purpose and functions of state agencies to determine if the agency should continue in its existing form, another form, or terminate. This year is the Arizona Commerce Authority’s (ACA) turn.  

The ACA is the state’s leading economic development organization. Its statutory mission is to grow and strengthen Arizona’s economy. The organization promotes prosperity through the development and protection of the legitimate interests of Arizona business, industry and commerce within and outside the state. The ACA also administers economic development programs at the state level. Additionally, regional and local economic development offices depend on the ACA to forward business locate opportunities and manage state incentives.  

The ACA must be reauthorized through legislation — it is an economic development multiplier for the entire state of Arizona.  

Military reuse zone reauthorization  

Arizona created the Military Reuse Zone statute to offset the unique costs of maintaining infrastructure on a former military installation. There are two Military Reuse Zones in Arizona — the former Williams Air Force Base, known as Phoenix-Mesa Gateway Airport, and the former U.S. Naval Air Facility in Goodyear, known as Phoenix/Goodyear Airport. The program is scheduled to end and must be renewed.  

According to the ACA, a business using the Military Reuse Zone program must own taxable property or operate an eligible business located within a zone to qualify for two types of benefits: 

• Transaction Privilege Tax Exemption: Exemption from transaction privilege tax on contracts for certain types of construction at an MRZ.

• Property Reclassification: Both real and personal property can be reclassified from class one (18% assessment ratio) to class six (5% assessment ratio), which may result in property tax savings of up to 72.2% for five years. 

Alternative project delivery legislation 

The statute that allows for alternative project delivery used in the construction industry sunsets on December 31, 2025. Legislation is needed this year to continue private sector design-build and construction manager at-risk delivery methods for public sector projects.  

Both delivery methods can save project costs. The design-build method saves money due to the time savings. The construction manager at-risk method may require the construction manager to pay the difference when going over budget. The construction manager must closely manage the project budget and schedule to stay within the guaranteed maximum price, avoiding cost overruns.  

Workforce development  

From healthcare and front office to hospitality and manufacturing, qualified workers are in short supply throughout Arizona. The work of the ACA, Department of Economic Security, and Arizona@Work offices are critical funding priorities this year despite a potential budget shortfall.  

AAED advocates for policies and legislation that make Arizona more attractive for business and job creation and retention. If you have questions about these or any other economic development bills at the Arizona Legislature, please get in touch with AAED at (602) 240-2233 or email info@aaed.com.  

Author: Katie Hurst is executive director of the Arizona Association for Economic Development.