All about Pension Reform

GPCC’s Public Affairs Committee voted to support legislation containing the pension reform package, as the Chamber has been a longtime advocate for common sense reforms to all public retirement systems that ensure long-term financial and actuarial stability of the systems.

The Chamber supported City of Phoenix’s Proposition 103 last year which made incremental reforms to Phoenix’s non-public safety employee pension plan. The three piece legislative package, brought forward by Senator Debbie Lesko, includes many aspects similar to Prop 103 and was crafted by various stakeholders over the past year. The rising cost of the public safety personnel retirement system to the City of Phoenix, their taxpayers along with other cities and public agencies in Arizona, is simply unsustainable. In FY 2017, Phoenix alone is expected to see their costs for PSPRS rise by over $25 million, putting other municipal services at risk.

Last Thursday the Senate passed a long-awaited and hard-bargained package with unanimous support. It is now headed to the House of Representatives, where 39 members are listed as co-sponsors. If the legislation passes by February 15 it will be included on the special election ballot in May.

PSPRS Reform Bill Breakdown:

  • SB1429: Expands the special election slated in May to include a constitutional amendment to facilitate the PSPRS reform package.
  • SCR1019: Constitutional amendment portion of the legislation to allow for the diminishment of benefits under the proposed agreement outlined in SB1428.
  • SB1428: Contains the meat of the proposed changes and would tie cost-of-living increases paid to retirees to the increase to the Consumer Price Index rate and cap the increases at a maximum of 2 percent. Permanent benefit increases have been paid out annually at 4 percent for over 20 years, regardless of the pension system’s funded status. New hires would have the option of choosing a defined contribution plan or a hybrid plan that has defined benefit and defined contribution components. New employees would split the cost of pensions with employers and see a $110,000 per year cap on their pension payouts in addition to being required to serve 25 years and reach age 55 before being eligible for full pension benefits.

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Ducey’s State of the State deserves three cheers from the business community

On Monday afternoon, Governor Doug Ducey addressed a joint session of the Arizona Legislature to deliver his second State of the State Address. Economic development, education, and eliminating burdensome regulations were all named as top priorities for his administration.

Ducey noted several accomplishments from his first year, including Arizona being named the best state for future job growth by Forbes magazine. His staff also uncovered hundreds of buried regulations that are harmful to business.

The Greater Phoenix Chamber of Commerce is extremely excited about the pro-business approach taken in his speech. For example, Governor Ducey called on cities to halt “patchwork plans” of wage and employment laws, declaring he would do everything in his power to protect small business. He also called for legislation that will eliminate burdensome regulations that bog down business.

The governor will continue to position Arizona as a place for businesses to migrate through “Arizona Commerce Authority 2.0,” adding that education is key when marketing and promoting Arizona in this way.

Proposition 123, the initiative that will bring $3.5 billion to the K-12 system and settle the school-funding inflation lawsuit, is headed to the ballot this spring. Governor Ducey called on all lawmakers to support Prop. 123, which he described as a once-in-a-lifetime opportunity to provide for the younger generation of Arizona residents. Governor Ducey would like to see taxes lowered while simultaneously investing in education.

Along with Prop. 123, his office has been working to make it easier and more affordable for the best public schools to expand by using funds appropriated for the Arizona Public School Achievement District and non-general fund dollars. Along with expansion, this plan would allow older schools to upgrade and repair their facilities and incentivize schools to educate students with AP-level and college-prep courses. In addition, he is focusing on technical education for high-employment careers, which will further economic development in the state. He also promised that he will spend more on universities.

The governor also highlighted water management during his address, as he praised the 1980 Groundwater Management Act that has kept Arizona ahead of the water crisis. Under his direction, the Arizona Department of Water Resources has hired new staff, furthered the investigation of water and infrastructure needs and identified a new long-term water source.

Governor Ducey also touched on eliminating burdens in the foster care system, putting pressure on deadbeat dads to pay child support, allowing Uber and Lyft to operate at the airports, and addressed the nationwide problem of drug addiction, which is also prevalent in Arizona. He would like to identify the best treatments and reduce barriers for those who are seeking treatment for drug addiction.

Overall, Monday’s State of the State focused on the most important aspect of Arizona, the people who live here. The hardworking residents of Arizona deserve the most credit for making Arizona a state on the rise.

Governor Ducey expects Arizona to become nationally recognized for all the great things Arizonans are accomplishing.

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Special Session Summary

This past week the Governor called the legislature into Special Session to consider a proposal that would increase funding for education by $3.5 billion over the next ten years. The Greater Phoenix Chamber and the business community at large fully supported these efforts and was pleased that a framework was reached to settle the five-year lawsuit between State of Arizona and Education Advocate Groups.

The K-12 lawsuit has posed a significant impediment for Arizona education, but with the work done by the Governor and Legislature this past week, Arizona is moving in the right direction. It is imperative to support our education system, including our higher education system, because this is the backbone of our economic development efforts. Now that the lawsuit is behind us, we look forward to working with all the stakeholders to address these other areas of need.

The adopted plan includes:
– A base level reset of $3,600 per student, an increase of $173 for each student and 72 percent of what the courts ordered. Within two years, the base level will reach the full amount.
– Inflation language (15-901.01) to continue as it currently exists (2 percent or the rate of inflation whichever is less) with compounding in perpetuity.
– Additional funds, in consideration of back pay, to be distributed annually: $50 million per year for the first five years & $75 million per year for the second five years
– Contingencies have been put in place to account for a severe downturn in the state economy.

The business community has been thrilled with the historic agreement, with a wide array of businesses and education organizations supporting the swift action taken. We pledge to work with all groups involved to take this to the voters in the spring of 2016 to help pass the Trust Land for Education referral. No economic incentive can match the positive impact of a great education system as an incentive to expand, grow, and bring successful companies to Arizona.

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Connections, congressional conversations dominate Chamber’s inaugural DC trip

The Greater Phoenix Chamber of Commerce’s inaugural Washington, D.C. Executive Dialogue policy trip Oct. 5-8 was a great success as we connected our 12-member delegation with high-level officials, our Arizona congressional delegation and the U.S. Chamber of Commerce.

Chamber Board Chairman Ken McMahon, President and CEO Todd Sanders and I led our group through three days of strategy and advocacy sessions furthering our mission of advancing the priorities of the state’s business community. We even scored a behind-the scenes tour of the U.S. Supreme Court authorized by Justice Clarence Thomas! Highlights of that exclusive extra included touring the Reading/Research Room and the justices’ conference rooms followed by an up-close look at the courtroom.

In order to get the most out of this trip, the Chamber decided to focus on four areas: education and workforce, environmental mandates, health care and sequestration.

The highlight of the trip was spending time with one of Arizona’s U.S. senators and nearly every member of the state’s U.S. House delegation. This was indeed a rare occurrence as the extremely busy members of our House delegation rarely have enough time in their schedules to visit personally with guests.

Fortunately, since we were able to bring our Chamber delegation face-to-face with our lawmakers, we were able to engage in robust and informative dialogue. The congressional delegation members provided their insights into U.S. House leadership elections and what to expect during the upcoming months.

It was also great for our Chamber delegation to be able to see how fluid situations can be in Washington. While we were there, the U.S. House speaker’s race was turned on its head when California Rep. Kevin McCarthy, who serves as House majority leader, unexpectedly dropped out of the House speaker race with no clear front runner to take his place. After initially indicating that he didn’t want the job, U.S. Rep. Paul Ryan of Wisconsin was ultimately elected speaker.

Members of Arizona’s congressional delegation were optimistic that several issues could be addressed by the end of this calendar year including the debt limit, enacting a budget for the entire fiscal year, transportation funding and enacting K-12 and higher education bills.

We kicked off the first day at the U.S. Chamber of Commerce discussing several issues important to Chamber members.

U.S. Chamber members representing health policy, environment, technology, regulatory affairs, education, workforce, political affairs and federal regulations help prepare us for our meetings with Arizona’s congressional delegation. They stressed the negative impact that aggressive EPA regulations are having on Arizona and on the nation as a whole. Equally concerning are the looming tax implications and rule implementations relating to the Affordable Care Act.

Kenyata Wesley, acting director of the U.S. Department of Defense’s Office of Small Business Programs, discussed the harmful effects of sequestration and impressed upon our group the need to enact a full-year budget instead of continuing resolutions.

Shortly after we returned to the Valley, our congressional delegation received word of positive news relating to some of the issues we discussed while in D.C.

First, a federal appeals court blocked the implementation of the EPA’s waters of the United States regulation while litigation proceeds through the court system. Secondly, the president signed HR 1624 allowing states to keep the definition of small group employer at 50 rather than increase to 100.

Our D.C. trip was also a great chance for me personally to spend some extra time with our Chamber Board members, who I typically only see for about an hour per month. It was nice to visit with them on a more personal basis and discuss in depth the impacts of our public policy work on them and their businesses.

Afterward, they expressed to me that the trip was worth their time and effort.

“It was interesting, informative and educational. I appreciate having had the opportunity to go on the trip,” said Phyllis Senseman, vice president, agency management & marketing, CopperPoint Mutual Insurance Company

“The D.C. Executive Dialogue trip was very worthwhile. Chamber members and executive staff had the opportunity to receive a firsthand report from Arizona’s congressional delegation on issues of interest pending before Congress. It’s clear that the Chamber identified itself as a key constituent to Arizona senators and all of Arizona’s congressmen by sending a strong delegation to meet with them personally. Most importantly, the trip served as an inaugural exchange between Arizona’s congressional delegation and members. Knowing that this will be an annual event is a valuable benefit for the entire Chamber,” said Don Isaacson of Isaacson & Walsh.

“I think we all agree that taking time from our busy day jobs is always a challenge, but without a doubt I can say it was an extremely valuable use of our time for many reasons, not the least of which was getting to know each other so much better,” said Kim Shepard, senior vice president, sales and account management, Cigna.

We have received so much positive feedback on this trip that we are already planning our second D.C. Executive Dialogue trip for next year. Hope to see you there!

Mike Huckins
Vice President of Public Affairs
Greater Phoenix Chamber of Commerce

SPECIFICS:
Members of our congressional delegation also specifically discussed their positions and took input from our group on our four areas of focus for the trip. Here is a quick look at their some of their goals.

Education/Workforce

  • Support the Elementary and Secondary Education Act (ESEA).
  • Support the Higher Education Act (HEA).
  • Continue to support high standards and aligned assessments.
  • Allow for flexibility in federal school funding.

Environmental Mandates

  • Support efforts to delay, prohibit or create Arizona-specific exemptions for increased ozone mandates.
  • HR 1327 & S 640 Ozone Regulatory Delay & Extension of Assessment Length (ORDEAL) Act
  • HR 1320 & S 640 – Common sense Legislative Exceptional Events Reform (CLEER) Act
  • HR 1388 & S 751 – Clean Air, Strong Economies (CASE) Act
  • Continue to work with states and the EPA on the Clean Power Plan to recognize unique economies and economic cost.
  • Continue to monitor and assist however possible with other EPA mandates such as Waters of the United States.

Health Care

  • Repeal the health care Benefits Excise Tax – HRs 2050 & 879.
  • Return the employer mandate to 40 hours per week.
  • Allow small businesses to utilize health reimbursement arrangements (HRAs) without undue penalties.
  • HR 2911 & S 1697 – Small Business Health Care Relief Act
  • Encourage streamlined and uniform ACA rules by the EEOC relating to workplace wellness programs.
  • Allow states to control the definition of small group employers.
  • HR 1624 – Protecting Affordable Coverage for Employees (PACE) Act

Sequestration / Budgets

  • Pass full-year budgets while avoiding continuing resolutions.
  • Recognize the large impact military and defense contract spending cuts have on Arizona.
  • Continue to recognize the contributions of Arizona’s military bases on the overall state economy.
  • Provide flexibility in military contract spending whenever possible.

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State Board of Education Vote

Earlier this morning the Arizona State Board of Education (SBE) voted in a 6-2 decision to repeal Common Core as the State’s Standards. This was a repeal of the June 2010 adoption of Common Core specifically and allows Arizona to continue our current standards, now referred to as Arizona College and Career Ready Standards (ACCRS). This motion was symbolic in nature, aiming to remove the controversy that surrounds ACCRS from the discussion and maintain the focus on Arizona students.

 SBE’s decision to repeal Common Core will in no way change the current standards in place that both educators and students have been working on over the last five years and will continue the review process that is currently underway. Comments will continue to be collected online through Nov. 20 at https://k12standards.az.gov/comment-standards. We encourage teachers, parents and other members of the public to weigh in to ensure that our standards are strong and reflect Arizona’s needs. Any changes to the existing standards will be made only as a result of this review process.

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More options are better than None- Education Update

After a tough budget year, many in the political and education community believe that additional funding is needed in Arizona’s K-12 school system. The biggest issue it seems will be how best to address the monetary problems facing the school system.

Settlement talks between Arizona public school districts and the Legislature regarding the K-12 lawsuit came to a deadlock. The Court of Appeals has lifted its stay on legal judgments, and the court is now able to proceed with ruling on the plaintiffs’ $330 million adjustment request along with $1.3 billion in back payments be paid to the school districts.

Also looming are the scheduled FY 2017 funding cuts to Career and Technical Education (CTE) and the Joint Technological Education Districts (JTEDs). Through the Chamber’s Phoenix Forward business inquiries, workforce leads as the number one concern among businesses. These programs provide a vital path to the workforce for many workers and the business community needs to work together to avoid harm in these critical areas.

House Speaker David Gowan and Senate President Andy Biggs released their proposal to place additional money into classrooms by using four revenue streams to infuse $5 billion in new money over the next 10 years.  This would be done without raising taxes and instead focus on supplementing the annual basic state aid which began in the last budget process, a new increase to annual basic state aid, a partial shift of money from the state’s First Things First program, and a plan to use increased earnings from the state trust land.

According to Biggs and Gowan, these sources will bring $500 million in new money to classrooms in the first year alone.

Within the same week, Representative Sonny Borrelli announced a proposal to immediately increase K-12 base funding and mandate that all public schools offer additional classroom time for kindergarteners. Borelli stated that it is time to resolve the education funding lawsuit while keeping the commitment not to raise taxes. His proposal increases per-pupil, base-education funding by an additional $262 million and will require schools to offer full-day kindergarten.

These announcements come in addition to Gov. Doug Ducey’s Land Trust Plan to tap the State Land Trust to infuse more money into K-12 classrooms, equaling close to $2 billion over the next decade. In addition, late last week, Superintendent Diane Douglas called for the immediate infusion of $400 million into the school system to aid classrooms.

As you can see, the challenges are great, but so are the ideas. The Greater Phoenix Chamber of Commerce looks forward to working with stakeholders in the coming weeks on addressing these critical needs.

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GPCC 2015 Guiding Principles Process

The Greater Phoenix Chamber of Commerce’s Public Affairs and Issue Committees bring government affairs professionals, industry practitioners, and business leaders together over the course of the year to evaluate and craft policy recommendations, setting priorities for the Chamber. The committees meet to hear presentations and have meaningful discussion about legislative bills and ordinances and ultimately make decisions on whether to support or oppose these initiatives.

To kick off this process, the Chamber’s committees will begin meeting in early September. The first meeting of each committee is reserved to establish the Guiding Principles for the year, identifying policy priorities.  Member involvement in the Public Affairs program is one of the most effective ways to influence regulatory and legislative policy, align with fellow Chamber members, and engage with elected officials.

We look forward to seeing you as our meetings kick off in the coming weeks!

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Rulemaking at its Worst

At its July 23 meeting, the Arizona Citizens Clean Elections Commission (CCEC) heard opposition from the business community on a proposal that aims to gain more transparency from “dark money” groups.   However, the proposal in its current form puts the burden on businesses to prove they are not subject to regulation by the CCEC, rather than the other way away around.

As written, the proposal would designate any group that spends or raises at least $500 to influence an election a political committee, which would trigger requirements that it discloses its contributors. As the law stands, an organization must raise at least $500 to influence an election, AND it must be created, combined or conducted with the primary purpose of doing so.  A key part of opposition is the lack of clarity of the “primary purpose” rule, which should make the guidelines a two-part test. But many feel it’s become a one-part test which forces honest businesses to justify their primary purpose before the commission for exercising their constitutional free speech rights in elections.

Even more concerning is that the proposed rule would put the onus on businesses to prove by “clear and convincing evidence” that they have not violated the rules. This is in stark contrast to normal jurisprudence procedures.

Along with the business community, the proposal has drawn criticism from Arizona Secretary of State Michele Reagan, who said the commission’s proposal usurps her authority as the state’s top elections officer and corporations are at risk of having “a multiple court system” of investigating campaign finance violations.

You can read our joint letter of opposition with numerous other business groups here. The next CCEC meeting will be on August 20, where the commission will be voting on a revised version the proposal. We encourage you to participate and voice your opposition.

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Get to know our new Public Affairs Chair, Jaime Molera!

Jaime Molera, co-founder of Phoenix-based government relations and public affairs firm Molera Alvarez, is the new Chair of the Chamber’s Public Affairs Committee. Molera succeeds Cox Communications’ Susan Anable, who served as Chair for six years.

For the last couple of decades Molera has been involved with public policy in one shape or form in Arizona.  He worked in the Symington administration in the mid-90’s, kicking off his professional career in Arizona.  From 1997-2001 he worked for Governor Hull and then transitioned to the position of State Superintendent of Public Instruction, in addition to serving as Arizona State Board of Education under Governor Jan Brewer.

Here are some highlights of the Q&A Jaime did with the Chamber:

What are your objectives as the Chamber’s public affairs efforts begin again in September?  To continue to create a strong business climate in Greater Phoenix. The Chamber has been a very big champion of is making sure that the regulatory and tax environments are such that businesses can continue to thrive and grow. Other focus areas are a strong education system, from K-12 all the way to higher education, and making sure that there are components of our education system that lead to a strong workforce. So combined with a good business climate, low taxes and low regulations, that mix of objectives can have a pretty powerful impact.

What do you see as the biggest priorities? How do education standards fall into that list of priorities?  It’s not just about having higher education standards, but making sure that we have a meaningful accountability system at all levels. It has to mean that academically, Arizona’s education system is truly preparing students to graduate from high school without the need for remediation as they head to college. Unfortunately, that’s not the case right now. So I think the Chamber is well positioned to help push for a really strong, meaningful accountability system.

What measures do you predict will resurface for the 2016 legislative session? It’s an election year, so yes…I predict a lot of measures resurfacing in the upcoming legislative session, but I think they are things we can deal with. The repeal of Arizona’s College and Career Ready Standards will likely resurface. I hope that Arizona can move forward in implementing the restoration of its Medicaid program. I know our hospitals will go crazy and our health care system will go nuts for that. I also predict various social issues might be coming down the pike again. Again, being an election year, we have to anticipate that.

Why should member businesses get more involved in public affairs and engage in dialogue? It’s simple: if the Chamber did not do the great job of being an advocate and being aggressive and ensuring that policies lead to a strong business climate, then we’d always be dealing with mediocrity. And I think mediocrity is not where we need to be at this point in the state. We need to be aggressive in focusing on the issues that make a difference for our members and local businesses. Education is just one of those hot-button issues. Having a reasonable and sound healthcare system is another hot issue. More importantly…it’s our job to make sure that bills are not going to harm businesses, but rather enable them to grow and prosper. That’s ultimately where the success in Arizona lies — in our ability to build a stronger workforce. A stronger workforce is going to go a long way towards Arizona’s betterment.

You can find the full Q&A with Jaime Molera here:

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GPCC PAC Endorsements

The Greater Phoenix Chamber of Commerce’s Political Action Committee (GPCC PAC) announced its endorsement of candidates in the upcoming Mayoral and City Council Election. GPCC PAC, an independent Board of the Chamber, was established to support the Chamber’s mission of advocacy in state and local policy. “Our Political Action Committee is vital to the Chamber’s mission of supporting and sustaining member businesses,” said Todd Sanders, Greater Phoenix Chamber of Commerce President and CEO. “We heard from many qualified candidates and endorsed those who had the clearest understanding of the challenges facing businesses in Phoenix and those whose policies align with our strategic initiatives to fosters a pro-business environment focused on the creation of quality jobs, robust business retention and expansion efforts.”

After thoughtful consideration and review of voting records, accessibility to Chamber Members, survey responses, and personal interviews, the GPCC PAC endorsed the following:

  • Incumbent Mayor Greg Stanton
  • District 1 Incumbent, Councilwoman Thelda Williams
  • District 3 Incumbent, Councilman Bill Gates
  • District 5 Incumbent, Councilman Daniel Valenzuela

“The Chamber’s Political Action Committee is excited to endorse candidates who demonstrate accessibility and collaboration in support of promoting the interests most important to our local businesses,” said Greater Phoenix Chamber PAC Chairman John Moody, partner in the Phoenix law firm of Peters, Cannata & Moody PLC. “The Chamber continues to build strong relationships and looks forward to working further with the Mayor and City Council on a number of issues to help our businesses and our economy further grow and prosper.”

Find the press release on GPCC PAC’s Endorsements here.

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