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Arizona Gov. Doug Ducey on Tuesday signed into law H.B. 2321, a bill to increase the current cap on the Qualified Facilities Tax Credit program from $70 million annually to $125 million annually.

The bill passed the state Legislature on Monday with broad, bipartisan support. 

In testimony before the state Senate Appropriations Committee last week, the head of the Arizona Commerce Authority called for the expansion of the tax credit program that she says has been central to the state鈥檚 ability to attract employers and create jobs over the past decade.

Sandra Watson, the president and CEO of the ACA, told committee members that to H.B. 2321 would enhance the state鈥檚 competitiveness. 

鈥淥ur goal is to ensure that we continue to increase Arizona鈥檚 [economic] momentum,鈥� Watson said. 鈥淭hese changes to the Arizona qualified facilities program will help us do that.鈥�

The Qualified Facilities Tax Credit

Under the Qualified Facilities Tax Credit, which was first implemented in 2012, qualifying companies must make significant investment in the construction of a new facility or an existing one and generate new high-quality jobs for manufacturing, research or the company鈥檚 headquarter operations.

To qualify for the tax credit, a majority of the full-time jobs created must pay above-average wages and all new full-time employees must receive health insurance covering at least 65% of the premium.

In 2019, the program鈥檚 tax credits represented , which totaled more than $3.5 billion.

Jim Rounds, president of the Rounds Consulting Group, said that for every dollar invested into the program, there has been $2.30 in manufacturing investment, providing Arizona taxpayers with a return-on-investment of $1.30 to state tax revenue.

Increased manufacturing investments in Arizona

Since the 2008 financial crisis, Arizona鈥檚 manufacturing sector has grown considerably, with the state establishing itself as an attractive location for manufacturers. 

In the 2010s, manufacturing output in Arizona . In 2019, the , for the first time.

Despite the global pandemic, over the past year Arizona has attracted massive investments from , , , and many other manufacturers for new plants in the state.

Earlier this month, ElectraMeccanica announced that after a year-long review of potential sites, it would establish its American base in Mesa, .

The ACA has already reached the program鈥檚 $70 million cap for this year due to increased manufacturing investments in the state, according to Watson. 

Watson stated that the ACA is currently speaking with additional manufacturers who are ready to invest in the state, contingent on the program鈥檚 cap being increased to $125 million this year.

Citing a study produced by the Rounds Consulting Group, Watson said 鈥淚f Arizona is unable to extend the [current] qualified facilities cap, there is an estimated opportunity cost of 20,000 jobs and $187 million in tax revenue in just one year.鈥�

The bill also will extend by 10 years an existing law that aids manufacturers investing more than $500 million in either Maricopa County or Pima County or $50 million elsewhere in the state in offsetting the costs of public infrastructure improvements.

The amendment to H.B. 2321, was introduced by Sen. Sine Kerr, R-Buckeye, onto a bill sponsored by Rep. Ben Toma, R-Peoria.

On Monday, the bill passed the Senate with a vote of 22-6 and the House with a vote of 40-19. 

Business community advocates the Arizona 小红帽直播app of Commerce & Industry and the Arizona Manufacturers Council support the bill. They argue that the tax credit and the infrastructure improvement law have been essential parts of the state鈥檚 overall economic development strategy.

Also registering in support of the bill were major manufacturing companies as well as the Greater Phoenix Economic Council, Greater Phoenix 小红帽直播app of Commerce and representatives from cities, including Glendale, Phoenix and Chandler.

鈥淲e applaud the Arizona Legislature and members from both parties for their swift action to raise the cap of the Qualified Facilities Tax Credit and extend a program that helps manufacturers offset the costs of public infrastructure improvements. These programs have allowed Arizona to quickly become a top destination for business relocation, expansion and job-creating investments,鈥� Arizona 小红帽直播app Interim President and CEO Garrick Taylor said.

鈥淲e thank Representative Ben Toma and Senator Sine Kerr for their leadership on this important issue, and we commend Gov. Ducey for quickly signing the bill into law and solidifying Arizona鈥檚 globally competitive position,鈥� Taylor said.