Arizona is the only state that does not allow local jurisdictions to create tax increment financing (TIF) districts, and it offers no film tax credits. But it does have the Rio Nuevo TIF at the state level and the Government Property Lease Excise Tax at the local level that divert revenues from public coffers.
Most of Arizona’s state incentive programs are administered by the Arizona Commerce Authority (ACA)—the public-private-partnered economic development agency that succeeded the Arizona Department of Commerce in 2010.
The ACA issues annual reports on all its incentives, but the amount of information provided varies by program due to confidentiality laws. Some, like the Quality Jobs Tax Credit, have the projected and actual number of new jobs created, while others, like the Computer Data Center Program, have hardly any useful information. What’s worse, the costs of the largest economic development tax expenditure by far—the Research and Development Non-Refundable Tax Credit administered by the Department of Revenue—are not disclosed at all.
As for aggregate program costs, the Office of Economic Research and Analysis in the Department of Revenue issues tax expenditure reports every year. The General Accounting Office in the Department of Administration publishes the Annual Comprehensive Financial Reports (ACFRs), but they don’t have any cost information for any of the major tax incentive programs except for the Rio Nuevo TIF. Arizona’s municipalities generally report tax abatements in accordance with Statement No. 77, but none of its school districts do.
- See our analysis of GASB 77 data from 2017-2021 on our Arizona State Fact Sheet.
Established in 2002, the Joint Legislative Income Tax Credit Review Committee issues annual evaluations of income tax credits on variable cycles (of which the R&D tax credit is one) on variable cycles but the lack of analytical rigor and the powerlessness of the legislative staff analysts stand in the way of policy changes.