Will the Valley ever fully recover from the Great Recession (Phoenix: transplants, sales)

[new2colo]

Does anyone truly think that the Valley will ever fully bounce back from the Great Recession that began in 2007? I'm primarily talking about the job and real estate markets as well as population growth. Are the Valley's best days behind us for decades to come?

It seems like several prominent Sunbelt metropolitan areas like Atlanta, Houston, and Dallas have largely recovered from the Recession. In some instances, growth rates have neared, if not exceeded, pre-recession levels, job growth is strong, and economists tend to have a positive outlook about the future of those cities.

We, on the other hand, are still seeing the number of new construction permits for single-family residential significantly lower than pre-recession levels, there are incomplete residential and commercial developments all over that remain empty, many proposed projects here remain delayed or they're just completely scrapped, and the job market here remains lethargic.

Is this the new normal? Will the trend be for the Valley to stop leapfrog sprawl and focus more on existing areas that are already developed? Will the former predictions of Buckeye reaching a population of 1.5 million come true? Will developments like Estrella Falls and Prasada come together?

[azdr0710]

the history of the entire US West has always been nothing but boom-and-bust, boom-and-bust......

[ajonesaz]

A lot of our economy was construction, so it is kind of like the chicken and the egg situation. They are not building houses because many are unemployed or underemployed. Personally, I think we should lay off the new massive home subdivision. I would rather see some gentrification of older areas as opposed to sprawling out into farmland and desert. House prices probably won't go back to where they were for a while because those prices were artificial and were not inline with the economy even then.

[WriterDude]

I'd love to see someone propose something really dramatic. For example, how about cutting the state personal income tax to zero, so we can compete for labor with Texas and Florida, and make up the revenue with a 2% state sales tax?

How about if we deliberately cut the cost of creating a business here (we're already very business-friendly, but business creation is different from operating and growing an existing business)?

How about if we give 10-year state tax exemptions for businesses if they hit certain thresholds (create over 100 new jobs earning over $xx,xxx, invest 5% of revenue in the local economy, invest in environmental remediation, build infrastructure)?

How about if we eliminate state taxes for 10 years on all startup businesses with fewer than 50 employees?

[Solere]

WriteDude: How about doing the opposite so as to insulate our economy from being too dependent on tourism, sales and housing. Arizona needs a Governor and Legislature that will expand the state's economy so as not to be so dependent on real estate and construction and that has the bold vision to reform the state's tax code so as not to be so reliant on sales taxes for revenue. If income taxes are cut and sales taxes rise to make up for the lost revenue, it will hurt the middle and working class, as sales taxes are regressive.

It's too bad voters overwhelmingly passed Prop 100 in 2008 that prohibits the government from charging any new tax on the sale or transfer of real property in Arizona. A lot of cities and states have modest (under 1%) real estate transfer taxes paid either by the buyer or seller of real property. If AZ or cities within it had transfer taxes, it would diversify their stream of revenue and be a small step to changing the landscape of cities. There wouldn't be as much pressure to build beige strip malls, big box stores and chain restaurants.

Why can't cities think beyond the box and enact a small city income tax (let's say 1/2 of 1%) to help city coffers? Is it really going to deter the average person from residing in that city? There are even HOA's and master planned communities in metro Phoenix that have private real estate transfer taxes of 1/4 of 1% or 1/2 of 1% that go to the HOA treasury and yet it's not a deterrent nor has it impacted property values.

Property taxes in Arizona are also artificially low compared to other states and the valuation and taxation formula is difficult to understand leading to great disparity for similar priced properties in the same neighborhood.

It's also punitive on the middle class and poor that many cities in Arizona charge sales on food for home consumption (grocery store food.

[Bruce Jackpot]

Not sure if this has been noted but I predict people will continue to flee the high COL and tax states for places like AZ, TX, FL, etc. A lot of these people are from Illinois, California, and the East Coast and are educated with money. These are the kinda people who I think will provide a boom to the state. Now imagine if Arizona can nab some of these businesses from an Illinois etc... that can improve the economy fast with good jobs. Texas is booming now in-part because of all the transplants... I hope we can expect some of the same albeit on a small level. Texas has the oil and more high paid/corporate/HQ's type jobs and Phoenix doesn't.

[sandy6879]

Originally Posted by Bruce Jackpot

Not sure if this has been noted but I predict people will continue to flee the high COL and tax states for places like AZ, TX, FL, etc. A lot of these people are from Illinois, California, and the East Coast and are educated with money. These are the kinda people who I think will provide a boom to the state. Now imagine if Arizona can nab some of these businesses from an Illinois etc... that can improve the economy fast with good jobs. Texas is booming now in-part because of all the transplants... I hope we can expect some of the same albeit on a small level. Texas has the oil and more high paid/corporate/HQ's type jobs and Phoenix doesn't.

The problem with this, is that the fleeing has been ongoing for some time. And yet - little has changed. AZ has a high percentage of people coming in and moving right back out again. And thus, they don't establish the long term changes that would be needed for this to occur. The education system is abysmal - and people who are highly educated don't want their children going through the education system here. This goes round and round - it's a perpetual cycle that, until some serious changes occur within many different areas of AZ, will continue. We go through this discussion all the time on this board - at the end of the day, people who are educated don't want to move here en masse.

[WriterDude]

Originally Posted by Happs

WriteDude: How about doing the opposite so as to insulate our economy from being too dependent on tourism, sales and housing. Arizona needs a Governor and Legislature that will expand the state's economy so as not to be so dependent on real estate and construction and that has the bold vision to reform the state's tax code so as not to be so reliant on sales taxes for revenue. If income taxes are cut and sales taxes rise to make up for the lost revenue, it will hurt the middle and working class, as sales taxes are regressive.

Hm. I'd 100% agree that basic-needs goods should be tax free (groceries, housing, education), but I'm afraid our opinions differ quite a lot after that point. :-)

For example, you want to tax what you feel are unmoving targets - property owners (with higher property taxes), home buyers (with transfer taxes), and workers (with city income taxes). Your ideas do nothing to expand the economy, but rather take money OUT of the economy.

You understand that adding government revenue streams with taxation doesn't expand the economy, don't you?If your approach works, we could increase property and income taxes to 100% and grow the economy by over 2000%. Happy days are here again!

Expanding the economy requires that we either build revenue organically from within (entrepreneurship, innovation, business starts, business expansion), or attract revenue-generating businesses from outside the state. Between those choices, attracting revenue from outside the state is faster and easier. (For example, New York State is running commercials touting their zero tax initiatives for startup companies, and Perry is running all over the country promoting the Texas business climate.)

We need to be able to compete for the businesses or entrepreneurs who are already inclined to move, and encourage them to move here, build companies, hire workers, and improve the state. You want to raise taxes. Let me guess, Democrat?

[Bruce Jackpot]

Originally Posted by sandy6879

The problem with this, is that the fleeing has been ongoing for some time. And yet - little has changed. AZ has a high percentage of people coming in and moving right back out again. And thus, they don't establish the long term changes that would be needed for this to occur. The education system is abysmal - and people who are highly educated don't want their children going through the education system here. This goes round and round - it's a perpetual cycle that, until some serious changes occur within many different areas of AZ, will continue. We go through this discussion all the time on this board - at the end of the day, people who are educated don't want to move here en masse.

The educated professional types moving here would likely be living where the school system is stellar. It would be a non-issue for them. I betcha most parents would feel just fine sending their kids to the public schools in North Scottdale, Gilbert, Queen Creek, etc. So I don't find the school thing as a big excuse or barrier if you have the means to live in a good district. And if not, splurge for private schools. Point being: I don't see the school issue as a deal-breaker.

But by improving education across the board would make us a more attractive workforce which could pay dividends in years to come. Companies want to relocate where they have a lot of qualified workers... they don't want to pay to move hundreds of engineers to Arizona. That hurts our case because we lack a lot of the in-demand skilled workers that Silicon Valley, Dallas, Austin, Houston, etc have. But if we had more, the Valley would instantly become more competitive. Low tax burden, business friendly state, just next door to an economic giant (CA). We could be an intriguing and cheaper alternative.

[Maroon197]

Originally Posted by Bruce Jackpot

Not sure if this has been noted but I predict people will continue to flee the high COL and tax states for places like AZ, TX, FL, etc. A lot of these people are from Illinois, California, and the East Coast and are educated with money. These are the kinda people who I think will provide a boom to the state. Now imagine if Arizona can nab some of these businesses from an Illinois etc... that can improve the economy fast with good jobs. Texas is booming now in-part because of all the transplants... I hope we can expect some of the same albeit on a small level. Texas has the oil and more high paid/corporate/HQ's type jobs and Phoenix doesn't.

There is this bizarre and undying belief among many Arizonans that all you need to attract people to a city is sunshine and low taxes. But the reality is that most of those old and oft-maligned northern cities are either booming or experiencing significant revitalization. People continue to flock to places like Boston, New York, and DC, and prices in those cities continue to explode. Meanwhile, Arizona continues to operate much like a supersized retirement village, which, in many ways, it is. Arizona's elderly/aging population is voting in the biggest numbers, and they are not voting for increased taxes or higher spending on schools.

There is always going to be a segment of the population that will move solely for reasons such as weather or a change of scenery. But mostly people will move where there are good paying jobs, good schools, and abundant amenities.