“Political Risk Factors” Put Some Arizona Communities At A Disadvantage

In May, University of Arizona economists with the Economic and Business Research Center reported that Arizona’s “job growth continues to top the U.S.” The Economic and Business Research Center found that the “job growth varied in Arizona metro areas: Flagstaff 0.8%, Lake Havasu City-Kingman 1.4%, Phoenix 2.5%, Prescott 2.2%, Sierra Vista 0.0%, Tucson 0.2%, and Yuma 3.1%.”

The smaller cities which make up the massive Phoenix metropolitan area seem to be announcing new jobs on a weekly basis. At the same time, business closings are a common occurrence in Flagstaff and Tucson.

There are good reasons for the disparity according to business relocation expert, Joe Vranich. Vranich of Spectrum Location Solutions, says corporations generally consider three factors when looking to expand or relocate; taxes, the regulatory environment, and lifestyle.

Both Tucson and Flagstaff have developed anti-business reputations over the years.

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Just last year, while the rest of the state was increasing the minimum wage to $10 an hour, Flagstaff increased it to $15. The results have been devastating.

While Flagstaff’s anti-business reputation is in its infancy stage, Tucson’s is well-established. “Let me put it this way,” said Vranich in an appearance on the James t. Harris radio show, “in all the years I’ve been at this, I’ve never had one company show serious interest in going to Tucson. Phoenix? Yes. Mesa, Chandler, Tempe, Scottsdale, Peoria; all of those places I have done studies on. So why not Tucson? I don’t know I think there is a general impression that if they go to Tucson things are going to be just a little bit more difficult with the government there than it is with the governments in these other places.”

“I’ll give you one quick example. A company in California wanted to add a door to a warehouse and it was going to take them nine months to get a permit from the city. In the Phoenix area you could probably get that in about one month, and I think that people have the feeling that in Tucson they are a little less apt to move as quickly as companies need.”

Surrounded by hungry communities interested in employing residents, Tucson, Flagstaff, Phoenix and Tempe have doubled down on turning business away by adopting resolutions to participate in the draconian requirements of the Paris Climate Accord.

“Whatever you think about global warming, the political risk factor in my studies would increase,” Vranich told Harris referring to Tucson’s adoption of the Accord, “the political risk factor in my studies has just increased. Tucson by doing that has just lost points in any study that I would do about competing locations for a company.

On Wednesday, the Bureau of Economic Analysis released the latest numbers on gross domestic product by states. The Real gross domestic product (GDP) increased in 43 states and the District of Columbia in the first quarter of 2017. Arizona was in the middle of the pack with growth of only .9 percent.

Table 1. Percent Change in Real Gross Domestic Product (GDP) 2016:Q1-2017:Q1
2016 2017 Rank 2017:Q1
Q1 Q2 Q3 Q4 Q1
Southwest ……………….. 0.4 1.8 -0.8 3.0 2.8 3.3 …….
Arizona ………………….. 2.1 -0.4 2.1 8.2 1.0 0.9 31
New Mexico ……………. -0.5 -0.7 0.2 0.5 1.3 2.8 3
Oklahoma ………………. -2.3 -1.1 -1.8 -2.2 1.3 1.9 11
Texas ……………………. 0.4 2.7 -1.3 2.7 3.4 3.9 1
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