As CEO of the nonprofit Arizona Small Business Association, Jess Roman is a passionate advocate for small companies and sole proprietors statewide. 

He also is a strong proponent for adequate funding for teachers and schools. Yet, he is calling on voters to reject Proposition 208, the ballot measure known as Invest in Ed. 

His opposition lies in the fact that the measure would have a negative impact on the “vast majority” of the organization’s 1,000 members in Arizona, Roman said. 

While the measure is intended to raise money for education by taxing high income earners, voters should not be misled into thinking it will not affect small companies as well, Roman said. 

Roman has a unique understanding of what it takes to grow a business and keep it operating. 

He spent 25 years in commercial banking in Arizona including as the president of BNC National Bank’s Arizona market. He also held business development positions with Heritage Bank, Desert Hills Bank and First Community Financial.

Roman spoke to �������� about why Prop. 208 is the wrong path for funding education in Arizona.  

As someone who has spent his career helping entrepreneurs grow their businesses, what are some of the daily challenges small companies face?

Businesses can go through different cycles depending on the year. There are so many issues that small businesses face: vendor relationships, challenges with employees, taxes, insurance, liability, human resources, sales, revenues, managing costs and profitability.

In addition to that, politics adds to that weariness. Who’s going to be elected president? What happens with taxes overall, let alone at the state level? That’s what they have to deal with on a daily basis.

Now, you throw in the cloud of this initiative. It’s just one more thing that then becomes out of their control. You work hard to make a profit and now the hands of this initiative are out for more dollars that is singly focused when it should be broader. There should be more shoulders lent to this instead of just a narrow segment of our economy.

You have stated that this is the worst time for an added tax on small businesses because of COVID-19. What are some of the stories you are hearing from your members affected by the pandemic? 

Restaurants and tourism in particular have been severely impacted. And with the holidays coming up, people may be reluctant to go to a restaurant, so that intangible emotion becomes a tangible for restaurant owners. They are being held hostage by the health challenges, which they understand. But it’s been really tough for them. It takes an emotional toll on everybody. 

Regardless of the industry, most businesses want to model responsible behavior. They’re buying cleaning supplies and protective equipment. I went to my dentist recently and when I walked in, there were no magazines, the chairs were spread out, there was a brand new wall. Plastics were everywhere in between. They completely redid their office to make patients feel comfortable. This can’t be inexpensive.

So here small businesses are fighting everyday to survive in this very difficult downturn and now you’ve got this initiative, one more thing out there on the horizon they may have to deal with. It’s wholly unfair.

Why would the initiative impact the vast majority of your members?

The vast majority of small businesses are not C corporations. They are limited liability companies and sole proprietors who file their taxes on the individual portion of the tax code so they could be subject to the tax increase. 

And you can’t just flip to a C corporation. It’s hugely expensive and it just doesn’t make any sense for an LLC to do that in order to manage their taxes. So what we would be doing is taking away from their future growth with this tax. 

What is ASBA’s stance on education funding? 

The Arizona Small Business Association recognizes the importance of education, and it supported the Red of Ed movement and the 20 percent pay raise by 2020 initiative from Governor Ducey. However, the Invest in Ed initiative puts all the burden squarely on the backs of individuals and small businesses while giving a free pass to corporations. 

Because small businesses file taxes on the individual portion of the tax code, Proposition 208 will increase taxes by nearly 80 percent and create a huge burden for small businesses who are already struggling in the wake of the COVID-19 pandemic. 

If Proposition 208 passes, it will be the nail in the coffin for many of us. No more hiring, no expansion, no recovery, and less tax dollars for Arizona’s teachers.

About the Arizona Small Business Association 

The Arizona Small Business Association (ASBA) is the voice for small business in Arizona, dedicated to promoting success for entrepreneurs, the business community and economic growth in the state. ASBA provides resources for businesses of all sizes with fewer than 500 employees, including education and mentoring opportunities, professional connections, and support resources through strategic partners. 

For more information, go to:

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You’ve likely seen the new television ad from the pro-Proposition 208 campaign. In case you’ve forgotten, Proposition 208 is from 4.5% to 8%–a 77.7% increase.

If you haven’t been following the back and forth over this initiative, you’re forgiven if you didn’t know its central provision amounts to the largest tax increase in Arizona history. The TV ad doesn’t mention it at all.

Instead, viewers are told that the initiative would restore education funding. Left out of the script is that Proposition 208’s tax increase on small business would deliver such a shock to state revenues that future education funding would be put at tremendous risk. Also left out is that early childhood, community colleges, and universities are left with peanuts.

Proponents also fail to inform viewers that they are relying on the section of tax code with the greatest volatility, leaving no guarantee for funding from year to year and no way for school districts to budget with any predictability. If voters want to deliver a boost in teachers’ contractual pay, they won’t get it from Proposition 208.

The ad touts Proposition 208’s accountability requirements, saying that funds would be “voter-protected.” That has nothing to do with accountability. It’s a statement of Arizona’s existing law that makes it virtually impossible to change a voter-passed initiative. There’s a reason for this obfuscation. There’s absolutely no accountability in this initiative. None. Nada. Zip. Zilch.

The ad promises a lot. Political ads often do. What the ad doesn’t do is answer how it will deliver.

A political ad urging passage of an initiative that proposes the largest income tax increase in state history that doesn’t mention the tax increase at all? Unlike the script, that says a lot.

Glenn Hamer is president and CEO of the Arizona �������� of Commerce and Industry

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The vast majority of funding for an initiative campaign to raise income taxes on individuals and small businesses comes from out-of-state unions and interest groups, according to a . 

Since January, InvestInEd, the group backing Proposition 208, has raised more than $4.6 million, however only $31,143 have come from individual contributions made by Arizonans. The remaining 99.3 percent has come from Portland, Oregon-based Stand for Children, the Arizona Education Association, and other special interest groups. 

“Arizona’s initiative process was never intended to be a petri dish for experimental policy cooked up by wealthy special interests from around the country,” Arizona Free Enterprise Club President Scot Mussi said .

In May, InvestInEd as “A grassroots movement to restore K-12 education funding and power our economic recovery.” 

However, the group’s campaign finance records belie the claims of the initiative’s supporters that the campaign enjoys deep Arizona-based grassroots support.

Nearly all pro-Prop. 208 funding coming from special interests

The initiative campaign has raised more than $4.6 million this year from:

·      Stand for Children, Inc. Portland, Oregon-based Stand for Children is funding the majority of the initiative campaign, with over 87 percent of contributions totaling $4,081,574 coming from the group. The vast majority of their contributions have been earmarked for signature collection. The group is active in nine states and previously supported a similar Arizona ballot initiative in 2018 that failed to secure a spot on the ballot. 

·      Arizona Education Association The Arizona Education Association, the National Education Association’s Arizona affiliate, has contributed $456,780. The National Education Association, based in Washington, D.C. is the nation’s largest labor union with over 2.2 million members.

·      Children’s Action Alliance The Children’s Action Alliance, an advocacy group, has contributed more than $85,000 to the ballot initiative.

·      Arizona Individual Contributions Arizonans themselves have contributed $31,143 to the group, only .67 percent of all contributions.

·      Save our Schools Arizona Save our Schools Arizona, another advocacy group, has contributed $23,100. This group in 2018 to Proposition 305. That vote resulted in fewer Arizona families having access to private school choice. The group also to a legislative reform adopted in 2020 allowing Navajo children to access the Empowerment Scholarship Account program to attend a private school on the Navajo Nation on the New Mexico side of the stateline.

History of out-of-state interest groups funding Arizona ballot initiatives

According to Mussi, “Based on the current signature requirements and constitutional protections for paying circulators to collect signatures, it is possible to gather enough signatures to qualify a measure for the ballot for around $2 million dollars.”

Because of this relatively low barrier to entry, Arizona has had multiple ballot initiative efforts funded by out-of-state groups each election year.

In 2016, Arizonans For Fair Wages and Healthy Families used the ballot initiative process to raise Arizona’s minimum wage and impose a new paid leave mandate on Arizona employers. The group from national groups such as the CPD Action, the National Education Association, and the Sixteen Thirty Fund.

Two years later, Clean Energy for a Healthy Arizona— by California billionaire and 2020 presidential candidate Tom Steyer’s NextGen Climate Action—gathered enough signatures for a proposition to require Arizona to use at least 50 percent renewable energy by 2030. Sixty-eight percent of Arizonans voted against it.

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The Arizona Supreme Court has ruled that the “Invest in Ed” ballot initiative will appear on the November ballot. 

The initiative was initially removed from the ballot in July by a Maricopa County Superior Court judge who ruled that the proposition contained a “misleading” 100-word petition summary. The state Supreme Court overturned the lower court’s ruling in Molera v. Hobbs on Wednesday.

“A written opinion will follow,” said Chief Justice Brutinel, delivering the court’s order to reinstate the proposition on the general election ballot.

Opposition swells

Amber Gould, chairwoman of the Invest in Education campaign, , “Today’s ruling by the Arizona Supreme Court keeping Invest in Education on the November ballot is an important victory because it gives millions of Arizona voters the opportunity to put more resources in our schools.”

Arizonans for Great Schools and a Strong Economy, led by former Superintendent of Public Instruction Jaime Molera, has opposed the measure from the beginning. 

Following the ruling on Wednesday, Molera , “Today’s decision is a disappointment. Between now and Election Day we look forward to sharing with voters how damaging this 77.7% income tax increase on small business will be to Arizona’s economy and how it will fall far short of what proponents’ have promised the state’s teachers.”

The opposition group led by Molera has pledged to appeal the decision again, this time “in the court of public opinion.”

Arizona could become one of highest tax states in nation

If passed by voters in November, the initiative would raise Arizona’s top income tax rate by 77.77%. This raise would vault Arizona among the highest income tax brackets in the nation, between Wisconsin and New York.

It would also result in Arizona having the highest income tax bracket among its neighbor states Utah, New Mexico, and Colorado. California beats out Arizona, however. Nevada does not have a state individual income tax.
Arizona Gov. Doug Ducey opposes the initiative, submitted for the publicity pamphlet that is sent to voters before the election that the structure of the initiative would force small business owners to pay “a whopping amount, especially considering that our economy is recovering from recession and high unemployment.”

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If a ballot measure that seeks to increase taxes on certain taxpayers and small businesses is adopted by voters in November, it would vault Arizona onto a top-10 list of states with the highest tax rates in the country.

But it’s a big if. A superior court judge has the initiative, known as Invest in Ed, not to appear on the fall ballot due to organizers’ failure to properly describe the principal provisions of the measure on the petition that voters signed to send the question to the ballot.

The initiative organizers have appealed the decision to the state Supreme Court.

A 77.7% jump

If the high court overturns the lower court decision, voters will be asked whether to increase the state’s top tax rate, currently 4.5%, to 8.0%, a 77.7% jump.

The 8.0% rate would slot Arizona between Wisconsin and New York according to done by Intuit TurboTax. Of Arizona’s neighbors, only California would have a higher top income tax rate.

A published by the Tax Foundation, a nonpartisan organization focused on analyzing economic policy and its impacts on real outcomes, shows that higher taxes on income have been historically linked to lower economic growth, decreased investment, and less job growth.

Arizona’s economic competitiveness and robust jobs market has grown stronger with time. The state has vaulted ahead in the past decade to the top of lists ranging from “” to “”.&�Բ�����;

The Invest in Ed initiative could put this momentum at risk, opposition groups argue.

Garrick Taylor, spokesman for the Arizona �������� of Commerce and Industry, that, “This will put downward pressure on economic growth and make investing in schools and teacher salaries more difficult going forward.”

“Crushes Arizona’s reputation”

In a statement submitted for the election year publicity published by the Secretary of State’s Office, Arizona Tax Research Association President Kevin McCarthy says Arizona’s tax rates stack up well regionally and nationally.

“Our rates are low enough to be both regionally and nationally competitive, encouraging economic growth in Arizona as well as attracting new residents and businesses,” McCarthy said. “Upturning this effective system with an 80% increase to the top marginal rate permanently changes Arizona’s framework from ‘low cost, high growth’ to ‘high tax, steer clear.’ In one shot, it crushes Arizona’s reputation as friendly to small business. It signals to businesses everywhere that Arizona has an unreliable tax climate and is not suitable for investment.”

Economic growth vs. out-migration

National publications have taken notice of Arizona’s increased competitiveness nationally.

The American Legislative Exchange Council in the of its “Rich States, Poor States” report said tax reforms included as part of the state’s conformity to the federal Tax Cuts and Jobs Act “lightened the income tax burden for nearly every filer.” 

“Arizona made the right decision to make federal tax conformity a net tax cut for income earners,” the report says.

The ALEC report finds that states that adopt smart tax and regulatory policies are more likely to achieve economic growth, while comparatively high-tax states are more likely to experience out-migration of capital and residents. 

“Those with lower taxes, reasonable regulatory burdens and sensible budgeting demonstrate a record of opportunity growth that continues to attract new residents.” 

Education funding

Since the turn of the century, there has been bipartisan support for increasing education quality and per-pupil spending.

Proposition 301, an initiative approved by voters in 2000, increased the state sales tax by six-tenth of one percent, with revenues directed to education. The governor and Legislature in 2018 extended Proposition 301 for an additional 20 years.

Proposition 123, which voters passed in 2016, increased by $3.5 billion allocations from the State Land Trust to be spent on education.

Following the passage of Proposition 123, Gov. Doug Ducey and the state Legislature expanded teacher salaries and per-pupil spending in 2018, 2019, and 2020. The “” plain raised teacher salaries across the state by an average 20%, also investing in resources such as:

• School Infrastructure 
• Textbooks 
• Modernizing Curriculum 
• Updating Technology 
• School Buses

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