As Covid-19 continues to take its toll on Arizonans’ health and impact hospital capacity, many citizens have no plans to get immunized even though an effective vaccine is available, recent indicate. 

That’s alarming to the medical community and business groups that came together this week to discuss the economic impacts of getting vaccinated — or not. 

Vaccines are one of the nation’s most important “economic development” tools to prevent the societal and financial costs that come with disease outbreaks, said Arizona economist Jim Rounds, who spoke at the event entitled, How Vaccines Impact Arizona’s Economy. 

“That’s the most cost effective, highest return on investment, economic development project we have ever seen in this country and it has to do with distribution of vaccines,” Rounds said.

AZBio () and a coalition of health and community organizations hosted the discussion to highlight the importance of vaccines to the state’s health and welfare. 

Fifteen medical and business organizations sponsored the event including the Arizona Chapter of the American Academy of Pediatrics, Arizona Academy of Family Physicians, Arizona Nurses Association, Arizona Medical Association, Arizona �������� of Commerce & Industry, Children’s Action Alliance, Grand Canyon University, and Greater Phoenix Leadership.

Duration of economic recovery depends on vaccination rates

To put the pandemic’s economic impact in perspective, Rounds compared the pandemic recession with the Great Recession of 2008-09. 

About 7 million jobs were lost in the Great Recession. More than three times that amount, 22 million, were lost during the height of the Covid recession last year.  

Arizona is seeing quicker recovery than other states when it comes to jobs, he said. But certain groups, particularly low-income individuals, are disproportionately affected by the recession, he said.  

“A recession ends when the vaccine is widely distributed,” Rounds said.

To achieve full economic recovery this year, the state will need to vaccinate 20,000 to 30,000 people daily, he said. Currently, only about 8,000 a day are being vaccinated.  

Human and financial costs of not getting vaccinated

Of concern is a growing anti-vaccination movement that is largely based on misinformation, Rounds said. 

Arizona already has one of the lowest childhood vaccination rates, which is “unacceptable,” he said.

“We need to rely on science and research, not dogma,” he said. 

To illustrate the human and financial costs of not getting vaccinated, Rounds referred to research by the Centers for Disease Control that estimates that among children born in the last 20 years, vaccinations prevented more than 21 million hospitalizations and 732,000 deaths.

Another study by the American Academy of Pediatrics on children born in 2009 revealed that compliance with the recommended vaccine schedule would represent $68.8 billion in savings to society, Rounds said.

“The Covid-19 pandemic is a reminder that we have to be diligent with getting information out there and we have to continue to advance science and research to attack these problems.”

Other speakers at the event were: 

• Chandler physician Dr. Andrew Carroll talked about his experience treating hospitalized Covid patients and the importance of vaccines in eradicating disease. 
• Phyllis Arthur, vice president of infectious diseases and diagnostics policy for the Biotechnology Innovation Organization in Washington, D.C., detailed the race by companies like Pfizer and Moderna to roll out hundreds of millions more doses in the next few months.  

To view the entire presentation, go to:

Fifteen health and business organizations sponsored the event including:

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Arizona’s new high income tax from Proposition 208 is bound to discourage new investment, harm thousands of small businesses, and is unconstitutional, two of the state’s leading economic and legal experts told the real estate community last week. 

While the tax is intended to provide funding for education, it is flawed in many aspects and will hurt education in the long run if measures aren’t taken to mitigate its impacts, said Jim Rounds, an economist and policy analyst who spoke at a virtual breakfast meeting of the nonprofit , the voice of the real estate industry in the metro Phoenix region.

“We’re not debating education funding. We’re talking about the best way to fund education,” Rounds of Rounds Consulting in Tempe told a group of more than 175 attendees. “We want to make sure the gains are bigger than the economic losses.”

Rounds was joined by constitutional attorney Jon Riches of the Goldwater Institute, which is challenging the tax in Maricopa County Superior Court. Riches detailed why the measure is unconstitutional on several fronts. 

Businesses seeking solutions 

Cheryl Lombard, president and CEO of Valley Partnership, said the organization invited the two experts so members could get more information about the controversial measure. 

Lombard said her organization supports a “well educated workforce” as part of its strategic plan and is joining with other business organizations to determine what is the best path moving forward. If Prop. 208 is not going to deliver as promised or is invalidated by the courts, the real estate community wants to know that there is a path forward that businesses can support.

“As a business community, we need to come together as a collective voice, one voice,” she said. 

Highest income tax hike in state history

Proposition 208 almost doubled the marginal income tax rate for individuals who earn $250,000 or more, and couples earning $500,000 or more, from 4.5 to 8.0 percent, a 77.7 percent increase.

It also will impact thousands of small businesses with 500 or fewer employees that file their taxes as individuals, not corporations. Meanwhile, the measure does not affect large companies that file under the corporate tax code.  

At the breakfast meeting, Rounds discussed economic implications while Riches outlined the legal problems with the new tax. 

Here are highlights from each:

What are the economic impacts of Prop. 208?

Rounds, who conducted an analysis of the new tax with the Goldwater Institute, said that any benefits to education will be offset by the damage it will do to the overall economy.   

For one, high income earners are not a stable funding source, he said. Their income flow tends to be more “volatile.”  

To determine the potential impact of the ballot initiative, the analysts calculated the damage including job losses, suppressed wage growth, dampened business recruitment, and harm to the state’s economic base. 

Among the key findings: 

A minimum of $2.4 billion in state and local tax revenues will be lost As more businesses fail under the weight of the tax hike, job growth and wages will suffer. A conservative economic modeling of the financial impact indicates that a minimum of $2.4 billion in tax revenues will be lost over the next decade. 

Cuts to social services, public safety, and higher education The new mandate will cause a minimum of $120 million in lost revenues annually to the state’s general fund. Since the proposition requires any decrease in state revenue to be made up from other sources, this will likely put critical services on the chopping block.

Substantial job losses Under the most conservative scenario, job losses will reach a minimum of 124,000 over the course of 10 years. 

A drop in new business expansion The risk to new business attraction and expansion could be as large as a 25 percent reduction.

About half of those affected are small business owners Fifty percent of those whose tax rates are expected to be directly targeted are small business owners. 

Why is the new tax unconstitutional?

Riches, of the Goldwater Institute, discussed the that is being heard in Maricopa County Superior Court. RIches said the measure is flawed constitutionally for a number of reasons including:

Arizona’s constitution requires limitation on school spending The law illegally exempts itself from expenditure limitations for school districts as set forth in the Arizona Constitution.

The proposition violates constitutional requirement The new law violates the state’s constitutional requirement that any new tax must be approved by a two-thirds majority of the legislature, which it did not. 

“No legislation, whether passed by the people or the legislature, can override or supercede the constitution,” Riches said. 

The Goldwater Institute is joined by many others in its legal challenge including the leaders of the Arizona Senate and House, Sen. Karen Fann (R-Prescott) and Rep. Rusty Bowers (R-Mesa); several other Republican legislators; Montie Lee, the owner of Lee Farms; cardiologist Francis Surdakowski; and the Arizona Free Enterprise Club. 

A separate lawsuit also was filed by small business owner Ann Siner, CEO of My Sister’s Closet, and John Buttrick, a retired Superior Court judge and federal magistrate. 

Both experts said Arizona must find a better way to fund education. Legislative leaders in both the Arizona Senate and House are seeking ways to do just that.

Among the solutions under discussion are mitigating the damage from Prop. 208 with tax reforms. No concrete proposals have been introduced but committee chairs in both houses said mitigation is one of their top priorities this year.

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Small businesses in Arizona, those with 500 or fewer employees, are not so small when it comes to economic output, according to a new report commissioned by the Arizona Small Business Association (ASBA). 

In fact, before the pandemic, they employed more than half the state’s workforce and produced $191.4 billion in annual economic activity, almost half the annual state GDP, the report shows. 

“I’ve been studying the economy in Arizona for two, two-and-a-half decades at this point, and I didn’t really appreciate the extent of small businesses’ impact on the economy until we got into these numbers. It was very impressive,” said economist Jim Rounds, president of Rounds Consulting Group, Inc., which conducted the analysis for ASBA. 

Report illustrates how important small companies are to state

ASBA commissioned the report to illustrate how important small companies and sole-proprietor businesses are to Arizona and how important it is to help them survive the final throes of the pandemic.

Among the findings:

• Small companies account for 99.4 percent of all businesses in the state. Of the 595,764 businesses, 592,485 are small companies 
• Approximately 486,000 of these small companies are self-employed operators 
• Small companies employ about 1.6 million of Arizona’s 2.9 million workers 
• Small businesses create $71.3 billion in annual wages and income   
• Small companies generate $10 billion in tax revenues for state and local governments annually

Rounds, who analyzed U.S. Census Bureau business data from 2017 for the study, said the figures illustrate the important role small businesses play in the state’s overall business ecosystem, including supporting large business attraction and expansion. 

New ‘Arizona Speaks’ to advocate for business recovery policies  

ASBA released the report at the kickoff of its new effort, Arizona Speaks: The State of Small Business, to find ways to advocate for and help struggling companies make it through the next several months as COVID-19 vaccines are rolled out worldwide. 

The effort is supported by Arizona Gov. Doug Ducey’s Office, and ASBA will continue to work with Rounds Consulting Group to quantify the full impact that small businesses have on the economy and recommend policies that will be beneficial to Arizona’s small business recovery into a state of small business report.  

More than 70 percent of state’s small businesses hurt 

Former Gilbert mayor Jenn Daniels, who moderated the event where the report was released, said state policy decisions made now can have a significant impact on the ability of Arizona small businesses to recover from the COVID-19 pandemic and again lead the state’s economic well-being.

According to the study, a majority of Arizona small businesses reported being negatively affected by COVID-19. U.S. Census survey data identified that nearly 42 percent of small businesses believe it will take more than six months to return to the previous year’s business level. 

Some of the issues short- and long-term that need to be addressed are workforce training, affordable housing, increasing the average wage amount, and assistance for small businesses hurt by the new Proposition 208 income tax hike, Rounds said. Rural areas also have a much higher percentage of small businesses than urban, posing challenges for lawmakers representing these areas.

Next decade could be Arizona’s best 

With hard work on everyone’s part, Rounds predicts a bright future moving forward. 

“If we can identity and work with groups like ASBA and their connections with other organizations as well, I think we’ll be able to identify good public policy moving forward to not only deal with COVID-19 recovery, which we will be out of soon, but also over the next decade so we can we make this one of the biggest expansions in the state history.” 

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