Napolitano reaps Intel reward despite lukewarm support for tax break lure

The Business Journal

Gov. Janet Napolitano was not a big proponent of the tax break that helped lure a $3 billion new Intel plant to Chandler, and it took a lot of business and high-tech lobbying to get her behind the idea earlier this year.

But, it's Napolitano who is one of the big winners from Intel's decision to locate that new plant in the East Valley.

The Democratic governor is up for re-election next year, and Intel's massive investment is a big feather in her campaign hat and pro-business image, according to top business lobbyists and technology leaders.

"Job creation and growing economies are always good for elected officials. These things tend to signal to the voting public that the right things are being done by their community leaders," said Cory Miller, state director for the AeA high-tech industry group.

Napolitano hesitantly signed the so-called sales factor tax cut earlier this year that will benefit Intel and other chipmakers and manufacturers.

Business groups and Republicans were the main drivers of the manufacturing tax cut which triggered Intel's expansion of its Chandler campus.

However, Napolitano signed the tax break despite liberal opposition in her office. The governor also met with Intel executives on occasion while the company was looking for plant sites.

Business lobbyists and political insiders say the governor will get plenty of credit from executives and voters because the Intel move occurred on her watch.

'Anytime anything positive happens, it's always a benefit to the chief executive," said Phoenix business lobbyist Stuart Goodman.

Goodman said Chandler Mayor Boyd Dunn also will benefit from the Intel expansion.

Napolitano is up for re-election next year with possible GOP challengers including state Senate President Ken Bennett and former state Senate president John Greene.

Bennett, a conservative business owner from Prescott, was a key backer of business tax cuts during the 2005 legislative session, including the one geared toward Intel.

Republicans are upset with Napolitano for taking credit for "spearheading" business tax cuts during the 2005 session. In a recent letter to the Arizona Chamber of Commerce & Industry, Napolitano said she led tax cut efforts including the Intel/sales factor measure and a reduction in business property levies.

The governor's assertion upset GOP leaders such as Bennett and state Senate Finance Committee chairman Dean Martin who say it was them and not Napolitano who led the tax cut charge at the State Capitol.

Napolitano vetoed an original business property tax bill, and Republicans say she was close to nixing the Intel measure before approving it. The Intel/sales factor tax cut came up each of Napolitano's three years in office, and she never voiced support for it until signing the bill this spring.

Martin said earlier this month the governor's chamber letter and tax cut self congratulations was a "work of fiction."

The governor brushed off the GOP criticism at a Wednesday press conference at the State Capitol, saying Republicans are just looking for something to complain about.

Since taking office in 2003, Napolitano has reached out to business and economic development groups touting high-wage jobs and targeted business tax cuts. Most business groups in the state are in the Republican camp and backed the GOP's Matt Salmon in the 2002 governor's race, though Napolitano has some influential business allies.

Athia Hardt, a Valley public relations executive and Napolitano backer, said the Intel/sales factor episode shows the governor's commitment to economic development.