Tuesday, February 11th On Q hosted a Town Hall event including a conversation with Governor Doug Ducey and GPEC CEO Chris Camacho. World famous speed painter Randall Hedden joined for a silent auction with the proceeds going to Phoenix Children’s Hospital. Hedden ended up raising $1,500 for charity with his speed painting of Martin Luther King Jr.
The event took place from 2:30 pm – 5 pm at our Headquarters in Tempe, AZ. Over 200 people packed into the space to join and witness Governor Doug Ducey and GPEC President Chris Camacho talk about Arizona’s economy and job growth in 2020.
“We’re excited that On Q Financial chose Arizona for its corporate headquarters, showing once again that Arizona is the best place for business,” said Governor Doug Ducey. “We thank On Q for investing in Arizona and creating more good jobs in our state.”
Bergman: I know how proud you are of our men and women in the service, particularly our first responders and veterans. We know you are calling for eliminating state income taxes on veterans’ military pensions. In 2019, 10% of On Q’s volume in Arizona and nationally were VA loans. This totaled to 789 units nationally and 210 units in Arizona alone. What are your plans going forward with respect to our veterans, and how can we, in the private sector, assist you to support our veterans and first responders?
Ducey: Well first, I want to say thank you to On Q Financial for having me here today. I know you do a lot of business in the Veterans community; you mentioned the amount of VA loans. In a state like Arizona, we have 600,000 veterans that live here and we think that the government should be honoring their service not taxing their service. We want to reduce the income tax on their military pensions to 0. This will affect about 50,000 veterans in our state and they’ll be worth about $900 a year to those folks. It’ll be good policy. We have a lot of folks moving to Arizona, veterans make a state stronger. We’re hoping it’ll bring more
Bergman: You’ve wiped out needless regulations (2,289 to be exact). What kind of impact has cutting regulations had on growing jobs?
Ducey: When I came into office, my background was in the private sector. My company was Cold Stone Creamery, the ice cream franchise. We grew 1400 in 40 stores in all 50 states. It’s now in 31 countries around the world. I learned some of my diplomatic skills from dealing with the bureaucrats and health regulators across the country. What we wanted to do was make sure we protected public health and public safety. So what is there to block competition to keep industries or competitors out? We’ve tried to eliminate those regulations. It’s been the equivalent of about $137 million tax cut without costing the general fund $1. We’re one of the leading states in the nation in terms of eliminating regulations. Other states are now starting to focus on this and certainly the Trump administration in Washington, DC is finally focused on reducing the amount of regulations the federal government puts forth.
Bergman: At the beginning of the new school year, you’ve committed to a 20% increase to teacher’s pay. Prior to your term, this was one of Arizona’s sore spots. Has your commitment to K –12 education added confidence to Arizona businesses and impacted job growth?
Ducey: I focus everyday on education in Arizona, we have among the best public education in the country. We don’t have the best public education in the country everywhere that we should, we do have a lot of excellent options. We are the number one in-bound state in the nation today. This is the fastest growing county in the country three years running and Phoenix is the fastest growing city. A lot of people are moving here. A lot of businesses are relocating and investing. I don’t want spending to be the measurement of success and K-12 education although we are proud that we’ve been able to put $4.5 billion additional dollars in since 2015. We’ll soon be at $6.6 billion. We just completed a 20% pay increase for Arizona’s hardworking public teachers. The metric that I’m most proud of is that we’re leading the nation in improvement, in math, and reading and we’ve seen across the choice community, that both in public districts and public charters, an improvement on results. That’s what we want to stay focused on. I’m concerned about the kids in the classroom, the teachers that are teaching them, and that’s where we’re gonna have the focus on the targeted dollars. We also want to close the achievement gap. Many of our low income areas, this is where you see kids that are falling behind. We’ve got a program that we call project rocket that actually injects dollars into those systems. We’ve seen areas like Deer Valley and Wickenburg and Avondale make a turn around as we piloted this. Now it’s going to be available all over the state which is good news for everybody.
Bergman: You’ve lowered taxes. You’ve de-regulated. You’ve improved education. You took a 1B deficit and turned it into a 1B surplus. Can you discuss how this momentum is translating into job growth for new and existing Arizona businesses?
Ducey: I talked about the population growth and today, in the state of Arizona, we have 350,000 additional jobs than we had in 2015. With the amount of folks that we have coming here and businesses that are relocating, it’s not just about new jobs and opportunities, although that is a big part of it. It’s also about people getting a personal pay raise. We’re among the top states in increase in per capita income. Incomes are rising in this state as well. We have more jobs available then we have people to fill them. Four years ago, people were saying I love it here but my son or daughter can’t find a job upon completion from university but it’s been three years since I’ve heard that from anyone. There’s jobs available at the entry level. There’s jobs available at the upper entry levels. It’s positive news and good news and we want to keep it going.
Bergman: Governor… you quoted the honorable Margaret Thatcher in the State of the State address and I’d like to quote you, Governor Ducey, from that same speech…“We got here by doing things our way, The Arizona Way. And I’m here to tell you: You ain’t seen nothing yet.” What are you looking forward to accomplishing most during the remainder of your second term?
Ducey: I used that in the state of the state address, it was very aspirational when I was inaugurated in 2015 that we would be a state of opportunity for all. When you look at the metrics, the growth, the incomes, the success that Arizonans are having, it’s because I do think we’ve had a philosophy and guideline and we’re going to stick to that. It’s very positive. In my old business, the game of ice cream, people voted with their dollars. In the game of states, people vote with their feet. Arizona is winning in doing this. This is about making certain that we don’t import some of the bad ideas and bad policies that are happening around the country. Arizona is seen as a top place to do business and not only are we in better financial shape today, then we were just a short period ago, our economy is diversified. We’re a state that was known as a home building and construction, growth for growth’s sake. Today we have more manufacturing jobs in the state than we do construction jobs. So this is an entirely different place. Technology and financial companies are coming here. Aerospace and aviation as well. Israel’s called a start up nation. You can see that Arizona is a startup state. It’s welcoming to existing businesses, businesses that are scaling, and new ideas.
Bergman: How does the Greater Phoenix Economic Council, the Governor’s office and regional partners collaborate to create job growth and recruit businesses to the Valley?
Camacho: This is one of the fastest growing markets in the United States across virtually all levels, population growth, GDP growth, personal income growth, you name it we’re amongst the tops in the US. How that actually works comes in so many different forms. Often times I’ll get a call from the governor and the governor will say Chris I’ve got this company who called me, can you help us build a business case as to why Greater Phoenix is a more attractive location than Dallas or Austin or Denver or somewhere else in the world. Other times, I’ll work with the commerce authority or work with the cities that are working with private sector vendors and referrals that are trying to help their own supply chain come to Arizona. Whether it’s technology firms or financial service companies, micro electronics, biomedical companies, we have to be the domain experts in every one of those areas. Coming from the midwest where you see that negative migration pattern, meaning people are leaving the midwest for the sunbelt and other locations, this is the place that we’re building now as kind of a blank canvas. In 20 years, this place is going to be off the charts-I mean it already is off the charts. 20 years from now, this place is going to be extraordinary.
Bergman: Can you explain the process of how you work together and share some recent wins?
Camacho: Every year, we work with about 300 companies that are deciding where to place head count and capital. It’s across all of those industries but the sexiest deals are the high growth tech firms. So if you’re a venture backed firm in Silicon Valley, Front being one of the most recent examples, you’ll likely decide to come to Phoenix and scale here. No longer are we just getting the entry level, sometimes customer service or sales employment, we’re not only getting those jobs, but we’re also getting the cyber security, the software development, the anti money laundering divisions. These high value, strong nerve center divisions and companies are deciding to come here. These companies have options but ultimately they are choosing Phoenix. Probably the most profound thing that we’re going to deal with in our lifetime is how we ensure that all Arizonans have ample opportunity for education pathways. We have a chance to grow a fast growing community the right way.
Bergman: Where are some of the preeminent corridors where growth is occurring and why is Greater Phoenix winning so many of these marquee and emerging brands.
Camacho: There’s over 92 employment corridors in this market with over 300,000 employees. Very different than most places that have a dozen. What’s different about this region is you’re gonna see about a million people move into our different cities over the next twenty years. I’m working with 22 of our mayers to answer the question of how do we ensure that we’re not in a position where the jobs only go to a certain portion of the region and also that the rest of the region becomes a better community. We’re working together in these west valley cities on building infrastructure on the 303. Our peripheral markets are now becoming main state players in building commerce corridors. This place is going to look so different in 20 years if we continue this growth corridor. The next three quarters as we lead up to this next presidential election is going to be wacky. We’re going to have market volatility with the stock market. We’ll see thousand point swings coming within the next year. The basics of the economy still look really favorable. Whether it’s the national GDP numbers which look like are going to grow at 2%, this region is going to grow about 2.5-2.9%, so we’re going to outpace the national average in virtually every one of these categories for a minimum of the next three quarters.
Bergman: How do you see the inclusion of different cultures and people influencing Arizona’s economy?
Camacho: I was in DC last week, I’m the co chair for US competitiveness and one of the items we talk about is growth markets and growth markets have historically been driven by population growth and we’re in this kind of conversion mode where if you’re not on the west or east coast, your GDP is fairly irrelevant to the health of the national economy. We’re in one of those places. There’s twelve places that are going to matter so the good news is we’re going to matter. The challenging news is that there’s this confluence of trends happening where we have to ensure as a market that’s transitioning from majority anglo to very strong positioning around being a minority majority latino population. How we educate across the entire paradigm and how we become very inclusive and focused on equity is going to lead to economic health in the future. If not, you’re going to see some of the things that happen in the midwest and in the northeast where you have segregation and you have undereducation of minority populations. That is probably the most significant thing that we must embrace is education for all and specifically as we’re welcoming new populations and being a young market, this is the sixth youngest market, we have to embrace change and we’re right in the midst of it. So the next fifty years, you’re going to see massive change. By 2034, we’ll be a minority majority population mix.
Bergman: We have to ask…Is Greater Phoenix on the verge of becoming the next Silicon Valley?
Camacho: I hear that all the time. Everyone strives to be Silicon Valley. The reality is that Silicon Valley was built on a tremendous amount of federal investment that led to the internet and major university systems that for years continued to turn out world class engineers. I would hope that we don’t create some gimmicks of Silicon Valley and try to become a Silicon Valley. We in our own right have tremendous opportunities, particularly in this regulatory regime that we have in our state. We’re a place where companies can test and validate technologies and one of the most business friendly locations we have in the US. Whether it’s autonomous vehicles, public infrastructure for smart technology, prop tech, fin tech, you name it, this is a place where companies want to come and test. My argument however to the point is we need to originate intellectual property here, not just import California’s IP to test and validate. The goal that we should have for ourselves is that we create the next Google. We create the next Go Daddy. We create the next On Q Financial here in Greater Phoenix and we become the epicenter where people want to come and grow and scale their businesses. That’s the identity we should want. There are things that we can do here on the basis of technology, testing, scaling, enterprises coupled with how we embrace social change that we can be our own special place and I would hope we don’t try to gimmick anywhere else and just be our own kind of maverick style of building this economy.
Bergman: What are some of the industries that you would like to see come to the Valley in future years?
Camacho: What industries is the transistor sector moving towards? Autonomous vehicles, radar and lidar detection, space systems; the manifestation of our semiconductor sector gives us a tremendous advantage to meet the needs of future commerce. Virtually every company now is becoming a technology company. Our aerospace and defense companies, legacy aerospace and defense where they make missiles and composite systems, you’re actually shifting into new emerging technology space- that’s happening here in Mesa with Boeing. The center of excellence in electrical engineering is in Mesa, AZ. That is the transition I’m seeing in our legacy sectors. So in the future, you’re going to see a mass amount of IOT, internet of things, virtually everything, every physical product, every hardware product is going to be connected to the internet and so that’s going to be a burgeoning sector. You’re going to see super computing and quantum computing. The demand cycle of all of us needing things faster and all of you checking your facebook constantly or twitter. We’re breaking records on the repeat side and the speed and density and which we can push transistors. The good news in all of this is that Greater Phoenix is well positioned in the new economy. The downside for the US is that the majority of places are not. The majority of places are holding on to low value R&D manufacturing bases whereas Greater Phoenix and aerospace and defense, healthcare, micro electronics, IOT, cyber security, we’re on the wave of all these industries of the future. I would argue that’s why we’re winning, not only in retaining jobs but new companies because people want to activate from a place that has that momentum and access to an engineering pool out of ASU for example. All these ingredients come together to make this a special place.