Arizona municipal league opposes bills to ban local grocery, rent taxes

Feb 3, 2023, 2:00 PM

(Photo by Brandon Bell/Getty Images)...

(Photo by Brandon Bell/Getty Images)

(Photo by Brandon Bell/Getty Images)

PHOENIX – The director of the League of Arizona Cities and Towns said state lawmakers are taking the wrong route trying to pull the plug on local food and rent taxes.

“I don’t want to make light of inflation, but this is a temporary problem. When you make a permanent solution like cutting taxes, you create issues,” Tom Belshe said Friday on KTAR News 92.3 FM’s The Mike Broomhead Show.

Republican bills to ban municipal taxes on groceries (SB1063) and rent (SB1184) are moving forward in the Arizona Senate after a committee vote on Wednesday.

“They’re trying to address inflation, which I think we can all agree on is a good thing to do,” Belshe said.

“The problem is we think they are doing it off the backs of local government. They’re not taking into account all of the complicated issues that surround that,” he said.

There are no state taxes in Arizona on groceries or rent. About 70 municipalities levy a tax on monthly rent, while 65 local governments collect taxes on food for home consumption, according to Senate Republicans.

Belshe said 5.7 million Arizonans don’t pay rental tax and 3.2 million don’t pay tax on food.

“When you take into account that you’re getting rid of those taxes and you’re actually not helping all Arizonans, we think there are better ways to help,” he said.

Rural municipalities often have to rely on local taxes more than places such as Phoenix or Tucson because they don’t have diversified economies, Belshe said.

For example, Taylor, a small town in the White Mountains, gets 35% percent of its general fund through its grocery tax.

“That food tax is an important way for them to provide the services that they do – public safety, water and sewer, roads, homeless services – all of those things that cities and towns provide,” he said.

Belshe’s organization doesn’t believe state money already earmarked for cities and towns will make up the difference in lost revenues.

“When they talk about how we’re going to have an increase in our shared revenue in the state, they neglected to talk about the things that they’ve done to keep us from getting windfalls. … They want to give the image that cities are awash in cash, but we are not,” Belshe said.

“We also suffer from the effects of inflation just like everyone else. Higher prices in hiring staff, higher prices in things like road repair, across the board. If you take income from us, it makes our job that much more difficult.”

Belshe said the league would prefer a short-lived solution.

“We think that since this is a temporary problem, you use a temporary fix … a one-time rebate of income tax,” he said.

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Arizona municipal league opposes bills to ban local grocery, rent taxes