Hobbs Vetoes Popular Rental Tax Bill

February 25, 2023

By Daniel Stefanski |

After vetoing a collection of budget bills last week, Democrat Katie Hobbs was ready to jettison another Republican-led policy as a divided state government remains far apart on solutions to help Arizonans weather the storms of a harsh economy.

Earlier this month, Republicans in the Arizona House and Senate passed legislation that would prohibit “municipalities from levying municipal tax on the business of renting or leasing real property for residential purposes,” sending SB 1184 to Governor Hobbs’ office on the Ninth Floor of the Executive Tower for consideration.

Governor Hobbs vetoed SB 1184, but her veto explanation struck a different tone than the one delivered to legislators after her rejection of their budget. The governor gave the following explanation for her veto: “I appreciate the legislature’s interest in addressing rising housing costs, particularly for renters. Lowering costs for Arizona families is a priority of my administration. Unfortunately, this bill suffers from two important defects at this time. First, this bill lacks any enforceable mechanism to ensure relief will be provided to renters. As noted by the legislature’s own attorney, provisions in the bill that purport to require that tax savings be passed on to renters face challenges under both the state and federal constitutions. If we are going to promise relief to renters, it’s important that we are able to ensure they actually receive it.

Hobbs then addressed the opposition to the legislative proposal from multiple cities and towns, including quotes from John Lewis (the President and CEO of PHX East Valley Partnership Board) and Yuma Mayor Douglas Nicholls (the League of Cities and Towns President), who had both urged the governor to veto SB 1184.

Republicans in the Legislature were not happy with Hobbs’ action to stop their bill from becoming law. Senate bill sponsor, Steve Kaiser, responded to the governor’s veto, saying, “Rent is the costliest expense for hundreds of Arizonans, but Governor Hobbs is clearly not among their ranks. If she was, she would know that in 70 cities across our state, renters see and pay for a rental tax line item on each monthly bill. Senate Republicans offered a substantive plan to fight spiking inflation that Hobbs vetoed. Governor Hobbs inflation plan? A limited tax exemption for diapers and feminine hygiene products. By her own logic used to veto SB 1184, her proposal would be a tax break for grocery stores, not consumers. Grocery stores, just like landlords, collect and remit tax paid for by consumers. Unlike Hobbs, our citizens don’t have the luxury of falling back on the semantics of tax collection, they feel the hurt of onerous taxation in their wallets.”

House Majority Leader Leo Biasiucci tweeted, “Removing the Home/Apartment rental tax would save Arizona renters $100-$200 per year. Yet, Governor Hobbs vetoed the rental tax repeal bill today. This idea that she’s a Governor for the people is now officially a lie! Watch, she’ll veto the grocery food tax repeal bill next!”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.

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