Arizonans were denied relief at the grocery stores this week as the Democrat governor and Republican-led Legislature remain far apart on how to provide economic assistance to hard-working, middle-class constituents.
On Tuesday, Governor Katie Hobbs vetoed SB 1063, which would have repealed the food municipal tax across the state.
In a statement explaining her veto, Hobbs wrote: “I’ve heard from dozens of local leaders about the impact this legislation would have on municipalities. From potential cuts to service – including public safety – to increased property taxes, it’s clear that this bill doesn’t actually eliminate costs for our residents. It simply moves those costs around. The bill, originally unveiled as a way to mitigate inflation, does not take effect for more than two years. What’s more, it does nothing for the more than 800,000 Arizonans who use SNAP and WIC benefits for their groceries, as these constituents are already exempt from the tax.”
The governor ended her statement with an exhortation for Republican legislative leadership: “Let’s work together to provide real relief for Arizonans struggling with higher costs.”
Republicans immediately expressed their profound disappointment over the veto and the effect that it would have on Arizonans in need of financial relief. Arizona Senate President Warren Petersen responded, “Senate Republicans have been working toward introducing legislation necessary to provide financial relief to all Arizonans, especially low-income families who are feeling the tremendous burden of inflation. It’s very clear the governor has no interest in helping with that financial burden.”
FOR IMMEDIATE RELEASE: Governor Continues Unwillingness to Help Arizonans Amid Crippling Inflation ⬇️ pic.twitter.com/qwOJSxorOH
Senate Majority Leader Sonny Borrelli said: “This veto is a disgraceful windfall for cities and an absolute gouge for families. We’re not only paying inflated prices to feed our families, but we’re also paying more in taxes as the cost of food rises. Food is not a luxury; it is a necessity. A tax on our groceries is regressive and hurts everyone. Over the next four fiscal years, cities and towns are estimated to receive an average of $2.3 billion per year in state-shared revenues, which is an increase of $844 million more than the average for the last four fiscal years. And yet the governor vetoed this bill, only padding cities’ bloated budgets instead of leaving more money in the wallets of hardworking taxpayers.”
House Majority Leader Leo Biasiucci tweeted, “During a time of record inflation, families are struggling to put food on the table. Yet, Gov Hobbs vetoes a bill to remove taxes on groceries. Instead, she wants to remove taxes from tampons & diapers.”
🚨 During a time of record inflation, families are struggling to put food on the table. Yet, Gov Hobbs vetoes a bill to remove taxes on groceries.
Instead, she wants to remove taxes from tampons & diapers.
She also vetoes another bill that protects law abiding gun owners.
Legislative Democrats applauded the governor’s veto. The Arizona House Democrats Caucus wrote, “Soundbite legislation that would handcuff ability of smaller cities and towns to provide public safety, streets, parks, libraries and senior centers. Good veto!”
Soundbite legislation that would handcuff ability of smaller cities and towns to provide public safety, streets, parks, libraries and senior centers. Good veto! https://t.co/HDQPxQPULn
Governor Hobbs had many other supporters of her veto from around the state. The Arizona League of Cities and Towns, which had opposed the bill as it progressed through the state legislature, tweeted, “Thank you @governorhobbs for vetoing SB1063 and recognizing that the food tax helps fund critical services in many cities and towns and its elimination does not provide targeted relief for those that most need help.”
👏 Thank you @governorhobbs for vetoing SB1063 and recognizing that the food tax helps fund critical services in many cities and towns and its elimination does not provide targeted relief for those that most need help. https://t.co/WGnjdqKULVpic.twitter.com/oBuKANMxjx
Goodyear Mayor Joe Pizzillo also championed the governor’s action, stating: “@GovernorHobbs veto of SB1063 protects local decision-making and funding for critical services like public safety, parks & recreation, and infrastructure. #Thankyou”
@GovernorHobbs veto of SB1063 protects local decision-making and funding for critical services like public safety, parks & recreation, and infrastructure. #Thankyouhttps://t.co/oo5J3AdKwT
A bill to expand Arizona’s Cottage Food Program is picking up steam and attracting significant bipartisan support in the state legislature.
HB 2509, sponsored by Representative Travis Grantham, deals with the sale and food preparation of cottage food. The purpose of the legislation provided by the Arizona Senate is to add “to the cottage food products exemption, food products that are potentially hazardous or require time or temperature control for safety to the extent allowed by federal law.” It also “prescribes sale and delivery requirements for cottage food products.”
The Arizona Department of Health Services (AZDHS) oversees the program. Its website states that this program “allows individuals to make homemade products that are neither potentially hazardous nor Time or Temperature Control for Safety Foods, and offer them for commercial sale.” According to AZDHS, “the Arizona State Legislature changed the law in 2011 to allow residents to produce non-potentially hazardous baked and confectionery products in their homes and offer them for commercial sale within the state. The law was amended in 2018.”
When asked for a comment by AZ Free News on why he introduced this bill and why its passage would be important for Arizonans, Representative Grantham replied, “This bill expands an existing program that has been in place since 2010. The current program would stay exactly the same, except for the expansion that we are seeking, which simply allows more food to be sold. This bill is important because: It allows home food producers (cottage food) to earn additional income in the way that best suits their needs, while keeping current health and safety mechanisms on the books; Cottage Food Producers tend to be lower-income earners using this as supplemental income, doing it as a hobby, or entrepreneurs starting their businesses before moving to a larger operation that better suits their needs.”
Grantham added “this bill does not affect home-based business regulations and all zoning requirements must still be followed.” He shared that “currently if you would like to sell homemade foods in Arizona, you have extremely limited options. You have to ensure that you are abiding by the Food Code, which ends up being very confusing for home practitioners and you can only sell things that are ‘shelf-stable.’”
In a House Regulatory Affairs Committee hearing earlier this year, Representative Kevin Payne commented in support of Grantham’s bill, saying, “people who make these cottage foods are abundantly aware of their reputation and the last thing they want to get is a bad one. They don’t want to be making food that’s poisoning people and then that gets out; they’ll be out of business in a heartbeat. So I have a lot less fear about these people making people sick than I do about actual restaurants.”
In February, HB 2509 passed the House Regulatory Committee (7-0) and the House Rules Committee (8-0). It later cleared the House chamber with a broad, bipartisan vote of 52-8. After its transmission to the Senate, it was approved by the Commerce Committee with a 6-1 vote, though it was amended.
Representatives from the Arizona Restaurant Association and the Chandler Chamber of Commerce have signaled opposition to the bill. The Arizona Department of Health Services and the County Supervisors Association of Arizona are maintaining a neutral position.
Representative Grantham is hopeful that this legislation will pass the House and be signed into law. He told AZ Free News that he believes “in the right for business owners to pursue their passions without government standing in the way, while providing consumers with the information they need to decide what is best for them.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Arizona Republicans continue to advance solutions to improve the financial situations of their constituents, and Democrat Governor Katie Hobbs will soon be faced with a decision on enshrining that relief into law.
This week, the Arizona House passed SB 1063, sponsored by Senator Sonny Borrelli in the Senate and Representative Leo Biasiucci in the House, which would repeal the food municipal tax across the state. The 31-29 vote to clear the bill from the Senate chamber featured another party-line standoff between Republicans and Democrats, as it did earlier in the year when the Senate voted on this legislation.
The bill sponsor in the House, Majority Leader Biasiucci, celebrated the passage of his legislation after votes had been cast, saying, “Removing the grocery tax would save hundreds of dollars per family. All the Democrats voted NO because they stated saving a family pennies would mean nothing. Proud to stand with my Republicans to remove the tax on groceries.”
Removing the grocery tax would save hundreds of dollars per family. All the Democrats voted NO because they stated saving a family pennies would mean nothing. Proud to stand with my Republicans to remove the tax on groceries. 🇺🇲 pic.twitter.com/tHPuvQAf7t
In the aftermath of the bill’s successful outcome, the Arizona House Republican Majority Caucus wrote, “House Dems voted against eliminating the tax on your groceries, saying it cuts $160 million to cities. The truth is cities will gain $700 million in shared income taxes alone from last year to next year. It’s not about the $ or public safety; they’ve prioritized city bureaucracy over Arizona families who are struggling in this time of record inflation.”
House Dems voted against eliminating the tax on your groceries, saying it cuts $160 million to cities. The truth is cities will gain $700 million in shared income taxes alone from last year to next year. It’s not about the $ or public safety; they've prioritized city bureaucracy… pic.twitter.com/YgdBUzn49A
— Arizona House Republicans (@AZHouseGOP) March 22, 2023
After the Senate passed this legislation in late February, President Warren Petersen gave an exclusive quote to AZ Free News on why it was so important for legislators to take this action on behalf of their constituents: “Over the past year, prices have skyrocketed between 15% And 45% on basic grocery items like eggs, butter, lettuce, coffee, bread and poultry. Senate Republicans believe that everyday necessities should not be taxed, especially when inflation is at historic levels and our Arizona citizens are struggling to make ends meet. This bill provides broad-based relief to those who need it most and can save families hundreds of dollars annually. We’re happy this bill passed the Senate, but we’re disappointed that all Senate Democrats continue to play political games with lives and livelihoods of our taxpayers by voting against the measure.”
When asked by AZ Free News on why he supported the bill, Senate President Pro Tempore T.J. Shope replied, “As a former grocer, the tax on food has always troubled me. I can’t count the amount of times I had people ask me to place a necessary item back on the shelf because they were just a dollar or two short. We provided much-needed relief to people, and I was proud to vote yes.”
Though there has been much pushback against this bill from Arizona cities and towns, at least one municipal councilmember, Jack Hastings from Surprise, appears to be in support of this proposal.
The Joint Legislative Budget Committee estimated that SB 1063 “would reduce municipal transaction privilege tax by up to $195.6 million in fiscal year 2026. Many Arizona cities and towns opposed this legislation. The League of Arizona Cities and Towns listed the preservation of food taxes as one of its legislative priorities “to ensure that municipalities may continue to provide vital services to their population, now and in the future.”
SB 1063 will soon be transmitted to Governor Katie Hobbs, who has already made quite the hobby of vetoing reasonable Republican initiatives sent to her office on the Ninth Floor of the Arizona Executive Tower. Her previous words, however, are already being used to hold her accountable – even before the legislation reaches her desk. An Arizona-based researcher tweeted a reminder of a months-old Hobbs’ statement to a local media outlet on this issue, where she stated that she was “not going to say no to anything if there’s a way to provide relief for Arizonans.”
Democrat Governor Katie Hobbs hasn’t been willing to compromise on Republicans’ proposals for economic relief for Arizonans, but her one idea for a targeted tax exemption has attracted bipartisan support as it moves through the legislative process.
HB 2401, sponsored by Democrat Alma Hernandez, “exempts feminine hygiene products and diapers from transaction privilege tax and use tax,” according to the overview provided by the Arizona House of Representatives. Republican Representatives David Cook and Steve Montenegro are two of the five co-sponsors on the bill.
Representative Hernandez’s bill has sailed through House committees, passing the Appropriations Committee with a 12-0 vote (with two members voting “present” and one absent) and the Rules Committee with a unanimous 8-0 tally.
Earlier in February, Hernandez explained her introduction and support of this policy, saying, “This would bring meaningful savings for families across AZ who are in need. I am hopeful that this year we will finally get it across the finish line and on @katiehobbs desk.”
📢 ATTN: I recently introduced HB2401 #bipartisan TPT; diapers; feminine hygiene; exemption. This would bring meaningful savings for families across AZ who are in need. I am hopeful that this year we will finally get it across the finish line and on @katiehobbs desk ✍️🏽 #AZlegpic.twitter.com/DJNgAIZuKb
Certain Arizona interest groups applauded the passage of this bill from committees, which placed it closer to a vote on the House floor. Arizona List tweeted, “Thank you Rep. @almaforarizona for introducing HB2401, which would eliminate tax on diapers and feminine hygiene products to make them affordable and accessible to all Arizonans. Congrats on its passing and thank you for your leadership on this hygiene equity issue.”
Before being selected as Governor Hobbs’ latest nominee to lead the Department of Child Safety this month, David Lujan took an opposing view to HB 2401, arguing, “Wealthy households do not need a $7 monthly savings on the sales tax for diapers. A better approach to this issue is a grant program which would provide free diapers to low-income parents.”
HB2401 is being heard in House Approps on Monday. Wealthy households do not need a $7 monthly savings on the sales tax for diapers. A better approach to this issue is a grant program which would provide free diapers to low-income parents. https://t.co/RuhYi5FSgj
This exemption was one of Governor Hobbs’s first proposals upon taking office on January 2, which she highlighted the following week in her first State of the State address to the Arizona Legislature.
Our government can do more to support working Arizonans. That’s why I’m proposing:
⚪️State level child tax credits ⚪️State sales tax exemptions for diapers and feminine hygiene products pic.twitter.com/XGE9u5D0qC
Hobbs later tweeted out, “Arizonans shouldn’t have to choose between paying their bills or getting what they need to be healthy. But with rising costs, everyday items add up. Eliminating the state sales tax on feminine hygiene products is a real step to provide meaningful relief.”
Arizonans shouldn’t have to choose between paying their bills or getting what they need to be healthy. But with rising costs, everyday items add up.
Eliminating the state sales tax on feminine hygiene products is a real step to provide meaningful relief. https://t.co/5ANaSjytit
Should this piece of legislation reach the governor’s desk, it would be a lock for a swift signature from Hobbs to enact it into law. However, Arizona legislative leadership could hold the bill in one or both of the chambers to extract concessions from the Governor’s Office on Republicans’ policy demands.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
Another Republican-led proposal to stimulate and incentivize business development in Arizona is moving through the legislature – though it is unsurprisingly meeting serious resistance from the other side of the aisle.
Senator Steve Kaiser sponsored SB 1559, which deals with a reduction in the income tax and fees for new businesses across the state. According to the purpose of the legislation provided by the State Senate, the bill “prescribes a threshold of five percent of state contracts the Arizona Department of Administration (ADOA) is encouraged to award to new businesses each year and exempts a new business and a person who is establishing a new business from filing fees to establish the new business.” It also “establishes an individual and corporate income tax subtraction in prescribed amounts for a new business’s first three years of operation.”
The prescribed amounts for individuals (income received from the new business) and corporations (Arizona gross income) are 100 percent for the first year of operation, 50 percent for the second year, and 25 percent for the third.
Earlier this week, Senator Kaiser’s piece of legislation passed the chamber with a party-line 16-12 vote – with two Democrat Senators not voting (Burch and Gonzales). This action followed two, prior partisan votes in Senate Committees– first in the Finance Committee back in February, where SB 1559 cleared 4-3; and in the Rules Committee, 4-3.
The Joint Legislative Budget Committee (JLBC) previously published data from the U.S. Census Bureau’s Business Formation Statistics, showing that there were 7,919 business formations in Arizona in 2022. The JLBC also projected that “the number of new businesses will grow to 8,523 in 2023, 9,173 in 2024, 9,872 in 2025, and 17,561 in 2026.”
Earlier in the Senate Finance Committee, Democrat Senator Mitzi Epstein explained why she was voting against the transmission of the bill to the full chamber, saying that though she was a small business owner and understood the need for these businesses to receive help and access to resources, she believed the provisions of this legislation would be “ripe for abuse.” She feared that SB 1559 would “create a whole new industry” of entrepreneurs helping small businesses take advantage of the tax and fee incentives provided by this proposal (if enacted).
In the committee, Senator Kaiser, the bill’s sponsor, touted his previous experience as a business owner and empathized with young business owners (especially those businesses under five years old) trying to keep their operation afloat and financed in the early years. He stated that “we need to really support our young businesses as much as possible. They do produce the most new jobs compared to existing small businesses and large businesses, and whatever we can do to help them survive and thrive is going to be helpful.”
Another Democrat Senator, Brian Fernandez, told the Finance Committee that he was a no, but he possibly could be swayed to flip his position if there were changes to the bill, inferring that his suggested tweaks mirrored the concerns expressed by his colleague, Senator Epstein.
Representatives from the Arizona Firearms Industry Trade Association and North Phoenix Chamber of Commerce supported this legislation through the Senate process, while a representative for the Arizona Center for Economic Progress registered opposition to the bill.
Before the vote on the Senate floor, the Arizona Senate Democrats Caucus tweeted that “SB 1559 is another handout for businesses,” and warned that “a new business income tax subtraction could cost Arizona’s General Fund an estimated $34.3M in FY25, $36.5M in FY26, and $38.9M in FY27.”
It sounds simple enough – repeal any sales tax on the purchase of food for home consumption currently being imposed by two-thirds of Arizona’s municipalities and thereby provide relief for residents against the ongoing effects of inflation, high fuel prices, and increases in utility costs.
That is the purpose behind House Bill 2061 introduced earlier this month by House Majority Leader Leo Biasiucci along with 35 co-sponsors. Sales taxes in Arizona are formally known as a transaction privilege tax (TPT).
Today I introduced HB2061, a bill that removes the grocery food tax in Arizona. With 35 cosponsors, this is a bill that all Arizonans should get behind! 🇺🇲 pic.twitter.com/CF1CKD2QHM
Arizona does not have a state TPT for the sale of food for home consumption. But supporters of Biasiucci’s bill note that without a change, those who shop in a city or town with a municipal TPT on food will continue to be hit with a double whammy – more TPT being paid along with increasing grocery prices.
Sponsored by @Leo4AzHouse, HB2061 repeals the municipal food sales tax. Cities are reaping the benefits of inflation with record high sales tax revenues, all while Arizonans struggle. It’s time to provide inflation relief to Arizonans by repealing the food tax. We support HB2061 pic.twitter.com/PgjzfJKWbE
There is, of course, a quiet benefactor to those inflation-driven higher grocery prices – the 65 of Arizona’s 91 incorporated cities and towns which tax food for home consumption. The higher the prices, the greater their revenues.
Several municipalities have gone on record against HB2061, including the cities of Apache Junction, Avondale, Buckeye, Chandler, Coolidge, Glendale, Globe, Goodyear, Litchfield Park, Page, Prescott, Scottsdale, and Tempe, as well as the towns of Florence, Fountain Hills, and Gilbert.
Two other cities – Phoenix and Tucson – which do not even have a city sales tax on food for home consumption still oppose HB2061, as do lobbyists such as the League of Arizona Cities & Towns, the Professional Firefighters of Arizona, and Arizona AFL-CIO.
HB2061 cleared its first hurdle last week with a 6 to 4 vote in the House Ways & Means Committee. All four no votes came from Democrats on the committee. One lawmaker who advocated for the legislation during the committee vote was Rep. Travis Grantham (R-Scottdale).
“It’s unthinkable to me that people can stand up and justify taxing something people need to survive on a day to day basis,” Grantham said.
HB2061 is slated to be considered by the House Rules Committee on Monday. It will then be debated by the House, where many lawmakers expect to hear complaints that cities and towns will have to cut services if the bill passes.
It is an argument Biasiucci (R-Lake Havasu City) refuted last week, pointing out that the roughly one-third of Arizona’s cities and towns without a sales tax on food for home consumption are still able to offer municipal services.
Do the 27 cities in Arizona that do not have a food tax have Police? Ask Phoenix, Tucson, Lake Havasu, Kingman and get back to me with your answer.
If passed into law, the elimination of the food sales tax would take effect later this year. However, there is nothing in state law preventing any municipality that currently has such a tax from repealing it on their own.
The Joint Legislative Budget Committee estimates HB2061 could save Arizonans nearly $160 million in Fiscal Year 2022 and potentially growing to a savings of more than $195 million in FY 2026.
Democrats in the Arizona Legislature just voted NO to cut taxes on groceries! EVERY REPUBLICAN VOTED YES!! #HB2061
