House Approves Groundbreaking Ballot Measure to Limit Food Tax to 2%

Rep. Leo Biasiucci’s proposal to reduce sales tax on grocery items in Arizona has found a middle ground after initial opposition. The legislation, known as HCR2021, aims to lower the sales tax charged by certain cities on essential food items like milk and bread. Despite Governor Katie Hobbs’ previous veto, the measure passed the House on March 4 with some bipartisan support, securing a 37-21 vote.

Biasiucci, representing Lake Havasu City, emphasized the measure’s potential impact, stating, “This is a regressive tax. Everybody needs food to survive.” The latest iteration of the bill reflects significant revisions since its rejection last year, yet it will not be subject to the Governor’s approval this session; instead, it will appear on the ballot in 2026.

The initial version proposed a complete ban on grocery taxes; however, resistance from municipal leaders—who rely on food tax revenues—led to amendments. Rep. David Livingston, R-Peoria, played a crucial role in modifying the proposal to permit municipalities to freeze food tax rates. This allows cities with rates under 2% to potentially raise their rates, contingent on voter approval.

Some Republicans, including Rep. Walt Blackman, initially opposed more stringent tax caps but later supported the compromise. Snowflake, for instance, has a 3% tax on food. Blackman acknowledged the revised bill as a positive step for smaller communities, even after previously expressing concerns.

Although every Republican in the House backed the bill, several Democrats who previously supported it voted against the amended version. Many lawmakers, including Rep. Alma Hernandez, D-Tucson, argue against taxing basic necessities like food. Critics, including Rep. Alexander Kolodin, R-Scottsdale, contend that the amendments fail to significantly benefit Arizona consumers amidst rising grocery prices.

The debate has also highlighted concerns over the financial implications for smaller municipalities. A fiscal note from the Joint Legislative Budget Committee predicts a potential revenue reduction of $227 million to municipal budgets if the measure passes. Several city officials have emphasized that food tax revenue constitutes a vital part of their local budgets, with some towns relying on it for over 30% of their funding.

As discussions continue, representatives from affected areas stress the need for balanced solutions that address both the cost of living for residents and the fiscal health of local governments. Rep. Stacey Travers, D-Tempe, articulated the broader implications, noting the measure’s disproportionate effects on rural communities and their budgetary needs.