Gov. Katie Hobbs vetoes food tax repeal, which may be what Republicans wanted all along

·5 min read
Gov. Katie Hobbs vetoed a bill to repeal food taxes. It's her 18th veto this year.
Gov. Katie Hobbs vetoed a bill to repeal food taxes. It's her 18th veto this year.

It was billed as an opportunity to help struggling families.

Republicans, those steadfast champions of Arizona’s poor and downtrodden, rushed to eliminate the sales tax on the very food you need to live while heartless Democrats turned their backs on the neediest among us.

“Gov. Hobbs Will Veto Another Bill That Helps Struggling Arizona Families During Record Inflation!” the bill’s sponsor, Rep. Leo Biasiucci, R-Lake Havasu City, triumphantly tweeted on Monday.

When it comes to helping Republicans get reelected next year, that’s a golden message.

When it comes to actually helping those “Struggling Arizona Families During Record Inflation!”?

Not so much.

This bill is really about cornering Hobbs

Biasiucci’s tax cut wouldn’t even take effect until July 1, 2025.

And it wouldn’t help the neediest among us. Arizona’s poorest residents – the ones who get state and federal assistance to help buy their groceries – already are exempt from paying the food tax.

But then, Senate Bill 1063 isn’t really about helping struggling families. It’s about cornering Democratic Gov. Katie Hobbs, who on Tuesday did as Biasiucci predicted and vetoed the bill.

Previously:If Arizonans want to nix the food tax, where are they?

SB 1063 is this year’s entry in the annual legislative pilgrimage to boss around the cities – our state leaders having apparently already resolved pressing state matters like protecting our dwindling groundwater supply and addressing a sharp spike in housing prices and rents that has led to record evictions.

This year’s plan is borrowed from Kari Lake, who proposed eliminating the tax on food last year during her unsuccessful run for governor.

Tax cut won't save you much on groceries

Arizonans in 21 of the state’s 91 cities and towns already pay no taxes on groceries, according to the League of Arizona Cities and Towns. None of the state’s three largest cities – Phoenix, Tucson and Mesa – tax groceries.

Among the 70 that do, the tax ranges from 1.5% to 4%, according to the league.

That means Biasiucci’s tax cut would save you, on average, $2.69 on a $100 grocery bill if you shop two years from now in a city that taxes food. (Or $0.00, if you don’t.)

Meanwhile, the tax revenue that funds a large portion of the budgets in those 70 cities and towns across the state – the lion’s share of which pays for first responders – would be gone.

What Biasucci doesn't tell you about the tax

Biasiucci dismisses that argument, saying that cities are “flush with cash” now that they can tax online purchases.

What he doesn’t mention is that the 2019 legislation that allows cities to collect taxes on online sales included an offsetting income-tax cut, to ensure that cities didn’t see a windfall.

Biasiucci says the cities are about to see a bump next year in their share of state income tax collections, from 15% to 18%.

What he doesn’t mention is that bump offsets city losses as a result of the Legislature imposing a new flat income tax that slashed taxes for the state’s wealthiest residents.

Still, Hobbs had a tough call to make

Republicans correctly point out that the food tax is regressive, forcing those who struggle to cover rent to pay the same tax for bread and milk as those tucked away in their plush Scottsdale mansions.

Strangely, they didn’t have a similar concern when they imposed the flat tax that ensures a guy making $40,000 a year pays the same income tax rate as a guy making $4 million.

So, Hobbs had to make a tough call.

Does she veto a bill that would end a regressive tax on food as she did the repeal of the rental tax, handing Republicans a handy reelection talking point? And if so, how does she then credibly push her own plan to repeal the sales tax on diapers and feminine products?

Likely not the last:Hobbs vetoes 1st tax cut bill of the year

Or does she sign the bill to repeal the tax, forcing rural communities to either slash their budgets or raise taxes elsewhere? (Sort of like how the state Legislature raised the overall state sales tax in the early 1980s after repealing the state tax on food.)

Hobbs, as predicted, opted for the veto – her 18th of the year.

“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,” she said, in her veto message. “It simply moves those costs around.”

GOP lawmakers are delighting in the burn

Suburban cities like Scottsdale or Chandler, no doubt, could have weathered the loss of a food tax. But what about a rural community that doesn’t have the ability to grow its tax base?

Globe Mayor Al Gameros told legislators in January that the loss of the food tax would be a $930,000 hit – a “huge impact” to a city of just 7,500 residents.

“If we are to recover this type of money we’d have to triple our property taxes to our city residents,” he said.

Still, at least Globe residents would be able to save a buck or two on food. The fact that they might not have anywhere to cook it given the impact on property taxes?

No worries, apparently.

The Legislature approved the food-tax repeal on a party-line vote last week, happy to toss Hobbs a (tax-free) hot potato.

“Gov. Hobbs Will Veto Another Bill That Helps Struggling Arizona Families During Record Inflation! Eliminate Rental Tax: VETO! Eliminate Food Tax: VETO!” Biasiucci tweeted on Monday. “Why is she OK removing the tax on tampons & diapers but not on Food and Rent?!?!?”

Already, they’re delighting in the burn.

Reach Roberts at Follow her on Twitter at @LaurieRoberts.

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This article originally appeared on Arizona Republic: Gov. Katie Hobbs vetoes food tax repeal, delighting Republicans