A Republican priority bill that seeks to eliminate local food taxes was overruled by Gov. Katie Hobbs, who vetoed it on Tuesday, sided with cities across the state opposing the bill.

Republican-majority Congress passed last week Senate Bill 1063, was intended to prohibit cities and towns from imposing a sales tax on food. The proposal is top priority of the party Coupled with the rent tax ban in Rejected After heavy criticism from local authorities.

Both tax bans Part of Failed Gubernatorial Candidate Kari Lake’s Economic Plan — it is widely Panned by economists —and was adopted into the Republican legislative agenda shortly after her defeat.

Democrats in the legislature opposed SB1063.

States no longer tax food, Tax abolished in 1980As many as 65 cities still collect sales taxes on food and other food items, and the Arizona Federation of Municipalities opposed the bill on their behalf. raised staff concerns.

“We are hearing from dozens of local leaders about how this law will affect local governments,” she said. I have written“From potential cuts to services, including public safety, to higher property taxes, it’s clear that this bill won’t actually reduce costs for residents. It simply shifts those costs.”

Some cities warned that decoupling them from the revenue they derive from food sales taxes would force them to raise taxes or cut spending elsewhere to mitigate losses. a Legislative analysis It is estimated that $182.9 million will be forfeited in fiscal 2025, and that figure will increase in the years to come due to rising inflation.

The prospects were dire, especially for rural communities. The Navajo County town of Taylor, with a population of about 4,100, is the most tax dependent town. 35% of total revenue.

Republican leadership defended the proposal As a solution to the rising cost of living in the state and as a way to keep dollars in the pockets of Arizonans in the face of worsening economic hardships. , are already exempt from food taxes through supplemental nutrition assistance programs commonly known as food stamps.of Average tax rate is 2.7%.

Senate Republican leaders blamed Hobbes’ veto for not wanting to help inflation-stricken Arizonas. The state, especially the Phoenix metropolitan area, was hit hard by last year’s inflation. Phoenix tops US charts with 12%.

the phoenix is One of three cities in the Valley with no food sales taxHowever, Litchfield Park relies heavily on taxes, which take up 16.8% of its budget.

“Republican senators are working toward the legislation needed to provide economic relief to all Arizona residents, especially low-income families who feel the heavy burden of inflation,” the Senate said. Chairman Warren Petersen said in a post-veto statement. “It’s very clear that the governor has no interest in helping with that financial burden.”

Senate Majority Leader Sonny Borelli, who sponsored the bill, argued that projected increases in state revenues over the next few years would allow cities to make up the difference. Projections of new revenue from state income tax collections are unrelated to the bill to end local food taxes.

“Food is not a luxury. It’s a necessity. Our food tax is regressive and hurts everyone,” said a Lake Havasu Republican. “Nevertheless, the governor vetoed the bill, just filling the city’s bloated budget instead of leaving more money in the wallets of hardworking taxpayers.”

Economists also predict recessionand cities have warned that their ability to weather a recession will be adversely affected by eliminating a major source of income.

Hobbs dismissed the proposal as inadequate and suggested a better solution.

“Let’s work together to provide real relief to the people of Arizona suffering from higher costs,” she wrote in her veto letter.