Arizona lawmakers are considering a major tax change that could impact both families and local governments. A newly proposed bill, HCR 2021, aims to eliminate the state’s food tax, potentially saving families up to $500 per year on groceries.
However, the move is facing strong opposition from small-town leaders, who say the loss of revenue could cripple local budgets and lead to cuts in essential services.
The bill is currently under review by the House Ways and Means Committee, and if approved, it could be placed on the November ballot for voters to decide.
How the Food Tax Works
Currently, 70 Arizona cities and towns impose a local food tax, which generates $200 million in annual revenue. Towns like Bisbee, Douglas, and Sierra Vista rely heavily on these funds to support police, fire departments, and infrastructure projects.
For example, Bisbee Mayor Ken Budge stated that removing the tax would result in a $620,000 budget loss, which accounts for 14% of the city’s total budget. Meanwhile, Douglas Mayor Jose Grijalva estimated a $2.5 million drop in revenue, which would severely impact their ability to maintain public services.
“If this passes, we will have to cut funding for public safety,” Budge warned. “We need our full-time fire department, and without this tax, keeping them fully staffed will be a challenge.”
Why Some Support Eliminating the Food Tax
Supporters of HCR 2021, including Republican lawmakers, argue that removing the food tax will provide much-needed relief for families struggling with rising grocery prices.
“Every time we talk about tax cuts, we hear scare tactics that police and fire services will disappear,” said State Representative Leo Biasiucci, a sponsor of the bill. “That’s simply not true. Cities have plenty of options to manage their budgets responsibly.”
Biasiucci and other supporters believe cutting the tax will put money back into consumers’ pockets, helping families afford necessities like food and gas.
Concerns from Small Towns
While eliminating the food tax may seem like a win for consumers, small-town officials say the financial consequences could be severe.
Douglas, a border town, receives a large portion of its food tax revenue from Mexican residents who cross the border to shop in Arizona. According to Mayor Grijalva, nearly 70% of food tax contributions in Douglas come from non-residents—meaning the tax cut primarily benefits visitors, not local families.
Another major concern is property taxes. Some local officials warn that to compensate for lost revenue, cities may have no choice but to raise property taxes—which could ultimately cost residents more than the food tax savings.
Governor Katie Hobbs vetoed a similar bill in 2023, stating that the tax cut would force cities to find alternative revenue sources, potentially leading to higher taxes elsewhere or cuts in public services.
Larger Cities vs. Small Towns
One of the biggest controversies surrounding HCR 2021 is that large cities without a food tax could influence the decision for smaller towns that depend on it.
Major metropolitan areas like Phoenix, Mesa, and Tucson do not impose a food tax. However, voters from these cities could still vote on the measure, determining the fate of smaller towns that rely on food tax revenue.
“We’re talking about people in big cities who don’t even pay this tax deciding what we can do in our town,” Budge said. “That’s unfair to local governments trying to manage their own budgets.”
What’s Next?
The bill is set to be debated in the Arizona Legislature within the next two weeks. If it passes, voters will have the final say in the November election
Until then, local officials and Republican lawmakers remain divided, with one side emphasizing tax relief for families and the other fighting to preserve funding for essential services.
Disclaimer—Our team has checked this article to ensure its accuracy and eliminate any misinformation. We are committed to providing clear and reliable information for our readers.