Several cities in the region have expressed strong concerns about House Concurrent Resolution 2021, currently moving through the Arizona Legislature that was initially drafted as a complete ban on food taxes. The potential consequences have worried many rural towns, whose officials note a loss of that revenue would be detrimental to the services they are able to provide.
Local leaders from Winslow, Snowflake, Taylor, Show Low, Pinetop-Lakeside and Springerville traveled to the Arizona House of Representatives on Feb. 12, to speak about the risks to their already fragile budgets. Winslow Police Department Acting Chief Ernest Cano also participated, emphasizing the potential strain on public safety resources if vital funding sources were lost. Holbrook Mayor Kathleen Smith voiced similar apprehensions at a recent council meeting, saying that Holbrook’s revenue would be significantly impacted without the food tax.
Following these objections, lawmakers revised the measure to allow communities already collecting a food tax to continue doing so. Later negotiations introduced an amendment that capped future rates at 2%. The bill eventually evolved into its current form, which lets cities such as Winslow keep their existing 3% food tax but prevents any future increase. If a city decides to reduce its food tax, it must lower it below 2% and would forfeit the ability to have a larger tax.
A similar piece of legislation was passed by both chambers of the Arizona Legislature in 2023 but was ultimately vetoed by Governor Katie Hobbs. This time, sponsors drafted the bill as a proposed amendment to the Arizona Constitution, allowing it to bypass a potential veto and instead go before voters in 2026. If approved, the measure would enshrine limits on municipal food taxes in the state’s foundational document.
Winslow City Manager David Coolidge has been updating the city council on both the food tax bill and other legislative proposals that could affect local government funding. One such bill, House Bill 2221, aims to prohibit any reduction in law enforcement budgets. Coolidge noted that this provision would be challenging for cities facing population declines, as it would force them to maintain a police budget that might exceed their actual needs. Additionally, if a city had made one-time purchases, such as acquiring new vehicles for its police department, it would still be obligated to maintain funding at that heightened level under the proposed law.
Coolidge further explained that Winslow manages its grants within a single grant fund structure, which helps separate temporary expenditures from permanent ones. However, a municipality that allocates grant money within its regular budget could risk being locked into those higher funding levels even after a grant concludes, resulting in a strained budget and reduced flexibility for local officials. Coolidge expressed that he wishes that the legislature would stop trying to meddle in how cities see the best way of collecting taxes for their area.
Concerns among officials in these rural communities center on preserving the ability to balance municipal budgets responsibly. Many worry that mandated limitations and prohibited adjustments could hamper their capacity to respond to changing economic conditions. Though negotiations have led to some concessions in the proposed laws, the ultimate outcome hinges on the upcoming legislative deliberations and, in the case of the food tax measure passing, on Arizona voters in 2026.
