Arizona voters will decide in November whether cities can continue setting grocery tax rates above 2% and whether local governments must receive voter approval before creating or increasing those taxes. Supporters, including Republican lawmakers, say the proposal could reduce the cost burden on residents, while some city officials say it could restrict an important source of local revenue.
Proposition 316 would establish a 2% ceiling on grocery taxes. Cities already above that level could retain their current rates, but they would not be allowed to raise them later. Communities with rates at or below 2% could seek an increase if voters approved it.
Taylor, a Navajo County town with slightly more than 4,000 residents, currently charges a 3% grocery tax. Chandler's rate is 1.5%, while Paradise Valley and Litchfield Park charge 2.5% and 2.8%, respectively. The measure began as a proposed ban on grocery taxes, but opposition from city officials helped produce the 2% limit instead.
Seventy Arizona cities and towns collect taxes on groceries. A Joint Legislative Budget Committee analysis estimated that eliminating the taxes entirely would have cost local governments $227 million in revenue during 2028. Chandler Mayor Kevin Hartke, who also leads the League of Arizona Cities and Towns, said the measure represents a compromise between reducing food taxes and preserving municipal revenue.
Officials in communities with higher rates have raised concerns about the effect of the cap. Bisbee Mayor Ken Budge said the city's 3.5% grocery tax produces about $700,000 annually, a sizable share of its $9 million budget. Page, which has a 3% rate, had already lost $228,000 in annual revenue after lawmakers eliminated rental taxes last year. Further details about Page's position were not provided.
