Arizona cities, towns want state to cover rental tax revenue loss

By Howard Fischer/Capitol Media Services
Published: Wednesday, August 2, 2023 - 1:29pm
Updated: Wednesday, August 2, 2023 - 3:39pm

Rebuffed in its bid for a veto, the League of Arizona Cities and Towns now wants lawmakers and Gov. Katie Hobbs to reimburse them for revenue they will lose with her decision to sign legislation stripping them of their ability to tax residential rentals.

According to figures provided by the League, cities and towns collectively levy $230 million annually in taxes on the owners of rental properties and homes.

Cities already get a share of state sales tax revenue. 

Now, the League wants lawmakers to increase the share given to the 75 affected cities – the ones losing the ability to keep their rental taxes.

But they are likely to face hostility from the Republicans who control the Legislature who have championed the repeal, which will take effect in 2025.

Senate Majority Leader Sonny Borrelli, R-Lake Havasu City, put it most succinctly: He provided a one-icon response of a thumbs down.

Christian Slater, a spokesperson for the governor, was noncommittal. He said only that the governor will work with lawmakers this coming year "to help cities address funding gaps to deliver the services their residents need.''

But House Majority Whip Teresa Martinez said it's not a simple question.

"I don't know if the state has enough money to backfill,'' she said.

"We want to make sure that our communities and our cities are not in a pinch,'' Martinez said. "But we also want to make sure that the (state) taxpayers can have some of their money back.''

At the very least, she said, it will take time to figure out how much the affected cities come up short and how much the state is collecting in revenue.

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