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Kari Lake's tax plan could mean cuts to first responders. Here's why

The Republican nominee for governor would end city taxes on groceries and residential rentals. A Valley mayor warns cuts to fire and police could follow.

PHOENIX — The Valley's 13% inflation rate - the highest in the country - is a top concern for the candidates for governor. 

Republican Kari Lake was standing in the middle of a Glendale carniceria Tuesday serving up her answer: tax cuts.

"One of the concerns I keep getting from people from all walks of life is, 'Wow, we can't afford just the basics anymore," Lake said.

She proposes wiping out the taxes that cities collect when you buy groceries or pay the rent. 

But there are questions about how many people would benefit, how Lake would pay for the tax cuts, and whether basic city services - like fire and police - would be affected.

Here's what we know:

'Half a billion dollars back in pockets'

Lake, a TV news anchor in Phoenix for 25 years, says she would put "half a billion dollars back in the pockets of Arizonans" by eliminating the rental and food taxes.

She would have to get the Legislature's approval to do it.

The tax rate on groceries averages 2.69% statewide, and the rental tax rate 2.78%, according to the League of Arizona Cities and Towns.

Total tax collections last year were $340 million, according to the league. 

The highest rates are found in rural communities that depend on taxes to provide basic services like law enforcement. The communities don't have the property tax and retail tax base that supports services in larger cities.

Uneven impact across the state

The proposed cuts would have an uneven impact on residents across the state.

Arizona's three largest cities - Phoenix, Tucson, and Mesa - don't have a food tax. Grocery shoppers there wouldn't get a break. 

Eliminating Phoenix's 2% residential rental tax could put some cash back in renters' pockets. 

According to the U-S census, four in every ten housing units in Phoenix are rentals. A tenant in the average $1,400-a-month, a one-bedroom apartment would save about 28 bucks a month.

Lake: We'll help cities

Lake pledged that cities relying on the food and rental taxes would be made whole.

"We're going to give them a helping hand for about five years, so they can kind of get used to not having this tax," she said.

"We will work with them. We don't want the cities to struggle, but we definitely need to start helping the people of Arizona."  

State surplus might not pay for cuts

State surplus projections indicate Lake and the next Legislature won't see surpluses large enough to cover her proposed tax cuts.

Lake policy adviser Sam Stone, who's also a candidate for the Phoenix City Council, said the tax cuts would be paid for out of a projected $5 billion state surplus in the coming fiscal year.

When a reporter questioned Stone about that number, he responded: "I believe it was accurate. But I'll have to double-check."

According to the Legislature's independent budget analysts, the surplus for the coming fiscal year will be much lower than Lake said and decline precipitously in subsequent years.

The Joint Legislative Budget Committee reports the next governor will have a surplus of just $2.8 billion to work with. The surplus is projected to plunge as low as $142 million two years later.

Goodyear mayor: 'Ill advised'

Goodyear Mayor Joe Pizzilllo said Lake's proposal was "ill-advised." He warned that public safety services could suffer.

"While I appreciate and support the intention to put Arizonans' hard-earned dollars back in their pockets, Kari Lake's tax plan is ill-advised and cuts statewide taxes off the backs of local governments," Pizzillo said in a statement to 12News.

"This will inevitably put us all in incredibly difficult positions to have to make unintended cuts to police and firefighters across the state, as well as allow for fewer opportunities to support multifamily rental properties."

Pizzillo added this warning about Lake's plan to backfill the cities' lost tax revenue: "Even an offset of five years is dangerous and will only delay these future problems."

"If suggested tax cuts are the end game for this gubernatorial candidate and the future legislature, perhaps they should focus on policy changes that impact their own coffers. That said, I welcome any opportunity to sit down and work collaboratively to discuss these impacts on Goodyear residents and I commit to finding a reasonable solution.”  

Hobbs: Plan falls far short

Lake's opponent, Democratic Secretary of State Katie Hobbs, provided this response to the proposed tax cuts:

"Kari Lake's bare-bones excuse of a plan falls far short of tackling what Arizona families are going through with the rising cost of groceries and housing.  

One of Arizona's top economists even said Kari Lake's economic agenda 'just doesn't work' and could actually make inflation worse... 

Arizona families deserve solutions that make life here more affordable. I know what it's like to support a family through tough times, which is why I've put forth a plan to cut taxes for 800,000 Arizona families and help people get back to work."


Decision 2022

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