Hobbs Vetoes Rental Tax Bill
On Thursday, Governor Katie Hobbs vetoed an effort to halt costly rental taxes. The proposed bill would have relieved the burden of renters across the state but, unfortunately, faced resistance due to its alleged lack of assurance that those people would benefit from it. Furthermore, some say one aspect that was even deemed unlawful by her was forbidding landlords any sort of aid in this situation. Though meant with good intentions, not everyone is happy about this decision made in Arizona’s capital.
“If we’re going to promise tenants relief, we need to be able to guarantee that they actually get it. This approach just doesn’t fit the bill for working families struggling with rising rent rates,” Hobbs wrote in her veto letter.
Arizona has a rental tax in 70 cities and municipalities, including Phoenix, Mesa, and Gilbert. Advocates said that renters needed help because their monthly payments had increased dramatically. The state Legislature passed the law with the support of all Republicans and one Democrat. The measure, according to supporters, would have saved tenants $20 to $200 each month. The Republican state senator from Phoenix, Steve Kaiser, said the tax was unjust since it singled out a particular demographic. He also disagreed with Hobbs’s assertion that the tax break impacted only landlords. He claimed that Hobbs’s proposal to remove taxes on feminine hygiene goods and diapers would primarily benefit grocery retailers, not customers.
However, opponents claimed that due to a lack of money from the rental tax, cities and municipalities would be forced to reduce services like emergency medical services or parks and recreation or raise taxes in other areas. Opponents said that the proposal would require local governments to increase other taxes or reduce services as a result of losing a significant source of funding.
In an effort to make up for the loss of revenue, the proposal contained millions of dollars for local governments that charge a rental tax. Hobbs recommended that such a significant expense be discussed during budget deliberations. At the same time, people in favor said that the legislation would ease the burden of rapidly rising housing expenses on renters, who often earn less than homeowners.
Reasons Behind the Decision
On 24th February, Arizona Governor Katie Hobbs vetoed a bill that removed taxes from rent payments. She gave two reasons for her choice.
In a letter to Republican Senate President Warren Peterson, Democrat Hobbs expressed uncertainty about whether Bill 1184 would genuinely help tenants. She said,
“If we’re going to promise tenants relief, we need to be able to guarantee that they actually get it.”
“This approach “simply doesn’t fit the bill” for working families who must contend with rising rental costs,” Hobbs added.
She claimed that the law, with its generous appropriation of almost $270 million over 18 months, was unsuitable, given there had been no budget agreement. Opponents argued that in times when inflation is high, and state/municipal governments are doing well financially, consumers should be allowed a break from such taxes.
Tom Belshe, director of the League of Arizona Cities and Towns, opposed the proposed policy that could have had significant financial implications for small rural municipalities. He feared it would force them to cut back on critical public safety resources, risking citizens’ well-being in many areas across the state.
Hobbs declared her dedication to identifying a better fit for the problem.
“I applaud the Legislature’s commitment to tackling growing housing expenses.” “One of my administration’s top priorities is reducing expenses for Arizona households,” She added.
