Apache Junction officials warn state food-tax measure could cut millions from city budget

Rob Whistler, management analyst in the city manager’s office, told the Apache Junction City Council on March 4 that a pending state measure, identified in his presentation as HCR 20‑21, would limit or eliminate cities’ authority to levy local taxes on retail food and could sharply reduce municipal revenue.

“Arizona, we have a transaction privilege tax, TPT,” Whistler said, explaining the state framework that allows municipalities to set local TPT rates on specific categories of transactions. He said the bill originally would have eliminated municipal food taxes entirely; an amendment posted in mid‑February would instead cap municipal retail‑food tax rates at 2 percent.

Whistler ran through the city’s numbers. He said Apache Junction currently imposes a 2.4 percent retail‑food tax. If the bill becomes law in its amended form — a 2 percent cap — the city would lose about $670,000 a year. If retail‑food taxes were eliminated entirely, Whistler said Apache Junction would lose about $3.4 million annually. He also noted the city already lost about $1.5 million in revenue when the state removed municipal residential‑rental taxes in 2023.

The presentation framed potential losses against the city’s budget: sales tax currently provides roughly 46 percent of the general fund, Whistler said, and a multi‑million‑dollar drop would force reductions that could affect personnel and core services. “Two‑thirds of our budget is personnel,” he said. “It’s hard to avoid completely the personnel side when we keep sustaining hits to our revenue stream.”

Council members and the mayor asked how the legislative process would proceed and whether the city could use staff time or public funds to campaign against a referendum. Bridal Powell, city manager, said city staff could provide informational material about the measure but could not run a campaign; political action committees could form to advocate in the election.

Council members warned of service impacts if revenue falls. One councilor said previous removal of the rental tax had not lowered rents substantially and that cuts to municipal budgets threaten public safety because personnel is the largest share of the budget. Another councilor said discussions with a legislator had been dismissive of local concerns.

Whistler summarized the legislative status at the time: the proposal was introduced as a constitutional referendum that would go to voters if passed by the Legislature; after political pushback it was amended to allow jurisdictions that currently levy retail‑food tax to keep existing rates but not raise them above 2 percent going forward. If the amendment remains, Whistler said, Apache Junction would not immediately lose its revenue but would be constrained from future increases.

Why it matters: city officials said the measure could force reductions in city staffing or services if enacted in a form that reduces or eliminates retail‑food tax revenue. Councilors urged residents to understand the ballot question and its implications for local services.

The council did not take formal action on the matter; this was an informational legislative update from staff.