Senate advances bill to exempt locally assessed business personal property after heated debate

The Arizona Senate Ways and Means Committee voted 4–3 on March 7 to return House Bill 2389 with a do‑pass recommendation after extended testimony and debate.

House Bill 2389 would exempt locally assessed personal property used for agricultural purposes or in trade or business from property tax, effective January 1, 2032. Proponents said the business personal property (BPP) tax is administratively difficult to value and collects little revenue; opponents said the exemption would shift roughly $59 million in tax burden to other taxpayers and could increase general‑fund pressure.

Representative (sponsor) told the committee that constituents — including restaurant owners — had reported surprise bills for chairs, tables and equipment inside businesses and that many small business owners felt they had already paid taxes at purchase and on income. "I pay sales tax when I buy those things ... and then the county's coming back to me and asking for a tax on these things," a sponsor relayed from constituent testimony.

Mark Barnes of the County Supervisors Association said the association was neutral but urged caution, noting prior 2022 changes that depressed locally assessed personal property values; he said that by the time this bill would take effect much locally assessed personal property might already be at minimum value, which reduced the counties' revenue exposure.

Opponents included Blake Lister of Opportunity Arizona and Ruthie Goldcorn, a micro‑business owner, who described the proposal as corporate tax relief that would disproportionately benefit larger businesses. Lister argued the exemption continues a decades‑long trend of business tax cuts and could worsen budget shortfalls.

Senator Epstein explained his "no" vote by calling the bill a "$59,000,000 tax shift to all the other taxpayers in the county," adding that eliminating the locally assessed BPP would shift costs for county services such as roads and public safety from businesses to residential property owners.

Supporters argued the administrative burden and low yield of the tax make it a poor policy for small businesses; opponents emphasized distributional and fiscal effects and urged offsets before making the change. The committee recorded a 4–3 vote to advance the bill as amended.

The bill will now advance for further consideration and potential floor action. Committee members suggested additional conversations on offsets and system simplification if the measure moves forward.