Hobbs agrees on Arizona rental tax ban to put Prop. 400 on the ballot

PHOENIX (3TV/CBS 5) — Voters first approved the half-cent sales tax, known as Proposition 400, in 1985, and they renewed it again in 2004. Over the decades, it’s paid for major road and freeway projects, as well as the light rail. The tax is set to expire at the end of next year unless voters approve it for a third time.

After threatening to keep Proposition 400 off the ballot next year, Arizona Republican leaders like House Speaker Ben Toma are now working with Democratic governor Katie Hobbs to place a massive transportation tax on the 2024 ballot. Under the agreement, voters in one of the fastest-growing counties in the country will get a say on extending Proposition 400 for another 20 years. If it passes, the tax is expected to raise more than $1 billion a year for a total of $21.7 billion.

For the past two years, mayors like John Giles of Mesa have called on the legislature to let the voters decide. “It’s hard to overstate how important Proposition 400 and the extension of it is,” he told Arizona’s Family. “This is the largest economic development package in the history of our state. This is the funding source for the new freeways to the growing parts of the county. And regardless of where you are in between the East Valley and the West Valley, you’re going to see the existing freeway infrastructure improved.”

One recent poll, with a margin of error of ±4.38%, shows that 68% of Maricopa County voters approve of the extension, while there are only 26% of those who oppose it. However, getting the proposition to voters didn’t come without a cost. Hobbs and Democratic lawmakers agreed to ban cities and towns from imposing rental taxes, a move that could save renters some cash but cost large and small communities big money. This is the same bill that Hobbs vetoed earlier this year.

“We’re very disappointed with the loss of residential sales tax,” Mesa Mayor John Giles said. “The proponents of this education in revenues to cities will give passionate speeches about ‘the evils of defunding the police department,’ but that’s exactly what they have done.”

Much of the money loss from the tax ban in Mesa, Giles said, will affect money for public safety, as the reduction of money from the tax affects Mesa’s general budget by $22 million a year. But Giles said it’s worth it to let Maricopa County voters decide the fate of a decades-old transportation tax.

The agreement on the transportation tax passed in the House with strong bipartisan support, along with a few of the state’s most conservative Republicans who opposed it. The governor’s office isn’t officially saying if Hobbs plans to sign the legislation. If she does, it’s estimated to cost cities and towns, which impose rental taxes, nearly $230 million a year.

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