It’s not an accident that the top issue talked about by politicians these days is affordability. Over the last 5 years the cost of pretty much everything has gone through the roof, largely caused by the trillions in reckless spending by Joe Biden and the Democrats in Washington.
Taming inflation must remain our top economic priority, and the good news is that Arizona Republicans are taking meaningful steps to bring costs down. After adopting a 2.5% flat income tax under Governor Doug Ducey in 2022, state lawmakers have fought to slash grocery taxes, residential rental taxes and eliminate regulations that are driving up the cost of energy and housing.
Yet while the Republican controlled legislature is doing everything it can to make sure hardworking taxpayers get to keep more of their hard-earned dollars, municipalities throughout Arizona are passing an avalanche of tax and fee increases that are costing taxpayers hundreds of millions of dollars every year.
Last July, Phoenix enacted a half cent sales tax increase that will cost taxpayers an additional $250 Million. This came six months after Gilbert passed their own half-cent sales tax increase. Not wanting to be left out of the tax hike fun, both Surprise and the Town of Maricopa passed their own sales tax increases as well.
Though the sales tax increases have been bad, the utility rate increases may have been worse. Countless jurisdictions have passed utility rate hikes in the last two years, including Mesa, Goodyear, and Chandler. Perhaps the biggest offender has been the Town of Gilbert, where residents experienced sticker shock as water bills exploded, with rate hikes of 50% in 2024, 25% in 2025, and an additional 25% that will go into effect in April of 2026.
In defending these endless tax and fee increases, the excuses from the cities remain the same. Unexpected budget “shortfalls” and reckless cuts in shared revenue from the state are forcing cities to raise rates. Or so they say.
These excuses all fall apart upon closer examination.
Take Phoenix for example. Between FY23 and FY26, Phoenix’s budget grew by nearly $4 billion, reflecting significant expansion rather than fiscal contraction. During this same period, the city faced scrutiny over multimillion-dollar expenditures on private organizations such as Phoenix Pride Inc, Phoenix Film Foundation, and Mexican Baseball Fiesta LLC which clearly fall outside of core municipal priorities.
Looking ahead, between FY23 and FY29, Phoenix is expected to collect roughly $780 million more than its historical revenue trendline, while Tucson’s excess approaches $260 million. This largely suggests that spending decisions, not disappearing funds, are driving the pressure.
In Tucson, projects like Downtown Links ballooned from about $76 million to over $110 million, more than $34 million over budget and years behind schedule under the failed RTA plan, leaving taxpayers holding the bag to cover major cost overruns.
In FY2025, Glendale adopted a $1.48 billion budget, a 17% increase from the prior year. Within that growth, the city directed funds toward recreation and fitness amenities while revising hundreds of fees.
And while Gilbert has been raising its sales tax and doubling its water fees, they have prioritized discretionary amenities such as pickleball complexes, splash pads, and massive park expansions.
Across Arizona cities, taxpayer dollars are increasingly funneled into pet projects, beautification, and administrative growth. Over the past five years, municipal budgets statewide have grown by 32%, underscoring concerns about fiscal priorities.
Meanwhile, Urban Revenue Sharing has ballooned in recent years, contrary to the claims made by municipal lobbyists at the Capitol. After lawmakers increased their general fund distribution from 15% to 18%, municipalities are now receiving more than $1.4 billion from the state, which is hundreds of millions more than what they were projected to receive a few years ago. Research from the Common Sense Institute confirms that since 2020 Arizona cities have received over $7 billion in additional shared revenue from the state than originally anticipated, projected to surpass $11 billion by 2028.
It’s obvious that local governments don’t care about affordability or how the endless parade of tax and fee increases are harming Arizona families. The only question now is whether anything can be done to provide taxpayers with some relief.
The Arizona Free Enterprise Club has worked on several bills this session aimed at protecting taxpayers from excessive municipal tax, fee, and rate increases. HB4030 and HCR2052, both introduced by Representative Justin Olson, would impose a temporary four-year moratorium on new local cost hikes, placing a short-term check on escalating government burdens. The referral version (HCR2052) would provide voters the opportunity to decide the issue directly; should the bill face a veto from Governor Katie Hobbs. By halting these increases, the policy would create meaningful breathing room for Arizona families trying to manage rising expenses.
Unsurprisingly, many cities and towns have come out strongly against the moratorium, as it would curb their ability to continue raising taxes, fees, and rates. Numerous municipalities signed in opposition, including Phoenix, Prescott, Tucson, Apache Junction, Gilbert, and more than 20 others. Apparently, the idea of actually restraining spending and holding the line on costs is just too much for some local officials to handle.
Another bill, SB1745, introduced by Senator Jake Hoffman, establishes a structural guardrail on local transaction privilege tax increases, capping hikes at 2.5% per classification. Any proposal to exceed that cap would require voter approval, ensuring oversight. This only applies to municipalities with a population of 550,000 or more. AKA Arizona’s worst offenders, Phoenix and Tucson, that also happen to represent nearly a third of all residents in the state. The bill promotes transparency and accountability, giving taxpayers a clear voice before additional costs are imposed.
Looking at the facts, the answers are clear: state taxes have been cut year after year, and revenues continue to rise, even as cities claim shortfalls. Yet spending is outpacing windfalls, fueled by a growing appetite for nonmandatory projects. Localities aren’t interested in fiscal restraint, only in endless taxation.
That’s why the legislature must put HB4030 and SB1745 on Katie Hobbs’ desk, to protect local affordability for taxpayers. Should she stand in the way of urgently needed relief from relentless municipal increases, HCR2052 will put the decision in the hands of Arizona voters.
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