Prop. 316 would cap Arizona grocery taxes. Rural cities say it will cost them, and their residents.

Arizona's Proposition 316 would cap city grocery tax rates at 2% and require voter approval for any future increases, a measure Republicans frame as cost-of-living relief. Cities already above that cap, like Taylor at 3% and Bisbee at 3.5%, could keep current rates but never raise them again, even with voter approval. The measure emerged as a compromise after an earlier attempt to ban grocery taxes outright was vetoed by Gov. Katie Hobbs.

City officials say the taxes fund essentials: Bisbee's mayor says its 3.5% rate brings in about $700,000 a year toward a $9 million budget, much of it from tourists rather than residents. Page's spokesman noted the city already lost $228,000 in rental tax revenue last year and that tourism-based revenue, like hotel and amusement taxes, fell sharply in FY26.

A Joint Legislative Budget Committee analysis estimated a full statewide ban would cost cities $227 million in 2028 alone, which is part of why the cap replaced the ban. Officials in Bisbee and Page warn that locked-in rates leave fewer options besides cutting services like firetrucks, potholes, pools, and libraries.

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