Phoenix’s temporary food tax will be cut by half in January under a budget plan ordered last week by the City Council.
City Manager David Cavazos was directed by an 8-1 majority to prepare a budget for fiscal 2014 that reduces the tax rate to 1% from the current 2%. The tax is set to expire entirely in April 2015.
“It’s time to get this thing over with,” said Councilman Sal DiCiccio.
Lowering the rate is expected to reduce revenues by $12 million in fiscal 2014.
The council will adopt the 2014 budget in October. A preliminary general fund budget for 2014 of $3.4 billion will be outlined at Tuesday’s council session by budget director Mario Paniagua.
Cavazos was told to develop a budget that does not endanger Phoenix’s bond ratings or require layoffs or cuts in public safety or community centers.
The city’s $1.7 billion of outstanding general obligation debt is rated Aa1 by Moody’s Investors Service and triple-A by Standard & Poor’s.
Mayor Greg Stanton supported an early end to the tax in the 2011 campaign, but reversed course earlier this year when Cavazos said terminating the tax would require the layoffs of 99 police officers along with 300 city employees.
Cavazos said last week that slowly phasing out the tax would be better than a sudden demise of the 2% levy.
The food tax was adopted in 2010 as Phoenix faced a record $277 million revenue shortfall in fiscal 2011.
