By Dustin Gardiner The Republic | azcentral.com Wed May 1, 2013 10:24 PM

Phoenix leaders voted Wednesday to prepare for an early repeal of half of the city’s controversial tax on food, though council members were sharply divided over what exactly the vote meant.

City Council members directed City Manager David Cavazos to create a budget that allows for a partial repeal of the 2 percent tax on residents’ grocery bills, effective in January. The remaining 1 percent of the tax would stay in effect until 2015, when it automatically sunsets.

But how the council plans to make up for lost tax revenue remains unclear. It did not outline any specific cuts or new funding sources to cover an estimated $12 million drop in revenue.

Instead, the council directed Cavazos to spend the next five months creating a plan that compensates for the projected loss without forcing cuts to police, fire or other community services.

It also required that the budget changes not hurt Phoenix’s top-notch credit rating.

Cavazos, who said the effort can be accomplished barring any major changes, must present such a plan to the council by Oct. 1. At that point, the council would need to take a final vote to enact the repeal and approve any budget changes.

Calls to repeal the tax, first imposed to shore up its budget during the recession, have deeply divided the council in recent months.

A few council members had pushed for its full elimination, but that effort was scuttled when Cavazos said it would require drastic cuts.

In March, Cavazos warned that repealing the tax this year would create a $55 million shortfall requiring sweeping cuts, including the layoffs of 99 police officers and about 300 other employees, closures of some senior centers and reduction of library hours.

A majority of the council had supported leaving the tax in place until 2015, citing concerns over the potential cuts.

However, the council’s seemingly gridlocked opposition to a repeal vote cracked two weeks ago, when Councilman Michael Nowakowski and Councilwoman Thelda Williams announced they had reached a compromise to phase the tax out before its expiration.

On Wednesday, the council voted 8-1 to approve a motion by Williams calling for the tax’s partial repeal and directing Cavazos to begin preparations.

Cavazos even suggested that phasing out the tax would be in the city’s best interest, rather than waiting to act in two years.

“The more we prepare for it now, the better prepared we will be later on,” Cavazos said.

Williams, who in the past pushed to repeal the entire tax, said the council must restore public confidence and make good on its commitment that the tax would be temporary. She said the economy has improved enough to allow for a partial repeal.

“It really has divided the community,” Williams said. “I just think it is time that we stood up as a council and say, ‘When Phoenix says it’s temporary, it’s temporary.’ ”

Councilman Michael Johnson cast the lone dissenting vote. He said Phoenix hasn’t restored many services to residents that were cut in recent years, such as library hours, senior centers and recreation programs.

“I think every citizen has a right to public access and public services,” Johnson said.

Council members debated the proposal for more than two hours, with much of the discussion focusing on their interpretation of Williams’ motion. Some council members said the vote was a clear end to the tax, while others said the issue is far from over.

Mayor Greg Stanton, who had backed off his campaign pledge to repeal the entire tax this year, called the motion an “aspirational statement” that nearly every member of the council could agree with.

Stanton said the real discussion will begin when Cavazos comes back with details of his plan.

However, Councilman Sal DiCiccio, the most vocal opponent of the tax, bristled at Stanton’s suggestion, saying the vote signaled that “it’s time to get this thing over with.”

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