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Key Takeaways from the City of Tucson Study Session on March 4th, 2025

The Tucson City Council's recent discussions on the Fiscal Year 2026 budget reveal concerning inadequacies in its fiscal management and planning. Despite a projected operating deficit of $13 million, which has improved from a previous estimate of $23.8 million, the city appears to be merely acknowledging its financial shortcomings rather than effectively addressing them.

One critical issue is the lack of a concrete strategy for managing employee health benefits amidst these financial constraints. While health care costs are reportedly factored into the proposed budget, the discussions indicate a reactive rather than proactive approach to what could significantly impact employees and their families. With rising health care expenses, workers will likely face increased premiums and out-of-pocket costs.

During discussions, it became evident that while the city has budgeted $4.8 million for health benefit increases, the estimated costs for maintaining current medical plans could soar to $7 to $10 million. This shortfall highlights a troubling mismatch between the city’s financial commitments and the realities facing employees, forcing workers to bear increasing insurance premiums while their salaries do not keep pace with the rising costs of living.

Moreover, the ongoing cost-of-living adjustments (COLA) fail to adequately address the disparities in pay, further exacerbating the situation for workers who are already feeling squeezed by increasing costs. We have heard from many departments but specifically from Housing and Community Development that senior employees are being paid $5-$6 per hour less than new hires. First responders report not having COLA increases for years. Prop 414 does nothing to address these issues. 

With budgetary decisions consistently favoring short-term fixes over long-term solutions, the city risks alienating its workforce and fostering dissatisfaction among employees who feel undervalued and under-compensated.

One broken record talking point that needs to continually be said is that once again, Mayor and Council are prioritizing failed free buses over employee compensation. 

Special Election for City of Tucson Voters ONLY!

City of Tucson Sales Tax Would Increase Sales Tax to 9.2%

The City’s remedy to crime and homeless is as fundamentally flawed as its failure to recognize the problem:

• Increasing the sales tax is inherently unfair to poor people. It’s what’s called a regressive tax, meaning that it takes a larger percentage of income from low-income taxpayers than from high-income taxpayers:
  • The City of Tucson suffers from widespread poverty: 18.8% of the population lives in poverty.
  • The poor spend a disproportionate amount of their income on food. The second largest category of sales tax in Tucson comes from restaurants. This sales tax makes meals more expensive. 25% of our population works in either food or retail trade (and related industries). This directly impacts those workers.
  • This tax falls on the backs of hardworking folks in the food & retail industries; those least able to afford an additional tax burden.
• Funding public safety construction and other city priorities should not be based on fluctuating sales tax revenue!
  • From the City of Tucson’s 2024 Annual Repot: “The City is watching the national economic picture and predictions of a possible mild recession as we map out our financial position for the coming months and years. In general, we expect that any recession would most immediately impact our Sales Tax collections, the single largest source of General Fund revenue.”
  • Case in point: sales tax from adult use marijuana revenue has been decreasing substantially:

• Increasing the sales tax will simply accelerate more establishments opening outside of the City limits. This trend is evident to almost everyone here. The City of Tucson will have the highest sales tax of any large city in Arizona. Businesses like citizens will continue to vote with their feet, just faster.
• Sales tax revenue in Tucson has basically mirrored inflation. There is simply little to no retail growth in Tucson and the City’s own 2024 Annual Report makes this clear:

• The City of Tucson has a long track record of passing off-cycle elections to increase sales taxes for large capital improvement projects, all of which have failed miserably:
  • As recently as 2022, the City extended a sales tax increase for road repairs. We ask our members, how are Tucson’s roads? View the City’s website for a sense of Déjà vu: 

    https://tucsondelivers.tucsonaz.gov/pages/better-streets-safe-streets

  • 2017- sales tax increase for road funding. We ask our members, how are Tucson’s roads?
• Prop 414 spends a disproportionate amount of capital projects instead of people! The City has a terrible track record on capital projects. The City allows its facilities to fall into disrepair due to mismanagement and then creates long term projects to build new ones while the community is starved of the resources it needs for public safety and prosperity.

There is a better solution!!!

• Bring stakeholders together to create balanced budgets that focus on the needs of our City! Fund priorities from the general fund, not from variable sales tax revenue that hurts our poor and our economy!
• Manage the City in a more effective fashion to grow the economy and population. This will allow the City to get a higher proportion of state tax revenue.
• Focus on people and management, not buildings! For example, TPD had 842 police officers in its latest report. The City of Mesa, which just a slightly lower population has 832 officers and a vastly superior police department. Mesa has a lower crime rate and a lower unemployment rate! 
• Reprioritize! The City of Tucson found a way to fund the free crime bus from its general fund at taxpayer expense while bus ridership declined