Tucson officials are tightening their belts as sales taxes trickle into city coffers more slowly than expected.
Sales tax revenues are coming in about 4% lower than projected for fiscal year 2026, which began three months ago. That could cause a $41 million drop in total revenues in fiscal year 2026, the city’s top financial official, Anna Rosenberry, told Tucson City Council members at a Tuesday study session.
Several agencies are making plans to save money. Tucson’s 911 dispatch is delaying a $6.3 million replacement of its computer system. The Tucson Police Department is restricting overtime hours and delaying hiring community service officers. Parks and Recreation is scaling down parks maintenance.
Mayor Regina Romero, a Democrat, put the blame at the feet of Republican administrations.
“What we’re seeing are failed economic policies coming from the Trump administration and the tail end of the Doug Ducey flat tax decisions,” she said.
Tucson has seen less shared revenue from the state since the 2021 passage of a flat income tax under Republican Governor Doug Ducey, whose terms ended in 2023.
Under the Trump administration, Romero said, tariffs and an “unwelcoming” attitude towards international visitors were depressing sales at local businesses.
“This really is the economic uncertainty that Trump has created for all of us,” she said.
Compared to last year, July sales tax revenues were down about $9.4 million. But August’s revenues were fairly constant and September revenues were up about $8.3 million, amounting to a decrease of 1.5% compared to the same period last year.
There was one solution Romero quickly ruled out: a ballot measure asking for a sales tax increase. Ward 4 council member Nikki Lee and Ward 5 council member Rocque Perez had expressed interest in such a measure during the course of the council’s meeting.
“Excuse me if I’m gun-shy on proposing an initiative for voters to approve,” Romero said, pointing to the failure of the Proposition 414 sales tax hike in March.
Instead, Romero signaled she preferred internal savings in city agencies. City employees have access to a portal to propose spending reductions themselves, said City Manager Tim Thomure.
“The people closest to the work often have the best ideas for how we can save money,” said Lee, speaking in favor of the idea.
Consolidating back office functions, like payroll, could also be an option down the line, said Ward 6 council member Karen Uhlich.
So far, planned spending cuts would make up for about $16 million of lost revenues, still leaving a $25 million operating deficit. Combined with some separately-counted spending obligations like park improvements and new police cars, it could deplete Tucson’s $81 million general fund and force the city to dip into its $141 million rainy day fund.
But over eight months of the fiscal year remain, and several council members were optimistic that the city would weather them.
Thomure also sought council members’ feedback on some yet-untested cost-saving ideas. One was to close all city pools during the winter. Council members appeared reluctant to do so.
“We can’t close pools in Tucson,” Cunningham said.
Council OKs homelessness emergency declaration##
Earlier in the study session, council members voted in favor of declaring a housing and homelessness emergency.
With homelessness counts stubbornly high, the council unanimously gave Thomure the go-ahead to write an emergency declaration and bring it back in 45 days for official adoption.
“Our neighbors are losing homes and living in public spaces. That is an emergency and our response should match that reality,” said Santa Cruz, who introduced the measure.
In practical terms, an emergency declaration could empower the city to suspend certain zoning regulations hampering the construction of homeless shelters and emergency housing.
Santa Cruz presented the emergency status mainly as a way to cut red tape for Tucson mutual aid groups and churches with existing shelter proposals. She said the city should issue blanket exceptions for more onerous zoning regulations while reviewing other kinds of exceptions on a case-by-case basis.
Also during the study session, the council approved plans for a joint meeting with the Pima County Board of Supervisors to discuss solutions to homelessness.
The council reconvened in the evening for its regular session, during which it approved around $100 million in bonds to renovate the city-owned Tucson House apartment building. It also declared a sister city partnership with San Luis Potosí, Mexico.
