City Explores Solutions to Tackle Funding Shortfall

In January, Phoenix officials announced an exploration of strategies to address a looming budget shortfall, which could potentially involve raising the sales tax or reducing certain city services. As mandated, the city must maintain a balanced budget for each fiscal year.

According to a January 15 press release, the city has issued a notice of intent to raise the transaction privilege tax (TPT) and use tax by up to 0.5%. The notice aims to provide the City Council and residents with the opportunity to evaluate possible tax increases that could help restore the budget balance. However, this does not guarantee that taxes will, in fact, be raised.

Should the Council decide to move forward with a tax increase, a vote will not occur for at least 60 days following the notice. Community engagement is a priority, allowing residents ample time to voice their opinions on the proposed changes. The City Council is set to deliberate on the tax increase at its meeting scheduled for March 18, with any approved changes projected to take effect on July 1, 2025.

Simultaneously, various city departments are recommending potential cuts to services for consideration by city leadership. To foster transparency regarding the possible tax hike, the city is organizing several budget information sessions, the first of which will take place on Tuesday, February 4, at Burton Barr Central Library from 6-7 p.m. A complete schedule of upcoming budget presentations can be found on the city’s official website.

On February 25, further details regarding the General Fund budget and a multi-year financial forecast will be presented to the Phoenix City Council.