City Projects Hit Revenue Standstill, Unveils Plan for Deeper Property Tax Reductions

Maricopa city officials are preparing for financial adjustments as revenue sources are projected to decline. During a recent Budget and Finance Council Subcommittee meeting, key figures indicated that state-shared and intergovernmental revenues are expected to drop in the upcoming fiscal year.

Chief Financial Officer Matt Kozlowski commented on the change in revenue trends, stating, “In the past, we were used to very exponential growth as a city. Now, we’re seeing more of a flattening.” The city has noted a significant slowdown in revenue from licensing, fees, and permits, with expectations set at $15.9 million—$90,000 less than the previous year and $6.6 million lower than fiscal year 2024.

In contrast, local sales tax revenue is anticipated to rise from $38.2 million to $43.8 million, aided by a proposed half-cent sales tax for the new Commuting Corridors Sales Tax Fund. This increase awaits approval from the city council on May 6.

State-shared revenue is also facing a decline, projected to yield only $30.71 million, a drop of $5.78 million attributable to changes in the state income tax structure.

On a positive note, Maricopa has confirmed its intention to lower property taxes for the seventh consecutive year. The primary property tax rate will decrease from 3.64% to 3.48%, while the secondary property tax will drop from 0.69% to 0.59%. These taxes primarily fund public safety initiatives.

Kozlowski emphasized that reducing property taxes is a way to benefit residents financially while proposing increased sales taxes for infrastructure improvements. He explained, “It’s just a way of moving the pieces around to take that overall tax burden and keep reducing it for the residents.”

He further noted that a lower tax percentage can attract business investments, creating job opportunities and enhancing the local economy. Mayor Nancy Smith raised a cautionary note, acknowledging the need to eventually reassess the strategy of continually reducing property taxes in light of fluctuating revenues.

Kozlowski’s team is set to provide an updated budget proposal for city council approval on May 6, the same day members will decide on the sales tax measure. He remarked, “People will see truly what these numbers are going to settle in at and what the budget looks like for the next year.” A final budget version will be voted on June 3, after which it will be accessible for public review online.