Tucson staff outline FY26 budget start and FY25 status; council approves ward allocations

City finance staff and the city manager used a study-session update to tell Mayor Regina Romero and the council that Tucson’s fiscal year 2025 budget is tracking “generally according to plan” at the halfway point, and to kick off the FY26 budget process with a draft calendar and financial assumptions.

Business Services Director Angel Ozomolam reported that as of Dec. 31 the city had collected roughly 50% of budgeted revenues for the unrestricted general fund and spent about 45% of the unrestricted general fund budget. Sales-tax receipts were reported up 7.38% year over year through December. The city’s investment plan — funded from assigned fund balance — showed partial spending in multiple departments, with unspent amounts planned through an optional sixth year if needed.

Assistant City Manager and CFO Anna Rosenberry said the FY26 process is at an early stage; departments were assembling base budget requests and the city manager’s recommended budget was set to be presented April 22. Rosenberry noted a state forecast that reduced urban revenue share/ state income tax estimates; staff planned to use a conservative 7.5% reduction in early FY26 projections while continuing to watch state updates.

Rosenberry also briefed the council on labor and benefit planning. She described efforts to develop the FY26 compensation plan, anticipated public hearings around the compensation recommendation, and an expected adoption timeline in June. On health benefits, staff said claims data for November increased projected costs; the employee benefits committee was meeting and staff planned to bring full health insurance recommendations to the council at a Feb. 19 study session for open enrollment planning.

Angel Ozomolam summarized the investment plan spending: $44.6 million in assigned fund balance for the FY25 investment plan, including $30 million for public safety and $5 million for collector streets. Departments had spent $13.2 million through the first half of the year. The city will allow unspent investment plan funds to carry into a sixth year, except for certain allocations that remain available until spent.

On ward framework funds, the council formally approved the staff recommendation to add $1.4 million (an extra $200,000 per office) sourced from the remainder of community partner investments. A motion to approve those allocations passed by voice vote.

In other budget-related matters staff briefed the council on housing asset management and the city’s public housing program status: the program was designated “troubled” by HUD for falling below performance thresholds. Staff described a set of recovery measures — asset repositioning, seeking HUD shortfall funding (approx. $900,000/year), and stronger oversight — and planned regular reporting to the Housing Authority Board and the council.

Mayor and council members asked questions about reconciling FY25 adopted and current budgets, state shared revenue forecasts, health-benefit plan choices and timing, and how a proposed local ballot measure (Proposition 4.14) could affect FY26 planning. Staff said they would proceed with a base budget that assumed no ballot passage while preparing “with-and-without” scenarios and options for council consideration.

Rosenberry said the next formal deliverables include an updated five-year general fund forecast at the Feb. 4 study session and the manager’s April 22 recommended budget. Councilmembers praised staff for proactive engagement and asked staff to continue transparency and public and employee engagement through the FY26 process.