Phoenix presents FY2026 trial budget after March vote raising sales tax; plan adds fire staffing, homelessness support and $5.6M for water plant

City of Phoenix staff presented the proposed fiscal year 2026 trial budget at a public hearing that reviewed revenue pressures, service priorities and next steps in the adoption calendar.

The presentation follows a City Council vote on March 18 to increase the transaction privilege tax (TPT) rate from 2.3% to 2.8%, effective July 1, 2025, a change the city says will generate revenue to support programs and services. The trial budget will be formally presented to the council on May 6, with a council vote scheduled for May 21 and legal adoption expected in June; the property tax levy ordinance is scheduled for early July.

The trial budget, described in a city video shown at the hearing, frames the city's finances as three main account types: the general fund (core services such as libraries, parks, police and fire), enterprise funds (water, airport, solid waste) and special revenue funds (grants and voter-allocated taxes). The presentation said state policy changes have reduced city revenues, including the elimination of the residential rental sales tax and cuts to individual income tax rates at the state level, and that the budget must address potential structural deficits.

Key spending proposals and notes included in the trial budget:

- Public safety: The city plans to use excise tax proceeds to finance large public safety capital and infrastructure projects, specifically citing two new fire stations and additional apparatus. The presentation and several public commenters identified emergency response times and staffing as priorities; the trial budget proposes additional funding to hire firefighters and staff existing and new stations.

- Homelessness: The proposed budget includes revised general‑fund estimates of $4.5 million for the Office of Homeless Solutions in fiscal year 2025-26 to continue shelter operations at sites named in the presentation, including Rio Fresco, the Phoenix Navigation Center and the Washington Shelter, and to support heat-relief efforts for unsheltered residents.

- Water services: The trial budget proposes a $5,600,000 addition to non‑general‑fund appropriations for the Water Services Department to fund the reopening of the Cave Creek water reclamation plant, increasing wastewater treatment and water purification capacity.

Public comment at the hearing stressed public safety and urged the council to prioritize the new revenues for the fire department. Chris Murphy, identifying himself as a Phoenix resident and a Phoenix firefighter, said many fire units are operating at high activity levels and that response times have grown. "71% of our trucks are running at critical activity levels of over 3,000 calls per year, and response times have ballooned to nearly 9 minutes, which puts lives at risk," Murphy said. He criticized Councilman Waring for voting against the TPT increase and urged voters in that district to consider leadership that backs public-safety funding.

Tim Kenobi, a District 3 resident who said he works at Fire Station 27, thanked the council for supporting the TPT increase and urged adoption of the proposed budget to continue adding resources. Anne Ender, president of Operation Blue Ribbon, also urged the council to "please prioritize this" by earmarking TPT proceeds directly to the fire department.

City staff repeatedly framed the trial budget as a balancing exercise aimed at offsetting state revenue losses, protecting existing services and setting aside contingencies to stabilize future budgets. The city presentation also emphasized that the general fund supports core services paid for by sales and property taxes, while enterprise and special revenue funds are used for utility operations and voter-designated projects.

The city will compile public comments from hearings across neighborhoods and present those to the council before the May 21 vote. No final adoption occurred at the hearing; the March 18 council vote on the TPT rate change is recorded as an earlier council action.