Phoenix presents FY 2025–26 trial budget, cites tax increase to cover state revenue losses

The City of Phoenix on Wednesday presented its fiscal year 2025–26 trial budget at a Sunnyslope Community Center hearing, outlining a package of reprioritized spending and a recently approved tax increase the city says is needed to replace revenue lost to state actions.

City Manager Jeff Barton summarized the budget process and the city’s fiscal pressures, saying the state’s elimination of the residential rental sales tax and reductions in individual income tax rates have reduced ongoing revenue and that staff have proposed a combination of revenue and reprioritization to keep the budget balanced. "This important document is now ready for everyone to look at," Barton said during a prerecorded presentation shown at the hearing.

The presentation noted that on March 18 the City Council voted to raise the transaction privilege tax (TPT) rate from 2.3% to 2.8%, effective July 1, 2025, to generate revenue for programs and services. The city also plans to present a manager’s revised budget to the council on May 6 and to take council action on May 21, with legal adoption of the budget expected in June and the property tax levy ordinance to follow in early July.

Why it matters: The trial budget links multi‑million‑dollar proposals to both immediate service priorities and longer‑term fiscal buffers. Officials described the TPT increase and spending shifts as measures intended to preserve services amid lower state revenue and rising costs.

Key proposed allocations and priorities outlined at the hearing included:

- Fire response: The trial budget would fund additional firefighters, apparatus and two new fire stations to reduce response times. Firefighter Chris Murphy, a 32‑year Phoenix Fire Department veteran, spoke in support of the investments, saying stretched resources have increased response times "from 5 minutes to 9 minutes" and that "every second counts" in emergencies.

- Homelessness operations: The manager’s presentation included a proposal for $4,500,000 in general‑fund resources for the Office of Homeless Solutions for FY2025–26 to replace pandemic‑era federal funding that is ending. The presentation said those funds would support shelters including Rio Fresco, the Phoenix Navigation Center and the Washington Shelter and heat‑relief efforts for unsheltered residents.

- Water services: The draft non‑general fund budget proposes a $5,600,000 addition for the Water Services Department to support reopening the Cave Creek Water Reclamation Plant and expand wastewater treatment and water purification capacity.

- Use of excise tax: The trial budget would direct excise tax proceeds toward large public safety capital and infrastructure projects including two new fire stations and associated apparatus.

Public comment reflected support for safety and environmental investments and raised concerns about other priorities.

- Environmental and transit priorities: Sunnyslope resident Masavi Perea, who identified as a member of Chispa Arizona, urged spending on racial justice and equity through environmental investments and improved transportation. "This $10,000,000 is an opportunity for us to push for a free and electric public transit system," Perea said, and urged more trees, cooler streets and walkable corridors.

- Neighborhood services and graffiti: Longtime neighborhood volunteer Ginny Ann Sumner thanked the city for a 24/7 park ranger phone number and for neighborhood programs, and urged continued funding for the Graffiti Busters volunteer program. Sumner cited program statistics from 2024—about 10,000 gallons of paint used and more than 48,500 graffiti sites cleaned—and opposed additional contracts with Community Bridges, recommending increased use of Neighborhood Services Department staff, Phoenix Cares neighborhood specialists and Office of Homeless Solutions liaisons instead.

- Timing and government growth concerns: A resident identified as Andrei criticized the timing of the council’s tax vote before community input and asked the city to address growth in "general government" spending. Andrei said between 2016 and 2024 general government spending increased by roughly $150 million and that contractor services rose by about 222% in that period, and he asked the city to explain that growth before raising taxes.

Other public comments included a request for an update on two previously approved medical resource (MR) units for the fire department and calls for increased legal aid and street repairs during evictions.

Councilwoman Deborah Stark opened the hearing and emphasized the role of public input in shaping the budget, saying, "Your comments really are important, and I will tell you, they do make a difference." City staff and council members asked residents to submit speaker cards or written comments; the manager’s revised budget will be presented to the council on May 6 and finalized later in May and June.

Ending: The trial budget sets the framework for formal council decisions this spring. The council’s March 18 TPT vote is already in place; the manager’s revised budget presentation on May 6 and the May 21 council action are the next steps in the formal adoption process.