Phoenix unveils FY 2025–26 trial budget, cites state revenue losses and proposes TPT increase to plug gaps

City of Phoenix officials on Wednesday presented a trial budget for fiscal year 2025–26 that responds to sharp state-driven revenue losses and outlines steps to protect public safety, homelessness services and water infrastructure.

Laurie Baze, assistant city manager for the city of Phoenix, told attendees the city is facing “a $39,000,000 shortfall, largely due to actions taken by the state legislature,” and that projected losses from the state ban on residential rental sales tax will total an estimated $285,000,000 over three years. The trial budget aims to close gaps through a combination of previously approved tax changes, departmental reductions and planned bond issuances.

The trial budget matters because it sets the proposed spending plan the city will refine before the City Council’s formal vote. The administration said the plan seeks to avoid deep cuts to core services, protect public safety staffing and maintain homelessness shelter and relief operations while planning capital investments.

Officials and staff described the revenue pressures driving the plan. Baze said the state changed the income tax…