Phoenix unveils trial FY2025–26 budget; council earlier approved sales-tax rise to shore up services
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Summary
City staff presented the proposed fiscal year 2025–26 trial budget at a community hearing, outlining revenue pressures from state changes, a council-approved rise in the transaction privilege tax, and proposed spending for fire response, homelessness services and water infrastructure.
The City of Phoenix held a community budget hearing to present its proposed fiscal year 2025–26 trial budget and explain next steps for council consideration.
City staff said the trial budget responds to recent state actions that reduced local revenue and lists a mix of strategies to maintain services, including a transaction privilege tax increase the City Council approved on March 18 to help close the gap. "This important document is now ready for everyone to look at. Your voice matters," said the City of Phoenix budget video during the hearing.
The trial budget document described three broad fund types: the general fund (for libraries, parks, police and fire), enterprise funds (for water, the airport and solid waste) and special revenue funds (for grant- or voter-directed programs). City staff said the budget includes proposals to increase fire-department staffing and apparatus to reduce emergency response times; an estimated $4.5 million in general-fund support for the Office of Homeless Solutions in 2025–26 to back shelter operations and heat-relief services; and a $6,000,000 addition in non‑general-fund resources for the Water Services Department, including reopening the Cape Creek water reclamation plant.
City leaders described the fiscal challenge as partly driven by state policy changes they said reduced local revenue. The trial budget document noted that the state eliminated cities’ ability to collect residential rental sales tax and reduced individual income-tax rates, lowering ongoing revenue available to the city. To offset those losses, the City Council voted March 18 to raise the transaction privilege tax rate from 2.3% to 2.8%, effective July 1, 2025, and the trial budget proposes reprioritizing general-fund spending, setting aside reserves and using excise-tax proceeds to finance large public-safety capital projects including two new fire stations and associated apparatus.
Council and staff emphasized the process and timeline: the trial budget will be presented to the full City Council on May 6, the council is scheduled to vote on the budget on May 21, legal adoption is scheduled in June, and the property-tax-levy ordinance would follow in early July.
City staff encouraged community comment during the hearing and on the city website; staff said public input at hearings will be considered before final council votes.
Ending: The trial budget lays out proposed program and capital priorities and a path for council action; staff and council members said public feedback collected at this hearing will be part of the record before votes set in May and adoption steps later this summer.