Phoenix presents FY2025–26 trial budget, cites state revenue losses and a TPT increase to balance books
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Summary
City staff previewed a trial budget that relies on a March council vote to raise the transaction privilege tax and allocates new money for fire staffing, homeless services and water infrastructure, officials and speakers said at a public hearing.
City staff presented a trial budget for fiscal year 2025–26 that relies on a recent decision to raise the city’s transaction privilege tax (TPT) and includes targeted funding for fire response, homeless services and a water-reclamation plant, officials said at a public budget hearing.
The trial budget, city staff said in a presentation played at the hearing, addresses “potential structural deficits” caused by recent state-level tax changes. The presentation said the City Council voted March 18 to increase the TPT rate from 2.3% to 2.8% effective July 1, 2025, to generate revenue for programs and services.
City Manager Inger and Councilwoman Hodge Washington stressed the importance of public input at the hearing. “The budget reflects our collective values, needs, and aspirations,” Councilwoman Hodge Washington said as the hearing opened.
Why it matters: City staff said state actions that removed the cities’ ability to collect certain taxes and cut income-tax rates have reduced ongoing revenue, creating the risk of structural deficits. The trial budget packages several strategies to preserve services and balance future years, including reprioritizing existing general-fund spending, setting aside reserves, using excise tax proceeds for public safety capital, and the TPT increase to generate new revenue.
Key allocations called out in the presentation include: - Homeless services: a proposed $4.5 million in general-fund resources for the Office of Homeless Solutions in 2025–26 to continue shelter operations at Rio Fresco, the Phoenix Navigation Center and the Washington Shelter and to support heat-relief efforts. - Water services: a proposed $5,600,000 addition to the non‑general fund budget to reopen the Cave Creek Water Reclamation Plant and expand wastewater treatment and purification capacity. - Public safety capital: use of excise-tax proceeds to finance two new fire stations and additional apparatus; the presentation also said the budget includes funding proposals to hire more firefighters to staff existing and new stations and to reduce emergency response times.
The presentation outlined the city’s timeline for adoption: staff will present the proposed budget to the City Council on May 6; the council will vote on the budget on May 20; legal adoption procedures are scheduled for June, with the property-tax-levy ordinance expected in early July.
Several council members urged residents to weigh in during the public comment process. “Your voice matters here today in this process,” Councilwoman Hodge Washington said. City staff also reminded attendees that budget materials were available online and in English and Spanish at the meeting.
Ending: The trial budget package combines short-term fixes and new revenues, city staff said, and the Council will consider public feedback before the May 20 vote. Public hearings and budget materials remain available online for residents who want to review or comment further.