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League warns state revenue shortfall will tighten local budgets, urges caution on bills that would limit city authority
Summary
The League of Arizona Cities and Towns told the Tri City Council on April 30 that a revised state revenue forecast and several pending bills could reduce local governments' budget flexibility and oversight of settlements, and urged local officials to engage with lawmakers.
Representatives from the League of Arizona Cities and Towns told the Tri City Council in Kingman on April 30 that a weaker state revenue forecast and several pending bills could reduce local budget flexibility and limit local authority.
The League said the Legislature's budget forecast dropped from about $615,000,000 in one-time surplus to roughly $303,000,000 under a new projection and that a possible national recession could push a fiscal 2027 shortfall as high as $1.8 billion. League officials also highlighted four bills and resolutions they oppose because of potential impacts on cities, towns and counties.
The budget outlook matters because much of local planning and projects depend on predictable state revenues and on the ability of local governments to set fees and settle claims without additional state review. “The bad news is that it’s all bad news,” said Renee Julian, League of Arizona Cities and Towns, summarizing the revised revenue forecast and its consequences.
League officials described the near-term budget environment as “hurry up and wait” after a short-lived bill moratorium tied to a funding impasse for the Division of Developmental Disabilities was resolved. The league emphasized that lingering uncertainty makes negotiations over the next fiscal year likelier to focus on where to allocate limited dollars rather than new spending.
The League flagged four measures of particular concern: House Bill 2221 (described as an "anti-defund-the-police" bill that was amended in the Senate and sent back to the House); House Bill 2222 (which would require certain settlement agreements and large contracts to be sent to the Legislature for review); Senate Concurrent Resolution 1008 (a proposed ballot measure that would require a supermajority for local tax, fee or assessment increases); and SCR 1014 (a TABOR-style measure that would tie future rate reductions to a surplus formula).
On HB 2221, League representatives said amendments in the Senate broadened statewide oversight language and prompted opposition from organizations including the Fraternal Order of Police; the League argued the bill addresses a problem that the League has not observed among municipalities. On HB 2222, the League said the proposal would require local settlements above a threshold (as discussed in testimony, $1,000,000) be sent to the Legislature for review, a change the League said would create significant workload and raise separation-of-powers concerns.
The League argued SCR 1008’s supermajority requirement could force routine local decisions — for example, modest fee increases or enterprise fund rate adjustments — into a more difficult, voter-driven process. On SCR 1014, the League noted that an automatic statutory formula to reduce state tax rates when a surplus threshold is reached could indirectly reduce urban revenue sharing and leave local governments with fewer tools to respond to downturns.
“We are opposed to all four of those measures,” Julian said. League staff encouraged Tri City mayors and staff to participate in League policy committees and to engage with legislators on amendments or veto requests.
The League offered to connect local officials with its policy committees and with League staff for follow-up; local officials were encouraged to track the bills as they move through the remaining legislative steps.
