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City manager presents balanced FY2026 budget with focus on general fund, employee pay
Summary
City Manager Tamir presented a recommended FY2026 budget focused on stabilizing the general fund amid state and federal revenue uncertainty and on advancing a multi-year employee compensation plan.
City Manager Tamir presented his recommended fiscal year 2026 budget to the mayor and council on April 22, laying out a $2.4 billion total budget while flagging the general fund as the area of greatest fiscal pressure.
Tamir told the council the recommended package is balanced for FY26 but comes amid substantial uncertainty: weakening sales- and state-shared income-tax receipts, potentially reduced federal competitive grants, and the aftereffects of the recently defeated or modified state tax policy. The city’s updated projection for the end of FY25 shows a $14 million net positive, down from an earlier $20 million estimate, and an available unrestricted cash balance of about $78.8 million going into FY26.
The recommended budget emphasizes employees. The package includes a $16.3 million increment in the general fund for employee investments for FY26 — part of a multi-year compensation plan that Tamir described as a top priority. The recommendation also includes in-range pay placement adjustments, pay progression for qualified employees, market adjustments for specific classifications and schedules for Tucson Fire and Tucson Police positions.
To buffer future volatility, the city manager proposes changing the general-fund policy reserve from a percent-of-revenues rule to a fixed $142 million “rainy day” reserve to be monitored annually by the mayor and council. Tamir also recommends $6.6 million of new revenue initiatives that the mayor and council could implement, including a public-utility tax, increased hotel-motel surcharge, park and recreation fee changes, an advertising tax and exploring naming rights for the Tucson Convention Center.
On expenditures, the recommendation contains $19.5 million in increases to base budgets and $12.5 million in one-time/carry-forward items; 25 new general-fund positions are proposed while 36 positions are proposed for elimination as part of net workforce rebalancing and forecast adjustments. The manager also suggested a partial pay‑ahead to the Public Safety Personnel Retirement System (PSPRS): rather than a previously discussed $15 million annual “overpayment” to lower the unfunded liability, Tamir recommends $7.6 million for FY26 with a plan to restore higher overpayments in later years.
Tamir emphasized hiring controls (“hiring frost”), daily revenue tracking, and vacancy-management savings as short-term actions. He also noted planned work on an analysis of online community survey results (4,300 responses) and scheduled follow-up hearings: May 6 study session, May 22 initial public hearing, and final adoption targeted for June 3, with final tax adoption on June 17.
Council members came prepared with questions about parking enterprise opportunities, impact of state flat-tax changes, Visit Tucson funding and jail-board costs. Several council members urged more work on long-term revenue options rather than recurring cuts. Tamir and CFO Anna Rosenberry answered detail questions about the general-fund portion (roughly $750 million without transfers) and assumptions behind state shared revenue forecasts.
