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Tempe warns of tightened finances as sales and state revenues slow; staff recommends reserve drawdowns
Summary
City staff told council Feb. 24 that local sales tax and state shared revenues are below budget, outlined the impacts of recent state actions and proposed legislation, and recommended short‑term measures including pausing supplementals and drawing down pension and OPEB reserves while monitoring options.
Tempe City Council on Feb. 24 heard a long‑range financial forecast from Deputy City Manager Lisette Camacho and Interim Budget Director Julie Heider that showed weaker local sales tax and lower state shared revenues and recommended a set of budget balancing measures to protect the city's financial stability.
Camacho and Heider told council the city has seen a slowdown in local tax revenue beginning in fiscal 2024 Q3 and stressed that recent and potential state policy changes create material downside risk. Heider said the forecast directly aligns with the council’s strategic priority of financial stability and noted staff’s goal of maintaining the city’s high general obligation bond rating.
Staff highlighted two revenue risks: the enacted repeal of the…
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