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Tempe projects revenue shortfalls; staff recommends drawing reserves and pausing supplementals
Summary
City staff reported slowing local tax revenues, outlined impacts from the repeal of the residential rental tax and potential food‑tax changes, and recommended using reserve drawdowns and pausing supplementals to balance the long‑range forecast.
City of Tempe staff told the council on Feb. 24 that local tax revenues have slowed and recommended several near‑term budget balancing strategies, including pausing recurring and one‑time supplementals and drawing on dedicated reserves for public safety pension and post‑employment health benefits.
Lisette Camacho, deputy city manager, and Julie Heider, interim budget director, presented the long‑range financial forecast and the staff recommendations to keep the general fund within fund‑balance policy to protect the city’s bond rating.
Heider said the elimination of the residential rental sales tax took effect Jan. 1, 2025. Staff estimated a roughly $10,000,000 revenue loss across three operating funds for the current fiscal year (half year), and an estimated $21,000,000 loss beginning in fiscal year 2026, distributed as about $14,000,000…
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