Oro Valley staff outline proposed use, commercial rental and telecom taxes plus parks and stormwater fee increases

Town staff presented a suite of revenue and fee proposals at a study session Oct. 1, asking the Town Council to consider three new local tax categories and increases to parks-and-recreation and stormwater fees to address structural budget pressures and rising pavement-preservation and public-safety costs.

Paul Gephardt, the town’s chief financial officer, framed the proposals around the council’s strategic-plan goal to safeguard town finances. He told council the town faces a structural gap in which operating expenditures — driven largely by rising police costs and road-maintenance inflation — are outpacing revenue growth. "Without these proposals ... the maintenance is going to be a challenge," Gephardt said. He summarized the town’s financial position with several figures supplied during the presentation: general fund revenues about $56.6 million in FY25 and projected $61 million in FY26 after migration of a half-cent community-center sales tax to the general fund; recent reduction of the general fund reserve policy from 30% to 25%; and a baseline five-year fund-balance forecast that would decline substantially without new revenues.

Key staff proposals and figures - New tax categories: staff proposed adopting local use tax, commercial rental tax and telecommunications tax categories (rates proposed to mirror Oro Valley’s general sales tax rate of 2.5%). Staff said these categories exist in the code but currently have a zero rate. Gephardt showed that…