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Tucson managers outline $21M operating gap; council weighs pawn fees, utility tax and hotel/STR changes
Summary
City staff briefed council on a projected operating deficit and presented five revenue options including higher pawn‑shop transaction fees, a half‑percent utility tax increase, and new/higher hotel and short‑term rental taxes; council delayed the advertising tax and provided feedback on equity and sequencing.
City budget officials told Mayor and Council on Dec. 16 that Tucson faces a structural shortfall driven by declining local receipts and a $40 million annual reduction in state shared income‑tax revenue linked to the state flat‑tax implementation. Assistant City Manager Anna Rosenberry said the city had identified roughly $34 million in current‑year reductions and reallocated spending but still projects an operating deficit of about $21 million for FY26.
To help close gaps and sustain core services — including public safety, 911/311 operations and…
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