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City projects FY26 revenue shortfall and proposes $24M in near‑term spending reductions
Summary
City finance staff reported first‑quarter general fund revenues ~1.5% below prior year and modeled a low‑revenue scenario that produces a projected FY26 deficit; staff proposed nearly $24M in immediate spending reductions (hiring freezes, project delays, fee adjustments) and said an additional ~$10M may be needed if revenues do not improve.
Anna Rosenberry, assistant city manager and chief financial officer, briefed council on first‑quarter fiscal performance and a stress scenario for FY26. Rosenberry said general fund collections for July–September were roughly 1.5% lower than the prior year and below the adopted budget growth assumption, prompting a re‑projection exercise.
Staff presented a package of proposed spending adjustments that could reduce FY26 outlays by nearly $24,000,000. Measures included hiring freezes ("frosts"), delaying a computer‑aided dispatch replacement (net savings of roughly $6.3M if delayed one year), trimming training and overtime budgets, tightening event subsidies at the Tucson Convention Center and potential winter seasonal pool adjustments. Staff emphasized the list focused on lower‑impact community items initially but noted bigger structural changes may be required if revenues do not recover.
Under the low revenue projection, staff estimated an operating deficit of about $25,400,000 and noted the city would need to consider another ~$10,000,000 in reductions to avoid depleting policy reserves. Council members discussed particular items — pools, event subsidies, procurement reform and timing for public engagement on budget priorities. The manager said monthly revenue and expenditure updates would continue and a robust midyear review is expected in January.
What’s next: staff will continue monitoring revenue collections, advance the described spending adjustments for council consideration and return with additional recommendations and public engagement on the FY26 budget.
