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Phoenix releases proposed 2026–27 budget with $162.5 million surplus, highlights child care and homelessness funding
Summary
The city manager presented a balanced 2026–27 proposed budget that allocates a $162.5 million surplus to priorities including child care affordability, continued homelessness services, a housing trust fund and employee compensation; council will take its first vote May 19.
Phoenix’s city manager presented the proposed 2026–27 budget on May 5, outlining a $162.5 million surplus and a package of one-time and ongoing allocations aimed at housing, child care and public safety. The proposal schedules the council’s first budget decision for May 19, with tentative adoption June 3 and final adoption June 17.
The budget presentation, led by Aaron Mertz, the city’s budget and research director, described where general fund revenue comes from and how the city plans to spend it. Mertz said local sales taxes make up about 42% of general-fund revenue, state-shared revenues about 35% and primary property tax about 12%. He told the council the general-fund operating picture reflects post-pandemic adjustments, including the end of several federal stimulus streams.
“This budget preserves our homeless solutions work, expands child care supports and sets aside funds for employee compensation,” Mertz said during the presentation. The proposal recommends $50 million for the first year of newly negotiated labor agreements and a $75 million set-aside intended to help keep fiscal year 2027–28 balanced.
Key allocations in the city manager’s proposed budget include a one-time increase to the Flexible Emergency Financial Assistance program (now recommended at $3.15 million), a $5 million ongoing child care affordability set‑aside (with a portion to be used in 2026–27 for SNAP navigation), $18.4 million in ongoing funding to replace expiring federal homelessness support and a $6.6 million one-time infusion to the housing trust fund. The presentation also proposes position conversions and 69.9 FTE conversions that use existing departmental resources and do not require additional ongoing dollars.
Mertz said the proposed master‑lease pilot would create city-held master leases the city could sublease to households exiting shelters, a measure intended to increase shelter bed turnover and housing transitions. Several community‑serving programs, including parks openings, lighting upgrades and expanded youth programming, are also funded in the proposal.
The city manager and budget staff said full budget materials and responses to prior requests are posted on phoenix.gov. The proposal faces three formal council votes: a budget decision on May 19, tentative adoption June 3 and final adoption June 17; the property‑tax levy vote is set for July 1.
What happens next: Council members and staff used the May 5 meeting to seek clarifications about implementation details and to hear community priorities; several members urged staff to continue reviewing options for additional one‑time funding before the May 19 vote.
