A $2.3 billion spending cap for Tucson’s 2024-25 fiscal year budget has been approved by the city council.
After approving the tentative budget on Tuesday, the spending cap can’t be increased, but funding can be shifted to different areas.
The council is set to adopt the final budget for the next fiscal year at its June 4 meeting.
The city budgeted for $2.2 billion in expenditures for fiscal year 2023-24, and expenses came in at about $2.03 billion. City staff expects spending to increase by about $140 million for next fiscal year, primarily due to a downturn in state-shared revenues. The city’s fiscal year runs from July 1 to June 30.
“We have been hit with unexpected revenue decreases in our General Fund that are projected to be large and to persist for multiple years,” city manager Michael Ortega said in his outlining the recommended budget.
People are also reading…
Due to the state flat tax going into effect in 2021, the city faces a budget shortfall “of at least” $80 million in 2026, “possibly more in 2027,” Mayor Regina Romero said during a meeting earlier this month.
While the 2024-25 budget is balanced, Ortega has said, that income tax cut will cause problems in future city budgets.
“This has required that we adjust our spending plans and change strategies for investing dollars within our community. But, because of the careful financial planning of the past, we have resources on hand that will help us weather these difficulties in the coming months.”
Employee raises
As part of last year’s budget, about $14.8 million went towards 5% raises for police officers and 3% raises for all other city employees. The city previously increased staff wages in November 2022, with a 2% across-the-board pay increase and 7% for commissioned police officers. Before that, the city invested about $30 million in May 2021 to bring Tucson employees’ salaries up to par with other similar government jobs across the state.
Another 3% increase to employee “wages, pension and benefits” were included in the city’s compensation plan, however Ortega is recommending a decision on when − and how − these wages are doled out should be delayed to either “December of this year or January of next year.”
The city estimates it will have about $142 million saved in reserve by July 1, Ortega told the council in April.
“That sounds like a lot of money,” he said then, “But keep in mind our payroll is about $17 million every two weeks.”
