Tucson approves $2.2 billion spending cap for next fiscal year

The budget for the 2023-2024 fiscal year, which begins July 1, allocates millions of dollars to key city initiatives like public safety, transportation and basic services while continuing to spend more than $231 million. dollars in an investment plan for city programs.

After the draft budget is approved on Tuesday, the spending cap cannot be increased, but funding can be shifted to different areas. The board is due to adopt the final budget for the next fiscal year at its June 6 meeting.

The budget includes $66.5 million over the next fiscal year as part of the $231.6 five-year capital plan the city launched with last year’s budget. The plan places city funding above its necessary reserve levels and invests one-time dollars in key areas. The three most funded areas under this year’s capital plan are public safety with $35.4 million, the collector streets program with $8 million, and information technology with about $5 million. $2 million.

Several speakers at Tuesday’s budget hearing expressed concern that the city is not devoting enough resources to the new Climate Action Plan board members adopted in March. The draft budget provides approximately $1 million for the first year of the plan for projects such as quantifying fugitive emissions, creating an energy consumption baseline study, and greenhouse gas emissions inventory. Greenhouse. The city is also using US bailout funding to hire two climate resilience positions to help implement the plan.

Tanish Doshi, a member of the Arizona Youth Climate Coalition, told council members as he enjoyed engaging with the city in the years leading up to the climate plan, “without the necessary resources…we don’t we cannot succeed”.

Mayor Regina Romero said, “I feel completely comfortable with the direction we’re headed,” as the city hires a lead and co-lead to begin implementing the program over the next exercise. She said the city needs to “be very aggressive” in cracking down on federal Inflation Reduction Act dollars being spent on climate resilience efforts.

But potential financial problems on the horizon have created “structural imbalances” in the coming years of the investment plan, largely due to the pending implementation of Arizona’s flat tax rate in in the 2023 tax year, which could cause Tucson to lose $27 million in funds each year, according to early estimates from the Arizona Center for Economic Progress.

State income tax will increase to 2.5% for all taxpayers and replace the progressive income-based tax rate structure. Tucson will lose a significant portion of state-shared income tax funding, which is 12% of its general fund revenue.

To ease the transition, the state is increasing the proportion of state-shared income tax distributed to cities and towns from 15% to 18%, which the Tucson projects will generate an additional $24.3 million than the previous share rate, but is considered one-time funding as the city anticipates a net reduction in future years as the money lost from the progressive tax structure overcomes the slight increase from the 3% increase in share the state.

The loss of funding the city has historically relied on has caused planned spending to rise above revenue, resulting in an estimated $18 million shortfall in the capital plan as of the fiscal year. 2024-2025. City Manager Michael Ortega said “we’re going to have to look at some changes to our expense lines or else there may be an increase in revenue” to make up the shortfall, but pointed out the dollars are only about $2 % of overall budget.

The initial ideas are to reduce the expenses of the investment plan and to use the savings made on the vacancies.

“(State-shared income tax cuts) have a very direct and real impact on our budgeting for years to come,” Ortega said. “I’m not concerned about our ability to cut the budget by 2% and achieve structural balance, but I wanted to point that out so that people don’t think ‘Oh, well, it happened to the legislature , but it doesn’t ‘have an impact on us here locally.’”

As part of next year’s budget, about $14.8 million will go to 5% raises for line and commissioned police officers and 3% raises for all other city employees.

The city council last raised staff salaries in November, with an overall salary increase of 2% and 7% for commissioned police officers. Prior to that, the city invested approximately $30 million in May 2021 to bring salaries for Tucson employees up to par with other similar government jobs statewide.

The difference this time, Ortega said, is that the increases come with consolidating the 550 individual job classifications with varying pay scales into 24 pay grades, a process the city is spending $1.1 million to implement. work.

Ortega said the move is the city’s “market hold” to ensure its pay rates are competitive with similar employers in the area. But Tucson continues to struggle with hiring and retention, consistent with a national trend of localities across the country struggling with shaky employment bases. In Mach, the city’s vacancy rate across all counties was around 12%.

In addition to salary increases, Ortega said new human resources department director Suzette Yaezenko is “really pushing the envelope in terms of how do we go out and make sure people know the city of Tucson is a great place to work and a great place to build a career.

One of the main efforts of this year’s budget plan, Ortega sent to the board, is strengthening internal services to “ensure the organization is in the best position to serve our community,” largely by strengthening efforts in departments such as human resources, business services and information technology.

When the 2008 recession hit, departments that provide key services such as contracting, budgeting and cybersecurity were reduced, but “as the city became able to expand programming and external services , internal services have not been proportionately developed to support them,” Ortega wrote in the memo.

“These are core services that all other departments rely on, and so we can’t provide citywide services if we can’t perform those functions well,” said Chief Financial Officer Anna Rosenberry. “We realize that we need to focus on strengthening these teams so that we can support the entire organization.”

Some of the efforts to bolster departments include $750,000 to increase awareness of cybersecurity risks and provide support for software users in the city. Human Resources will use $500,000 to add staff to its classification and compensation efforts. The city also plans to allocate staff and funds to reduce the backlog of permit applications and code enforcement tasks.