Tucson to lean on voters, uncertain federal grants in new roadwork funding plan

An early strategy to fund Move Tucson shows the money needed to address the city’s transportation needs is far from secured, with a large chunk of it relying on uncertain federal grants and upcoming voter decisions.

Move Tucson is a 20-year-long transportation master plan that was approved by officials last year. The plan outlines projects ranging from street repaving to transit system upgrades, and carries a price tag of $13.1 billion — or a third of the city’s budget over the next two decades.

It was intended only to show what Tucson needed, not what could be realistically accomplished, however.

Officials instead set a smaller goal to raise transportation funds by $128 million annually, which is enough to complete some top-priority projects but still represents a 50% increase from the current funding level.

City Manager Michael Ortega presented options to meet that funding goal during Tuesday’s city council meeting, where it was made clear that Move Tucson will live or die depending on how residents vote at the ballot box in the near future.

Still, even if voters choose to fund the master plan, the city will need to find and secure at least $100 million in extra grant money to reach its goal over the next 20 years — something that’s far from a sure thing.

“We know what we want, we know what we need, now we have to start talking about how to fund this,” Mayor Regina Romero said. “We need to get ourselves ready because once we have a plan in hand, a vision in hand, then we need to start working steadily into funding that vision.”

Funding sources

Among the more dependable funding sources in Ortega’s strategy is the Highway User Revenue Fund. The program uses money collected by the state, such as vehicle registration fees or license taxes, to pay for road work in cities and towns across Arizona.

Tucson has already received about $6 million in HURF funds during each of the past two years. That amount is expected to jump up to $11 million annually after 2023, creating some extra money for Move Tucson.

The City Council also pulled $14 million from Tucson’s general fund to put toward road repair recently, something that has not been done historically because money for road work has come mainly through sales tax revenue or grant funds.

Ortega expects the city to continue spending general fund money on road work for at least the next five years, though it may extend beyond that if it’s still an affordable option.

The two new funding sources will only create a combined $19 million in extra funds each year — just a drop, however, in the $128 million bucket that needs to be filled if the city hopes to reach its Move Tucson goal.

“The fact that this mayor and council is able to invest general fund money and have focused that as a priority is huge,” Ortega said. “But unfortunately, even though where I come from $14 million is a lot of money, that’s not going to cut it. That’s not going to get it to the point where we can address the needs that were identified in Move Tucson.”

Voters’ role

One of the largest funding sources for Move Tucson, Proposition 101, has funded road work through a half-cent sales tax since 2017. It’s up for voter renewal in May, but there are many uncertainties surrounding what exactly the updated initiative will look like.

For the past five years, Prop. 101 funds have been divided into two spending categories: 60% went to resources for Tucson’s public safety departments and the other 40% went to street maintenance.

It’s not clear if it will be split the same way this time around. If it is, only $10 million in extra roadway funding would be generated each year.

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On the other hand, it could create more than $50 million in new transportation funds annually if it all goes to road work — about 40% of what’s needed to reach the Move Tucson goal — though it would also cut funding for public safety vehicles, equipment and facilities by about two-thirds.

The other Prop. 101 uncertainty is whether it will even be a half-cent tax. City officials need to decide this month whether to increase it to a full penny, but that will depend on what happens with another funding source — the Regional Transportation Authority.

The RTA has funded projects across Pima County using its own half-cent tax since it was approved by voters in 2006. Since then, it has provided over $30 million for Tucson’s projects each year, and it could be up for voter renewal as early as 2024.

Tucson has threatened to leave the RTA by Feb. 1 unless its complaints are addressed, including a governance structure that the city said disenfranchises Tucsonans and a large funding gap that is threatening the completion of Tucson’s RTA projects.

“We need the folks at the RTA to understand that we’re not going to bluff on this,” Councilman Paul Cunningham said. “We need to be really clear to the RTA that, if we have to go this alone, we will if we don’t get some of the things we need.”

The RTA disputes that the funding gap is its responsibility, and city officials said negotiations with other RTA members have “not been fruitful.” There’s also only one RTA meeting left until Tucson’s withdrawal deadline, making it appear unlikely that a deal will be reached in time.

The full-cent Prop. 101 tax is Tucson’s backup plan. It would cover the lost RTA money and could generate over 70% of the extra funds needed for Move Tucson, depending on whether Prop. 101 is used to fund road work exclusively.

City officials have to sort out those details by Feb. 1 in order to get Prop. 101 on the ballot. What they decide, and how residents vote on the initiative, could impact the quality of Tucson’s roads for decades.

“We’re less than a month now from our Feb. 1 line in the sand, and we have a Prop. 101 election called for May,” Councilman Steve Kozachik said about the pressing decision. “We haven’t had any real substantive public discussions about Prop. 101 and what that looks like.”

City short by millions

Regardless of what form Prop. 101 takes and whether Tucson remains in the RTA, the city will still be short of meeting its annual funding target. The yearly shortfall could be in the tens of millions.

The gap will have to be filled with money from unspecified federal grants — and there’s no guarantee Tucson will win those awards, how many grants will be available in the next 20 years or if it will be enough to cover the gap.

City officials are confident they have a good shot at winning some extra funds through the federal Bipartisan Infrastructure Plan, a $1 trillion federal bill that dedicates billions to transportation projects across the country.

Mayor Romero was invited to the White House for the bill’s signing last month, suggesting Tucson may be a shoo-in to receive a piece of that money in the near future.

“Tucson is poised to compete well for these additional infrastructure funds,” Ortega wrote in his memo. “We are organizing our approach to ensure the highest likelihood of success.”

As of now, it’s unclear how much Tucson could receive through the infrastructure plan or any other grant opportunities the city will depend on to fund its transportation projects.

City staff are expected to provide more details on the currently ambiguous “federal and competitive grant programs” piece of the Move Tucson funding strategy as those “conversations evolve.”