The following is the opinion and analysis of the writer:
Tim Thomure
Ballots are coming out for the Proposition 414: Safe & Vibrant City Special Election. Tucson voters are being asked to consider a new half-cent transaction privilege tax (sales tax) for the next ten years to fund services across five investment areas to improve the quality of life in Tucson. As City Manager, I feel it is my responsibility to provide factual information about Prop 414 so voters have clarity when making their decision. To this end, I share this information to debunk three myths that are circulating about Prop 414.
Myth No. 1: Since the City has a $2.4B annual budget, surely, they can “find” $80M to fund the Prop 414 needs without a new tax.
While it is true that the City’s total annual budget is approximately $2.4B, the simple fact is that most of the City’s revenues are restricted and can be expended only for certain purposes. Examples include Tucson Water rates and fees, garbage collection and recycling fees, state and federal grants, highway user revenue funds, and other voter-approved programs (Prop 407 and Prop 411).
Once we account for the restricted revenues, we are left with the portion of the City budget that is “discretionary,” the general fund. This fund represents about $750M of the overall annual budget. While that is a lot of money, it’s less than 32% of the annual $2.4B budget, and it’s the only part of the budget that can be used for costs like those that are proposed to be funded under Prop 414.
About two-thirds of the general fund is already allocated to providing Police, Fire, 9-1-1, and Housing services. The remainder is budgeted for core City-Charter services, such as Parks, and other necessary functions like maintaining City facilities. There is very little flexibility to meet the needs expressed in Prop 414.
Myth No. 2: The City is proposing Prop 414 because it does not manage its finances well.
The City’s financial management and creditworthiness are evaluated and monitored by three bond ratings agencies: S&P Global, Fitch Ratings, and Moody’s, and they don’t mess around. Their ratings influence billions of dollars of private investment, and their reputation and success are highly dependent on the accuracy of their assessments.
Over the past 10 years, City bond ratings have steadily improved, even during the pandemic. Fitch Ratings assigned the highest possible rating of AAA to the City’s bond sale this past fall and all the City’s recent ratings, from the three agencies, have been AA or higher. Simply put, these private-sector companies, who have tremendous expertise and experience in evaluating cities like Tucson, literally put their names on the line to assure investors that Tucson is a well-run city.
Myth No. 3: There are other funding options.
Some say the city has alternative funding mechanisms available to meet the needs of Prop 414 — but they don’t identify any. A look at the city’s other funding sources shows there are no real alternatives.
The city currently receives federal funding for specific housing and public safety programs, but not enough to address the areas identified in Prop 414. The new federal administration has acted to freeze or even eliminate this funding. We certainly cannot count on any new or increased federal funding for local needs.
State-level funding has also been depleted by the Legislature’s implementation of the flat income tax. This action reduced this revenue source by tens of millions of dollars, so we cannot count on the state to help.
An option often cited is to consider raising city property taxes instead of a sales tax. State law and the City Charter prohibit that. So, what does that leave? It leaves only the option of a voter-approved, dedicated local sales tax for funding specifically authorized programs and expenditures.
Finally, it is worth understanding what this sales tax would mean to Tucsonans. It would mean that when you buy something at retail — not groceries or rent (the largest monthly costs for many families) — you would pay an additional 50 cents on a $100 purchase and over the next 10 years, an estimated $800 million would be invested in our community.
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