Phoenix budget shortfall on horizon according to City Manager

Phoenix received nearly $400 million for COVID-19 related costs and economic recovery. The City Council recently approved using another $15 million in ARPA funds to continue funding various shelters and services through June 2025.

City Manager Jeff Barton is warning Phoenix’s overall expenses are going up while revenue is going down.

Despite the extra federal dollars, Phoenix could face a budget shortfall this year. The state changed the way it distributes income tax to cities, and Phoenix will get $36 million less in the fiscal year that begins July 1.

In 2025, cities will no longer be allowed to collect tax on residential rents, a ban Barton estimates will total $83 to $85 million annually.

What are the next steps?

“On March 19, when I bring the city managers trial budget back, I am going to request that my council allow me to put $80 million in reserve so that it gives me at least a little bit of a glide path as I try to balance (years) 25, 26,” said Barton.

He also explained the importance of either cutting cost or increasing revenues in order to maintain his proposed budget and services residents have now.