Phoenix is facing significant budget shortfalls — roughly $200 million over the next two years. A combination of factors could lead to cuts in public services and programs.
Starting Jan. 1, state law will ban Phoenix from collecting sales tax on residential rents. The city’s also getting less money due to the state’s move to a flat income tax.
“It will be an all hands on deck project because we have a lot of turbulent times ahead,” said City Manager Jeff Barton.
“These upcoming deficits are very real and the cuts necessary to keep the budgets balanced will impact every citizen's access to public facilities and services such as parks, libraries and swimming pools. It most definitely will impact our public safety and increase response times that we continue to grapple with,” said Councilwoman Ann O’Brien.
Since creating the Office of Homeless Solutions two years ago, Phoenix has invested millions in shelter beds and services. Budget Director Amber Williamson told council members the funding — tied to federal COVID-19 relief through the American Rescue Plan Act — is expiring.
“Resources will have to be identified if it’s the council’s decision to continue those homelessness programs,” she said. “It’s $15 million next year, which is a partial year. The ongoing annual need is $27 million starting in ‘26-’27.”
City departments are reviewing potential budget cuts. The city manager will present a trial budget to the council in March and gather community feedback in April.
“I remember as department head I had to do that too, and it's not pretty,” said Vice Mayor Debra Stark who used to oversee Phoenix’s Planning and Development Department. “I am very concerned, though, that we have lost a significant amount of money because of the state. So I hope they understand as we move forward, as do other cities and towns, we have the difficult task of trying to help our constituents with the services they deserve.”
