The town of Guadalupe sits in between Tempe and Phoenix, with the Interstate 10 in between.
It has just over 5,000 residents, very few businesses and a long and proud history connected to the Pascua Yaqui Tribe of Mexico.
But now, it’s facing a major budget deficit that could be hard to fill.
Maritza Dominguez is a reporter for the Arizona Republic who covers the East Valley. She came to KJZZ's studios to talk about what's happening in Guadalupe, including how big this deficit is.
Full conversation
MARITZA DOMINGUEZ: So, it was originally $1.5 million coming into this year, looking at their expenditures. Um, on June 25, the council approved their final budget for this coming up fiscal year. They ended up cutting about $90,000, bringing down that deficit to 1.4.
LAUREN GILGER: OK, so they made some cuts at the Town Council level, but they kind of balked at this idea that they should make deeper cuts, right?
MARITZA DOMINGUEZ: Right. So, at a previous council meeting, the council and the mayor pretty much said, “This is not the year to make those deep cuts.” The town manager had suggested about half a million cuts. That would not get them to where they need to be, but it would definitely have been a more substantial cut.
The council said, you know, “This is not the year,” because they were potentially looking at bringing their employees down to a 32 workweek, potentially closing Town Hall on Fridays, or making a way where they would keep Town Hall open Monday through Friday, but still only have staff be at a 32 workweek, eliminating some contracted services or cutting it in half, such as building inspectors, planning. And they — the council — felt as though they need the staff levels to sort of find new revenue sources. They are suggesting potentially bringing back the property tax vote next year that failed earlier this year in May.
LAUREN GILGER: Right, voters there rejected it, said, “We don’t want a property tax.” But they are saying, “We need this,” right, at the Town Council level to make up for this deficit.
MARITZA DOMINGUEZ: Right, but it would have only raised about $300,000.
LAUREN GILGER: So not a — not enough.
MARITZA DOMINGUEZ: Not enough, but, you know, the mayor had mentioned that this would have been a revenue source to continue programs like the senior centers, to not have the general fund sort of subsidized, because grant funding that the town has received has been lowering every single year.
A part of the cuts made at the council meeting is including the Community Action Plan. Most cities have this program. It’s a program that provides utility assistance or rental assistance, also provides food boxes for community members. That will be cut with this budget decision that they made on June 25.
LAUREN GILGER: OK, so there are some cuts coming, but not enough to fill the gap. Back up for a moment, Maritza, and just tell us how we got here. Like, there have been a lot of city budgets impacted by federal and state decisions of late. This is part of that, it sounds like.
MARITZA DOMINGUEZ: It is part of it, but it is also something that has been looming for Guadalupe for many years. So, the current town manager started raising the alarms back in 2018, telling them, “We will at some point, we are spending more than we are generating,” right. He had started the process then, and then COVID-19 happened.
And so, a lot of the COVID relief funds that the town received, they were able to use that to fund the programs that were eligible for it, like the Community Action Plan, like the senior center. They were able to use it to pay for their firefighters. Um, and so whatever they were not spending from the general fund, they were banking it into their reserves.
LAUREN GILGER: Right.
MARITZA DOMINGUEZ: So, at the end of COVID-19, they came out with a balance, a general fund balance or reserve of about $6 million.
LAUREN GILGER: OK.
MARITZA DOMINGUEZ: But they were still spending more from their expenditures more than their revenues. So, they were drawing out funds every year from their reserve balance. And now they’re at the point where by fiscal year 2029, their reserve balance will have been drawn out and will be empty and they will not have the ability to subsidize their general fund with their reserves.
LAUREN GILGER: OK, so not a great situation financially for the town going forward. You talked to some financial experts about this, and what they had to say I found very interesting because one of them literally said, and I’m quoting here, “It’s not clear to me that Guadalupe makes sense from the outside as a fiscal matter.” What did this expert mean by that?
MARITZA DOMINGUEZ: They are — they are such a small town, you know, they’re less than a square mile, they’re landlocked. They are largely a residential community. You know, it’s very common in Arizona that our cities are not funded by property taxes. Um, but cities like Mesa, Gilbert, other East Valley cities, they have large commercial districts that are going to raise quite a bit of sales tax funds.
That’s not what’s happening in Guadalupe, and so for him, it did not make sense to him why Guadalupe did not have a property, a primary property tax to sort of pay into the general fund.
LAUREN GILGER: Right, like almost where else are they going to get any funding.
MARITZA DOMINGUEZ: Correct.
LAUREN GILGER: Right. OK, so let’s just pause for a moment and talk about Guadalupe, because it’s a very unique place, a very small place. And one of the things that these experts told you is essentially that, you know, if they continue on this path, they will cease to exist.
And that would be, I’m sure, devastating for the people in Guadalupe, because they have really fought for five decades to be their own community. They incorporated 50 years ago to preserve their very unique culture.
MARITZA DOMINGUEZ: Correct. Yeah, you know, Guadalupe used to be a county island. 1975, they voted, and narrowly passed the incorporation. Um, you know, they secured their borders because they wanted to secure their heritage, their culture, their sense of living. Their residents are overwhelmingly Latino, a lot of Pascua Yaqui tribe members who fled, you know, persecution, um, in the early 1900s from Mexico.
LAUREN GILGER: Yeah.
MARITZA DOMINGUEZ: But, you know, from what I’ve heard of community members that I’ve spoken to, they are really prideful in their culture, in their community, and they want to find ways to to remain. To the point where could they be incorporated by another town? No one is um, seriously speaking about um, any sort of incorporation into Tempe. There’s also they would most likely have to disincorporate before there could be any serious um, talk about incorporating into another city.
LAUREN GILGER: Which would be a tricky and probably a difficult thing for a lot of the folks there. So, let’s just talk lastly then, Maritza, about the long-term or even relatively short-term possibilities here. Like, how long can Guadalupe continue like this? Is bankruptcy an option for them?
MARITZA DOMINGUEZ: From what I’ve heard experts say, bankruptcy likely wouldn’t make sense for Guadalupe. Guadalupe does not have serious debt, they have not gone out for a general bond since the 1990s, I believe, and bankruptcy is largely used as reform of debt. What Guadalupe has is a structural issue within their budget.
Now, I’ve heard talk of receivership. Looking into state law, receivership does not look like an option for um, a municipality. Could Guadalupe and state legislators that represent Guadalupe attempt to change state law? That is a big question mark, and that is something that could potentially be something to look down the line if they were serious about taking that. And an appointed receiver would come in and make the cuts for the council. One expert said that means that your politics aren’t working if you put in a receiver.
LAUREN GILGER: Interesting. All right, so unclear future for this town at this moment. Lots of really interesting reporting there from Maritza Dominguez, reporter for the Arizona Republic. She covers the East Valley. Maritza, thank you very much for coming in, I appreciate it.
MARITZA DOMINGUEZ: Thank you so much.
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