Council Weights New Taxes and Increased Fees As Residents and Businesses Voice Mixed Reactions

Staff outlines proposal to broaden Town revenues
At its October 1 study session, the Oro Valley Town Council heard staff’s proposal to raise additional revenue through a mix of new taxes and fee adjustments. The proposed changes include a use tax, a telecommunications tax, and a commercial rental tax, along with updated stormwater and parks-and-recreation fees. Town of Oro Valley Finance Director David Gephart said the goal is to “maintain service levels” while giving the Town a more stable and diversified financial base.

Gephart says diversification is essential for long-term stability
Gephart told the Council that Oro Valley’s reliance on sales tax revenue makes its finances more vulnerable to downturns in retail spending. “When one sector slows, another can help balance it out,” he said. He explained that adding other revenue streams would reduce that risk and “help smooth the ups and downs” in future budgets. He noted that many Arizona cities already rely on a broader mix of revenues to maintain consistent service levels across economic cycles.

Diversifying revenue sources reduces risk
Gephart also described diversification as a form of risk management, consistent with guidance from the League of Arizona Cities and Towns. The League advises that municipalities dependent on a single tax source — such as retail sales — are more exposed to market fluctuations and changes in consumer behavior. “The League encourages all cities to strengthen financial resilience by broadening their tax base,” Gephart said, adding that the proposed mix of new taxes would bring Oro Valley’s structure more in line with peer communities.

Council weighs timing and public trust issues
In addition to the issues we presented yesterday regarding trust in the Town staff’s future financial projections and the concern that the Town must demonstrate it is operating at the most efficient level, Councilmembers also voiced concern about when to implement new taxes and fees. Several said that timing could be as important as the amounts proposed. 

• The use tax, for example, might make sense for long-term fairness — ensuring that online and out-of-town purchases contribute equally — but some questioned whether residents were ready to accept a new tax of any kind. 
• The telecommunications tax drew similar hesitation, with members noting that most households already face rising costs for digital and streaming services. 
• The commercial rental tax prompted the greatest concern because of its potential to affect local business recovery, especially as retail occupancy continues to rebuild at the Marketplace and elsewhere. 
• Fee increases were viewed somewhat differently. Several Councilmembers said they could support updates to stormwater and parks-and-recreation fees since those directly fund the services they affect, but only after a clear explanation to residents of what improvements those fees would support. 

Overall, the Council’s message was that both the timing and the justification for each proposal must be transparent before any vote occurs.

Residents and business owners express mixed reactions
Four speakers addressed the Council during public comment. Resident Bill Carson said he understood the need for reliable revenue but urged staff to focus first on controlling costs. “We all have to tighten our belts — so should the Town,” he said. Local business owner Sarah Lopez, who operates at Oro Valley Marketplace, cautioned that a commercial rental tax could slow efforts to fill vacant retail spaces. “We’re still trying to bring tenants back,” she said. “Adding another tax won’t help that.”

Support for service-based fees
Others supported adjustments tied directly to Town services. Resident David Hoffman said updating stormwater fees “makes sense because those systems protect every home during monsoon season.” Recreation user Lisa Torres agreed, saying, “If higher fees mean better fields and safer facilities, I think most users would understand that.” Both speakers thanked the Council for discussing the proposals in public before making any decisions.

Next steps
Staff will return to the Council on October 15 with refined estimates and recommendations. The proposed taxes and fee changes would require formal adoption by vote, and residents will have another opportunity to comment before any implementation.

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