Does Oro Valley Really Need Three New Taxes?

Why some say approving three new taxes now may be premature
Yesterday we reported that town staff have asked the Oro Valley Town Council to consider approving three new taxes—a commercial rental tax, a telecommunications tax, and a use tax—that together are projected to generate between $930,000 and $1.88 million annually. 

Tonight, the council will consider approving these taxes.  While staff argue the taxes are needed to address long-term financial pressures, some believe approval may be premature based on what has and has not been analyzed to date.

Today, we present the alternative case for caution.

The projected funding gap is based on assumptions that may or may not come to fruition... alternative scenarios not considered
The current discussion was triggered by a long-range financial forecast presented last year that identified a potential structural funding gap beginning in fiscal year 2029–30. That forecast was based on a host of assumptions related to future spending growth, revenue trends, and service levels. Forecasts are widely used as planning tools, but they are not predictions. Some suggest that policy decisions with long-term consequences, such as new recurring taxes, should be informed by a range of alternative projection scenarios that explore different “what if” conditions.

Cost-control efforts are described but not fully documented...perhaps "reengineering" is needed
Town staff state that budget reductions have already occurred and will continue, and that reallocations within existing funds have been used to manage rising costs. However, the materials provided to Council do not document a zero-based budgeting review, a department-by-department operational analysis, or an independent efficiency or performance audit. Without this level of detail, some believe it is difficult to assess whether current services are being delivered as efficiently as possible or whether additional internal adjustments could be considered.

New revenue is proposed before structural changes are evaluated
The proposed taxes would create new, ongoing revenue streams. Once adopted, such taxes are rarely reduced or eliminated. Some argue that before committing to new permanent taxes, the Town could examine whether structural changes—such as staffing models, program scope, technology use, or service prioritization—might slow long-term cost growth or improve efficiency.

Business impacts are not fully explored
Two of the three proposed taxes—the commercial rental tax and the use tax—would primarily affect businesses, while the telecommunications tax would affect both residents and businesses. The staff materials do not include an economic impact analysis, a competitiveness review, or an evaluation of how the proposed taxes might influence business behavior over time. Some note that even relatively modest taxes can affect business location, expansion, and investment decisions, particularly when layered onto existing costs.

Alignment with other towns is context, not analysis
Staff note that neighboring communities already impose commercial rental, telecommunications, and use taxes, and that Oro Valley is an outlier in not doing so. While this comparison provides useful context, some believe alignment alone does not constitute a full justification. Communities differ in service expectations, cost structures, and fiscal strategies, and comparisons do not address whether Oro Valley has fully examined other available options.

Projected revenue generated is de minimus ... could be "covered" without any change in service levels
The amount of revenue projected from the proposed taxes is relatively small when viewed in the context of the Town’s overall budget, roughly $2 million within a $150 million budget. Some suggest this scale raises the question of whether improvements in operational efficiency or adjustments to non-essential spending could address the projected 2030 shortfall before new taxes are adopted.
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