Town has identified and council has considered three new taxes to cover possible future spending shortfall
In March, Oro Valley Finance Director David Gephart presented a five-year forecast of the Town’s General Fund showing that expenses are projected to exceed revenues beginning in fiscal year 2029–30. The General Fund—one of the Town’s many funds—supports day-to-day operations, capital spending, and transfers to other funds. In response to the projected financial shortfall, Town staff identified several ways to close the gap. These included implementing three new taxes already in place in nearby communities: a commercial rental tax, a use tax, and a telecommunications tax. Together, these taxes, along with long-overdue fee increases for parks and recreation programs, would close the roughly $3 million funding gap identified in the forecast. The Council
approved the Parks and Recreation fee increase in October. As
reported last week, the Council is expected to vote on them at its next meeting.
New taxes are not a "silver bullet" but are part of a set of actions to insure financial sustainability
Though much has been said by town staff in favor of the proposed new taxes, these taxes are not a “silver bullet” for ensuring Oro Valley’s long-term financial sustainability. According to Mayor Joe Winfield, speaking at the October 15 study session on the new taxes, “We’re looking at this as one of many tools,” he said, emphasizing that the Town must continue to pursue multiple strategies to strengthen its financial position rather than relying on any single measure. Winfield pointed to the Town’s strategic refinancing of its public safety pension debt—which has saved about $3.4 million—as an example of responsible financial management. He also cited other ongoing efforts to improve fiscal sustainability, including pursuing annexation of retail rich areas, working to reduce retail sales leakage, and supporting population growth through approved housing projects now under construction. Winfield said that all these actions together—not any single one—will help build a stronger financial foundation for the Town.
While town focuses on maintaining efficient operationsWinfield also stressed that the real solution also lies in maintaining an efficient municipal government and practicing disciplined budgeting. Finance Director David Gephart believes that the Town is running a “tight ship.” He emphasized that Oro Valley has been proactive in managing expenses and maintaining fiscal discipline. Gephart outlined several ongoing efforts to control spending, including limiting staff growth, consolidating positions where possible, and delaying or reprioritizing capital projects that are not immediately necessary. The Town is also using technology to improve efficiency, reducing reliance on outside consultants, and closely monitoring contracts and operating costs. He noted that departments have been asked to identify savings and that the Town continues to maintain healthy reserves without relying on short-term borrowing. Gephart said these measures have allowed Oro Valley to preserve high service levels even as costs increase and revenues grow more slowly, demonstrating that the Town is already “doing more with less” while continuing to strengthen its long-term financial position.
Impact of new taxes on businesses and tenants remains uncertain
Town staff said they do not believe the proposed new taxes would place a significant burden on residents or the business community. The only direct impact on residents would be a small increase in their cell phone bills. Regarding the commercial rental tax, Finance Director David Gephart said the effect on tenants would depend on lease terms and market conditions—some landlords might absorb part of the cost to stay competitive, while others would likely pass it through to tenants. Councilmember Nicolson initially disagreed, noting that most Oro Valley commercial centers are owned by large, out-of-state corporations that operate under strict financial models and are therefore unlikely to absorb new costs. Later in the meeting, however, Nicolson pointed out that Oro Valley’s commercial vacancy rate—about 14 percent—represents an oversupply condition that could limit a landlord’s ability to raise rents, meaning some may have to absorb at least part of the additional expense themselves.
Council decision will shape Oro Valley’s long-term financial path
Soon, the Town Council will decide whether to move forward with all or some of the proposed new taxes. The decision will determine how Oro Valley balances its budget in the years ahead—whether through new revenue sources, continued cost control, or a combination of both. Whatever the outcome, the discussion has made clear that maintaining the Town’s long-term fiscal stability will require steady attention, discipline, and a mix of strategies rather than reliance on any single solution.
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