
The Oro Valley Town Council met October 15 to continue its study session on three proposed taxes — a use tax, a telecommunications tax, and a commercial rental tax. These taxes are already collected by Tucson, Marana, and Sahuarita. Town staff said they would help maintain services as costs rise and state-shared revenues flatten. We have reported on the council's four previous discussions of this item.
Estimated annual revenue impact of up to $2 million
Finance Director David Gephart said the three taxes could generate between $930,000 and $1.9 million annually:
Finance Director David Gephart said the three taxes could generate between $930,000 and $1.9 million annually:
- Use tax: $375,000 to $600,000
- Telecommunications tax: $130,000 to $280,000
- Commercial rental tax: $425,000 to $1,000,000
Staff would like to see funds dedicated for capital spending
If adopted, staff recommends that revenue from the new taxes be earmarked by Council for capital projects such as the newly acquired Police Department building, which currently lack a dedicated funding source. Final money dedication would require Council action (ordinance, fund setup, or budget transfer). Otherwise the funds can be used for any town operating or capital need. Council has not taken a position on this.
Businesses say new taxes would hurt competitiveness
Oro Valley Chamber of Commerce President Kristen Sharp told the Council that the commercial rental tax would make it harder for local businesses to remain competitive when operating costs in Oro Valley are already higher than in surrounding areas. She said businesses are “operating on tight margins” and warned that higher costs could discourage new tenants or drive existing ones away.
Commercial real estate broker Robert Tomlinson presented data showing Oro Valley’s retail vacancy rate at 12.8%, more than double the Tucson-area average of 5.9%. He said the new tax could further weaken the retail sector and increase vacant space.
Move would diversify Oro Valley's revenue stream
Joyce Garland, a 25-year Oro Valley resident and former Chief Financial Officer for Tucson, supported adopting all three taxes. She said state-shared revenues are declining because Oro Valley’s population is growing by less than one percent a year while new cities, such as San Tan Valley, are being incorporated. That means Oro Valley’s share of the statewide revenue “pie” continues to shrink.
Garland said a broader mix of local revenues would give the Town flexibility and protect services from future shortfalls. The Budget and Finance Commission, which she chairs, voted September 16 to recommend approval of the proposals.
Implementation of taxes would not happen until July of 2026 if they are approved by council
Gephart he will bring implementation proposals back for another study session before any vote. He explained that the Arizona Department of Revenue recently changed its reporting process for municipal tax code updates, and Oro Valley is the first community to use it. Because of that, there are questions about timing and notification requirements that must be resolved before moving forward. He said staff may recommend a phased implementation beginning in July 2026.
Council weighs fairness and economic impacts
Councilmember Robb said she supports the use tax because it applies broadly and fairly but remains undecided about the other two. Vice Mayor Barrett questioned whether the rental tax would truly harm competitiveness, noting that neighboring towns already have similar taxes. Councilmember Nicolson said that because most Oro Valley commercial centers are owned by large, out-of-state corporations. These are landlords who are unlikely to pass the added cost on to their tenants — many of whom are small, locally owned businesses. He explained that these are landlords operate under corporate financial models that prioritize maintaining profit margins, leaving little flexibility to adjust lease terms or absorb new costs locally.
Next step: Yet another study session
No formal action was taken. The Council will revisit the issue at a future study session before deciding whether to notify affected businesses and schedule a vote.
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