Tempe City Council Work Study Session – April 28, 2026

The Tempe City Council held a work study session on April 28, 2026, beginning at approximately 5:02 PM (after a late start due to technical issues with Microsoft Teams audio). The meeting included two proclamations, public comment, a detailed budget review session focused on long‑term financial stability, and updates from council subcommittees. Key topics were proposed sales tax increases to offset permanent revenue losses from state legislative actions, with council consensus to forward the proposals to the April 30 formal meeting for a call of election.

Proclamations

• Neurodiagnostic Week (April 19–25, 2026): Mayor Corey Woods read the proclamation recognizing neurodiagnostic technologists for their role in diagnosing and treating neurological conditions. Representatives Thammarie and Anna accepted.
• Week of the Young Child (April 11–17, 2026): The proclamation highlighted early childhood education and the 55th anniversary of the event. Lisa from First Things First accepted.

Public Comments & Testimony

• Kelsey Files (Tempe resident): Spoke on proposed transit tax increase (0.1%) and called for prior engagement with the Transportation Commission. He expressed full support for expanding the transit tax but urged the council to brief the commission before the April 30 vote. The mayor confirmed that the city manager had already arranged a meeting with the commission chair.

Discussion Items

Fiscal Year 2026‑27 Budget Review Session

Presented by Deputy City Manager/CFO Lissette Camacho and Municipal Budget Director Robert Baer.

• Capital Improvement Program (CIP): Recommended CIP is $6.5 million higher than the March 23 proposal due to reappropriation for the water utility building asset management project. Overall FY 2026‑27 CIP is 18% lower than the current adopted budget.
• Operating Budget: Recommended FY26‑27 operating budget is 2% higher than FY25‑26, driven by compensation increases, Valley Metro transit costs, and new positions for the Novus fire station. Non‑cost‑neutral supplemental requests were limited.
• Long‑term Financial Stability Strategies:
  • Revenue losses from state actions: Approximately $14.4 million (general fund), $6 million (transit fund), and $1.3 million (arts & culture fund) annually, plus $2.4 million from federal income tax conformity and $1.6 million from Santan Valley incorporation.
  • Proposal 1: A 0.4% local sales tax dedicated to public safety (police, fire, park rangers) – estimated $40.3 million annually. This would be placed before voters as a dedicated fund, not commingled with the general fund.
  • Proposal 2: A 0.1% increase in the existing transit tax – estimated $10.1 million annually – to fund streetcar expansion, pedestrian/bicycle improvements, and continued transit operations.
  • No change to the food tax (remains at 1.8%).
  • If both approved, Tempe’s total sales tax rate would rise from 1.8% to 2.3% (additional $0.50 per $100 spent).
• Proactive steps taken: Second consecutive year with no new budget additions; mid‑year 10% budget reductions in Q4 FY25 saved $12.4 million across general, transit, and arts & culture funds; procurement secured $2.5 million in savings on security contracts and $300,000 annually on software; $8 million in vacancy savings budgeted for FY27.
• Timeline: Council consensus sought to move forward; call of election on April 30, public outreach August–October, election day November 3, new rates effective January 1, 2027.

Council Questions and Deliberation

• Councilmember Hodge: Asked why the tax is permanent rather than sunsetting; staff explained the revenue loss is permanent (state preemption of rental tax) and cannot be recovered through economic growth.
• Councilmember Keating: Asked about fund balance policy (20–30% of revenues) and whether a dedicated public safety tax would stabilize funding; staff confirmed the proposed 0.4% tax is dedicated. Keating also queried alternative revenue sources (bed tax, secondary property tax) – staff explained those are either restricted by law or already used. Keating noted the proposed tax appears to exceed the shortfall; staff clarified the $40 million is for public safety needs, not solely the $18 million deficit. Keating questioned whether a 60% voter approval is required; city attorney confirmed only a simple majority is needed.
• Councilmember Chin: Clarified the deficit ($25–26 million total) is from state/federal actions beyond city control. She asked what cuts would be necessary without new revenue – staff replied reductions would fall on public safety and other core services, which residents consistently rank as top priorities.
• Councilmember Amberg: Supported sales tax as the correct approach because it captures spending from the 200,000 daily non‑resident workers. He questioned the 0.4% rate and whether the 0.1% transit tax for one‑time projects (pedestrian bridge) should be funded by bonds rather than ongoing tax; staff explained ongoing operating and maintenance costs (e.g., $10 million annually for streetcar operations) require permanent revenue.
• Councilmember Adams: Expressed reluctance to raise taxes but acknowledged the city’s hands are tied by state actions; asked for deeper cuts before raising taxes.
• Vice Mayor Garland: Noted the city already cut $12.4 million in services and froze positions before the rental tax loss hit. She emphasized public safety and human services need stable funding given population growth. She asked for better engagement with boards and commissions on transportation issues.
• Mayor Woods: Recalled past service reductions (e.g., bulk trash pickup) that caused public backlash. He highlighted a 21% reduction in violent crime in Tempe and warned that cutting police/fire would reverse progress. He supported the proposal but asked staff to explore a voluntary buyout/early retirement program (staff agreed to examine cost and feasibility).
• Councilmember Adams (second round): Expressed support for including park rangers in the public safety tax and inquired about using AI to reduce costs; staff confirmed AI initiatives are underway but require IT security approval.

Committee of the Whole / Subcommittee Updates

• Animal Welfare & Cruelty: No update; awaiting contract negotiations.
• Community Engagement & Connection: Next meeting May 21 at 4 PM at Tempe Library.
• Drink Spiking Education & Prevention: Focus groups ongoing; a testing kit vendor offered a possible donation.
• Federal & State Advocacy Review: Met once; next meeting April 27 at 11 AM.
• Mixed‑Use Space: Next meeting May 7 at 2 PM.
• Motorized & Electric Mobility Devices: Third meeting held with Bird and Lime; field view was informative; new ordinance expected.
• Revitalization of Tempe Town Lake: Heard from Holly Street and Diggs Studios; next meeting likely in June after survey results.
• Tempe Term Limits Policy Review: No update.

Key Outcomes

• Council consensus (unanimous, all seven members present) to direct staff to prepare the resolution for the April 30 formal meeting (call of election) with the current proposals: 0.4% public safety sales tax and 0.1% transit tax increase. No formal vote was taken at this work session; the April 30 meeting will include a vote to place the measures on the November 3, 2026 ballot.
• Council requested staff to examine a potential retirement buyout program as one element of cost savings, with a report back at a later date.
• The transit tax proposal will be briefed to the Transportation Commission before the April 30 meeting (city manager confirmed a meeting is scheduled).
• Staff will present a consolidation of financial policies (including fund balance policy changes for ambulance and water/wastewater funds) for adoption at the June 25, 2026 council meeting.

Meeting adjourned at 6:33 PM.