Oro Valley weighs new taxes, fee hikes to close budget gap

Oro Valley leaders are weighing new taxes and fee increases to address a looming $1.15 million budget shortfall over the next five years, as rising road maintenance and public safety costs threaten the town’s current level of services.

The taxes discussed during the Town Council’s Oct. 1 meeting were a new use tax, a commercial rental tax and a telecommunications tax, each at 2.5%. These taxes are in place in municipalities including Tucson, Marana and Sahuarita, but not in Oro Valley.

A use tax would establish a tax on any purchase of goods on which no sales tax is applied and would apply almost exclusively to businesses. A commercial rental tax would apply to landlords of commercial offices and storage facilities, and a telecommunications tax would apply to wireless communication service providers operating in the town.

“If the town council desires to keep the same level of service, especially as it relates to road maintenance moving forward, then additional revenues must be considered,” said Chief Financial Officer David Gephart.

Gephart said the town has saved $3.7 million in anticipated spending since fiscal year 2023 thanks to “belt-tightening measures,” but said the cost of maintaining its 430 lane-miles of roads has increased 107% since then.

Without additional revenue, road maintenance and public safety measures will be at risk, Gephart said.

Costs would likely be passed onto the consumer with these taxes, but Gephart believes that when the cost is spread out among a large number of customers, the increase per individual would be small. He added that a decline in road quality and public safety would be worse for town businesses than new taxes.

The town previously attempted a public outreach campaign, hosting three virtual meetings for residents to provide feedback and a forum for local businesses.

Business owner Jeffery Lared addressed the council at the meeting, saying that traffic is down across businesses and they fight for every dollar they can get. He said that with inflation and tariffs increasing his costs, he’s concerned about further strain from additional taxes.

The council also discussed increasing parks and recreation fees. The Oro Valley Parks and Recreation Advisory Board had voted unanimously to raise the fees, most of which have not changed in more than 10 years.

Advisory board Vice Chair Matt Wood added that the proposed fee increases are not excessive and that the goal was simply to provide a good return on the town’s investment.

They also plan to increase the stormwater utility fee over the course of three years. Town officials say the existing rate doesn’t meet the fundamental expenses associated with stormwater management, specifically capital improvement and infrastructure maintenance and repair projects.

The Stormwater Utility Commission unanimously supports a one-time rate increase from $4.50 per Equivalent Residential Unit to $6.50.

The council will revisit the tax and fee increases at a future meeting.

Mayor Joe Winfield suggested divesting the responsibility of maintaining roads within subdivisions, saying that subdivision roads are historically private and thus repairs should be paid for by the communities, even though several subdivisions have their roads maintained by the town.

“It’s an interesting concept, and I would love to look into it,” said Paul Kesler, the town’s director of public works.

Ian Stash is a journalism major at the University of Arizona and Tucson Spotlight intern. Contact him at istash@arizona.edu.

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