It appears city officials are mentally preparing to tighten their belts. Maricopa revenue is expected to plateau while state-shared and intergovernmental revenues will continue dropping for the upcoming fiscal year, according to numbers previewed in a Budget and Finance Council Subcommittee meeting yesterday.

“In the past, we were used to very exponential growth as a city. Now, we’re seeing more of a flattening, or plateauing of some of those revenue sources because of a lot of changes at the legislative level,” said Chief Financial Officer and Deputy City Manager Matt Kozlowski.

And while the city previously saw money pour in from licensing, fees and permits, it’s slowing to a trickle since fiscal year 2024. They expect to see $15.9 million from licensing, fees and permits, a $90,000 reduction in revenue from fiscal year 2025, and $6.6 million less than the previous year.

The revenue generated from local sales tax appears to grow to $43.8 million from $38.2 million, about $5 million of that would come from the proposed half-cent sales tax for the newly dubbed Commuting Corridors Sales Tax Fund. That’s contingent on the city council voting to approve the tax May 6.

The city is also expecting to see just $30.71 million from state-shared revenue, about $5.78 million less thanks to the new flat state income tax.

Expect lower property taxes

This comes at the same time the city confirmed plans to reduce property taxes for a seventh straight year.

The primary property tax is expected to drop from 3.64% to 3.48%, while secondary property tax will decrease from 0.69% to 0.59%. Property taxes are used to fund public safety expenditures.

Kozlowski said the reduction is one way to put money “back into residents’ pockets” while increasing sales tax, which would be invested into transportation.

“It’s just a way of moving the pieces around a little bit to take that overall tax burden and keep reducing it for the residents,” he said. Property tax is “a conservative way of making sure that a resident is protected and not paying too much in sales tax.”

It’s also a way to “spur more economic investment from businesses,” according to Kozlowski.

“The lower we take that percentage from a business perspective, the more attractive it is to invest in Maricopa. That creates jobs, that creates more opportunities for restaurants, that creates more opportunities for different types of retail stores to come to town,” he said.

However, Mayor Nancy Smith admitted during the meeting the city will eventually have to decide when to stop lowering property taxes.

“Considering how volatile it can be year to year, and what the state takes away in terms of revenue opportunity, at some point we have to seriously look at not reducing property tax,” she said.

So, what’s next?

Kozlowski and his team will present an updated version of the tentative budget for approval by the city council during its May 6 meeting — the same meeting where councilmembers will vote on the half-cent sales tax.

“People will see truly what these numbers are going to settle in at and what the budget looks like for the next year,” Kozlowski said.

Councilmembers will vote on a final version of the budget June 3, after which it will be available for the public to view online.