Summary Sheet- RFCA SUMMARY

CITY OF TEMPE
Meeting Date: 4/30/2026  
REQUEST FOR COUNCIL ACTION
Agenda Item: 8A1
ACTION:  Adopt a resolution ordering and calling a Special Election to be held in and for the City of 
Tempe, Arizona, in conjunction with the Statewide General Election on November 3, 2026, to submit to 
the qualified electors thereof:
1) a proposition for a new transaction privilege (sales) tax and use tax of four-tenths of one percent 
(0.4%), except for the privilege (sales) tax on food for home consumption, to enhance public 
safety and strengthen the overall security of Tempe’s parks and neighborhoods, including 
funding for essential public safety infrastructure, operations, and services for police; fire; 
emergency operations; safety and security programs; and crime prevention through 
environmental design; and
2) a proposition for a one-tenth of one percent (0.1%) increase of the transaction privilege (sales) 
tax and use tax designated for the improvement and operation of Tempe’s public transit system 
and multimodal projects (Transit Tax), except for the privilege (sales) tax on food for home 
consumption.
The City’s current tax rate, authorized by the voters, is 1.8% (1.2% General Fund, 0.5% Transit Tax, 
and 0.1% Arts & Culture Tax). (Resolution No. R2026.48)
FISCAL IMPACT:  The total cost of a November 3, 2026, Special Election is estimated at $250,000. 
Sufficient funds to cover the costs of the election have been allocated for fiscal year 2026/27, in cost 
center 1320, Elections/Legal.
RECOMMENDATION:  Adopt Resolution No. R2026.48.
 
BACKGROUND INFORMATION:  Recent legislative changes at the state and federal levels have 
significantly reduced revenues for cities and towns, including Tempe. Key impacts include the repeal of 
the residential rental tax in 2025 and the proposed federal income tax conformity measures. Collectively, 
these changes are estimated to result in approximately $18.1 million in annual revenue losses in the 
General Fund, with the largest impact stemming from the repeal of the residential rental tax ($14.4 
million). Additionally, the repeal of the residential rental tax resulted in approximately $6.0 million in 
annual revenue loss for the Transit Fund. These combined losses pose ongoing challenges to sustain 
service levels and underscore the importance of proactive financial planning and the identification of 
alternative revenue strategies.
To address ongoing revenue losses and ensure long-term financial stability, staff is proposing targeted 
revenue strategies focused on public safety. Staff is proposing establishing a new 0.4% local sales tax 
to enhance public safety and strengthen the overall security of Tempe’s parks, neighborhoods and public 
spaces. This measure aligns with the results of the 2025 Community and Business Surveys, which have 
historically ranked police and fire services, neighborhoods, traffic and street safety, and quality and 
safety of businesses and homes as the top priorities of our residents and businesses. If approved by 
voters, the new tax is projected to generate approximately $40.3 million in local funding annually, helping 
offset revenue reductions resulting from recent state legislative changes and providing a stable, 
dedicated source of revenue for essential public safety services and infrastructure.
Funds would be used to enhance public safety and quality of life by investing in police and fire services, 
park rangers, and critical public safety infrastructure, including facilities, vehicles, equipment, and

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technology. Additionally, the investment would improve emergency response capabilities, strengthen 
community and public safety programs, and support prevention initiatives to reduce crime and maintain 
safe, vibrant neighborhoods and public spaces.
On September 10, 1996, Tempe voters approved Proposition 400, which increased the city’s transaction 
privilege (sales) tax by five-tenths of a percent (0.5%) from 1.2% to 1.7%, with all additional revenue 
dedicated to improving and operating the public transit system. The proposal outlined a range of 
improvements, including expanded bus service, more frequent routes, improved accessibility features, 
better bus stops, and future rail connections. Tempe voters' approval of the proposition signaled strong 
community support for investing in more reliable, accessible, and sustainable transportation options 
across the city.
To address the ongoing revenue loss and ensure long-term financial stability in the Transit fund, staff is 
proposing a 0.1% increase to the Transit Tax. If approved by voters, the increase is projected to generate 
approximately $10.1 million in annual local transit funding. This additional revenue will help offset losses 
resulting from recent state-level decisions while providing critical support for transit and multimodal 
improvements.
The proposed funding will be used to improve and operate Tempe’s public transit system and to support 
multimodal projects that enhance mobility throughout Tempe. Key projects under consideration include 
improving regional connectivity through the streetcar expansion to Tempe Marketplace and Mesa, 
creating a safer, more seamless pedestrian and cyclist crossing over the east bank of Tempe Town 
Lake, and expanding safe, convenient options for biking and walking citywide. Additionally, funds will 
support the development of continuous multi-use paths that better connect neighborhoods to jobs and 
key destinations, as well as improvements to rider comfort, safety, and accessibility at transit stops.
The proposed sales tax strategy is designed to reflect Tempe’s economic activity while minimizing 
impacts on residents. Sales tax is a key revenue source that captures spending from visitors and non-
residents, helping to distribute the financial burden beyond the local population. Importantly, there is no 
proposed change to the food tax rate, recognizing the direct impact such costs have on residents. This 
approach considers current inflationary pressures and the rising cost of living, while avoiding additional 
burden on essential purchases. Overall, the proposal balances the need for additional revenue with a 
commitment to equity and affordability, ensuring that essential goods remain accessible while leveraging 
broader economic activity to support City services.
The proposed measures will be presented to voters in accordance with a structured timeline. Public 
outreach will be held from August through October. Early voting begins October 7, with Election Day on 
November 3. If approved by voters, the city will adopt the necessary ordinances by the end of the year, 
with new tax rates taking effect on January 1.
Together, these strategies aim to stabilize revenues, protect essential services, and support investments 
in a safe, connected, and resilient community. If both propositions are approved by voters, Tempe’s 
combined tax rate would increase from 1.8% to 2.3%. The potential impact on consumers is outlined 
below.
At the April 23, 2026, Budget Review Session, the City Council directed staff to move forward with the 
two propositions, as detailed in Exhibit A, Form of Official Ballot, to the attached Resolution.
If approved by voters, Tempe’s combined tax rate would increase from 1.8% to 2.3%, effective January 
1, 2027.

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ATTACHMENTS:    
1. CALL OF 11-03-2026 SPECIAL ELECTION RESOLUTION_4-30-2026 RCM.DOCX
STAFF CONTACT(S):  Lisette Camacho, Deputy City Manager - Chief Financial Officer, (480) 350-
8505
Department Director:  Lisette Camacho, Deputy City Manager - Chief Financial Officer  
Legal review by:  Eric Anderson, City Attorney
Prepared by:  Lisette Camacho, Deputy City Manager - Chief Financial Officer