Summary Sheet- RFCA SUMMARY

CITY OF TEMPE
Meeting Date: 5/14/2026  
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 a proposition for a new transaction privilege (sales) tax and use tax of five-
tenths of one percent (0.5%), except for the privilege (sales) tax on food for home consumption, with: 
1) three-tenths of one percent (0.3%) to be allocated 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;
2) one-tenth of one percent (0.1%) allocated for the improvement and operation of Tempe’s public 
transit system and multimodal projects, including pedestrian and bicycle infrastructure; and,
3) one-tenth of one percent (0.1%) to expand and strengthen Tempe PRE early care and preschool 
education and broaden access for income-eligible Tempe residents.
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 $160,000. 
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, the proposed federal income tax conformity measures and the 
incorporation of San Tan Valley. Collectively, these changes are estimated to result in approximately 
$25.7 million in annual revenue losses. In the General Fund, the annual revenue loss is estimated at 
$18.1 million, 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 
maintaining 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 
establishing a new transaction privilege (sales) tax and use tax of five-tenths of one percent (0.5%), 
except for the privilege (sales) tax on food for home consumption, with three-tenths of one percent 
(0.3%) to enhance community 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; one-tenth of one percent (0.1%) increase for the improvement and operation of 
Tempe’s public transit system and multimodal projects, including pedestrian and bicycle infrastructure; 
and one-tenth of one percent (0.1%) increase to expand and strengthen Tempe PRE as a high-quality,

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early care and preschool education program, and to broaden access for income-eligible Tempe 
residents.
If approved by voters, the 0.3% allocated to public safety is projected to generate approximately $30.3 
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 
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.
If approved by voters, the 0.1% allocated to transit 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, including 
pedestrian and bicycle infrastructure.
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.
If approved by voters, the 0.1% allocated to Tempe PRE early care and preschool education is projected 
to generate approximately $10.1 million in annual local funding. This investment will expand and 
strengthen Tempe PRE by offsetting the cost of high-quality early care and preschool for Tempe families 
with demonstrated financial need. 
The proposed funding will be used to expand access and improve quality across Tempe’s early care 
and education system. Key investments include increasing the availability of Tempe PRE early care and 
preschool slots for income-eligible children and supporting a mixed delivery system that includes school 
district partners and community-based providers. Funds will also provide scholarships to ensure 
equitable access to high-quality early care and education. 
Additionally, funding will strengthen developmental, school readiness, and early literacy outcomes for 
young children, while enhancing overall program quality, workforce support, and family engagement to 
ensure long-term impact for children and families across Tempe. 
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

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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 proposition will be presented to voters in accordance with a structured timeline. Public 
outreach will be held from June 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.
This proposal aims to stabilize revenues, protect essential services, and support investments in a safe, 
connected, and resilient community. If the proposition is 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 30, 2026 Regular Council Meeting, the City Council directed staff to move forward with the 
one proposition, 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.
ATTACHMENTS:    
1. CALL OF 11-03-2026 SPECIAL ELECTION RESOLUTION_5-14-2026.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