General Fund

Fiscal Year 2021/22

Overview

The General Fund is the main operating fund for the City of Tucson. The government’s activities are reported in General Fund, unless there is a compelling reason to report an activity in a different fund. Compelling reasons may include requirements for certain generally accepted accounting principles, specific legal circumstances, or financial administration.


The City of Tucson’s adopted General Fund revenues for Fiscal Year 2021/22 are $595.9 million, an increase of $63.5 million or 11.9% from the Fiscal Year 2020/21 adopted budget of $532.4 million. In addition to the current year revenue, the City expects to draw $52.7 million from its fund balance in Fiscal Year 2021/22, an increase of $19.4 million or 58.3% from the Fiscal Year 2020/21, primarily due to the reserve set aside of $41.0 million.

General Fund By Category FY2021/22


City Business Privilege (Sales) Tax

The Business Privilege Tax is a major source of revenue for the City and accounts for approximately 43.3% of the anticipated General Fund revenue. The Tucson City charter exempts food purchased for home consumption, but allows the taxation of food consumed in restaurants or carried out.


City Business Privilege Taxes are estimated to be $258.1 million, an increase of $12.3 million from the Fiscal Year 2020/21 projected year end revenues of $245.8 million.


The major revenue sources below comprise General Fund -

City Business Privilege (Sales) Tax Revenues FY2019/20 - FY2021/22

State Shared Revenues

Cities and towns in Arizona receive a portion of revenues collected by the State of Arizona. The allocations for these revenues are primarily based on U.S. Census population figures. These state-shared revenues represent 28.1% of the General Fund budget. Revenues from these sources may be used for any general government activity. For Fiscal Year 2021/22, the projected state-shared revenues are $167.5 million, representing a 1.6% decrease from the $170.3 million estimate for Fiscal Year 2020/21.


Public Utility Tax

The Tucson City charter authorizes a tax on the gross sales by public utilities and telecommunication providers operating without a franchise to consumers within the city limits. The tax is paid monthly on gross income with a provision allowing credit against the public utility tax for any franchise fees paid to the City. The public utility tax is in addition to the 2% city sales tax.


Under the terms of voter-approved franchises granted to Tucson Electric Power and Southwest Gas for use of public rights-of-way, the City collects 2.25% of the gross sales of electricity and 3.0% from the natural gas consumed within the city. The franchise fee payments received from Tucson Electric Power and Southwest Gas reduces their public utility tax. Monies received from public utility taxes and utility franchise fees may be used to pay any expense legally chargeable to the General Fund.


Adopted revenues from public utility taxes for Fiscal Year 2021/22 total $25.9 million, representing an increase of $0.4 million from the Fiscal Year 2020/21 estimated budget of $25.5 million.


Primary Property Tax

The City imposes a primary property tax on real and personal property located within the city limits. Revenues from the primary property tax can be used to pay any expense legally chargeable to the General Fund.


The Arizona State Constitution limits the amount of ad valorem taxes levied by a city to an amount not to exceed 2% greater than the maximum allowable levy in the preceding year. This levy limitation permits additional taxes to be levied on new or annexed property which may be taxed at the allowable rate computed for property taxed in the preceding year. Property annexed by November 1 will be taxable in the following year.


The primary property tax rate adopted by Mayor and Council is $0.4301 per $100 assessed value (up to the levy of $17,043,080) and the Involuntary Tort Judgment Primary Tax rate is $0.0129 per $100 assessed value (up to the levy of $513,010).


Public Utility Tax Revenues FY2019/20 - FY2021/22

State Shared Revenues FY2019/20 - FY2021/22

Primary Property Tax Revenues FY2019/20 - FY2021/22

Charges for Services

City departments may charge fees for a certain level of cost recovery. The Planning and Development Services Department charges fees for project planning, review, and zoning. The Fire Department charges fees for services provided for emergency medical transport and fire inspections. The Parks and Recreation Department has fees for recreational programs and classes. The Environmental and General Services Departmental charges other funds for vehicle servicing, building maintenance, and fuel usage.


The City charges an administrative fee to the Water and Environmental Services Enterprise Funds, as well as the Park Tucson and Highway User Revenue Funds (HURF). This charge covers the cost of General Fund central support services provided to the business-type activities of the City.



Charges for Services Revenues FY2019/20 - FY2021/22

Licenses and Permits

Licenses and permits revenues include revenue from franchise fees, licenses for various business activities, and permits for signs, alarms, and trash hauling.


For Fiscal Year 2021/22, the adopted licenses and permits revenues are $32.3 million, representing a slight increase from the $32.2 million Fiscal Year 2020/21 estimated.


Licenese and Permits Revenues FY2019/20 - FY2021/22

Fines and Forfeitures

This revenue is derived from fines for violations of State Statutes and the Tucson City Code, and from forfeitures collected by the Tucson Police Department and the City Attorney. Fines include driving under the influence and other criminal misdemeanors, along with civil traffic violations.


Fines and penalty revenues are accounted for in both the General Fund and the Special Revenue Funds. Forfeitures, which are accounted for in the General Fund, are restricted for specific law enforcement expenses.


The Adopted Fiscal Year 2021/22 revenues of $6.9 million are projected to slightly decrease from Fiscal Year 2020/21 estimated revenues of $7.2 million.

In Lieu of Taxes

Municipal-owned utilities are exempt from property taxes. In order to compensate the City for the lost property tax revenues, the City collects a payment in lieu of tax (PILOT) from Tucson Water Utility Fund for $2.0 million.

In Lieu of Taxes Revenues FY2019/20 - FY2021/22

Fines and Forfeitures Revenues FY2019/20 - FY2021/22

Other Financing Sources

Other Financing Sources is the category in which current financial resources are reported separately from standard operating revenues to avoid distorting revenue trends. For Fiscal Year 2021/22, other financial resources are use of fund balance.


The City receives certain funds which are subject to constraints either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or are imposed by law through constitutional provisions (i.e. state assessment fee, vehicle impoundment fee, special duty). If the City is unable to spend the restricted funds by fiscal year end, then the remaining funds increase the General Fund’s restricted fund balance. A department may plan to spend the restricted funds in the following fiscal years.