TUCSON, Ariz. (KGUN) — As the 2025 fiscal year winds down, Tucson city leaders are finalizing the FY2026 budget.
At a Tuesday night council meeting, Tucson's Mayor and Council opened the floor up to the audience for the first public hearing on the FY26 budget.
Many Tucsonans stepped up to the podium asking about what the city is choosing to fund or not fund. A group people in the hospitality industry decided to talk about how the city will get this funding instead. They focused on the city's lodging taxes.
When you rent a hotel or motel room in Tucson, you're paying for more than just your room and board. Like many other cities across the United States, hotels in Tucson are subject to a hotel/motel surcharge.
Since 2022, that tax has been 12.05% of the entire stay with an extra $4 charge per room per night.
6.05% goes to Pima County while the remaining 6% and the $4 charge go to the city of Tucson.
That money goes into the city's general fund, paying for core functions for police, fire, parks or courts.
Revenues for the general fund have been declining over the past few years due to a cut in funding from state income tax. In their April 22 study session, leaders briefly floated the idea of adding to the hotel/motel taxes to bring more revenue into the general fund.
People in the industry who spoke at the May 6 meeting, like J D Butler of the Arizona Lodging and Tourism Association, say that the surcharge could be bad for business.
Hospitality is a booming industry in Arizona. In 2023, the Arizona Office of Tourism said visitors spent a "record breaking" $3.5 billion in Pima County.
That same year, the city of Tucson recorded that the money made from the hotel/motel surcharge made up 1.9% of general fund revenues.
For the FY26 budget, the city estimates they'll make around $19 million from the tax.
However, Butler says the bump in pricing could cause a drop in bookings.
“When visitors are coming, their economic impact goes far beyond the hotel room they’re paying for," he said. "It’s our restaurants, it’s the stores and it's the local attractions.”
Tucson Mayor and Council are scheduled to adopt the final FY26 budget June 3.
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Alex Dowd is a multimedia journalist at KGUN 9, where her work combines her two favorite hobbies: talking to new people and learning about the community around her. Her goal is to eventually meet every single person in Tucson. Share your story ideas with Alex via email, alex.dowd@kgun9.com, or connecting on Instagram or X.
