TUCSON, Ariz. (KGUN) — Downtown Tucson is a much livelier place thanks to Rio Nuevo’s work as a downtown development district. But Rio Nuevo could shut down in June with new projects incomplete. Republican lawmakers have decided to cut Rio Nuevo out of the state budget.
A vacant lot in the heart of Tucson’s downtown is full of potential but there is also the potential that all of that could not happen because the Rio Nuevo downtown development district is at risk in the state budget.
Plans for the lot at 75 E. Broadway include Tucson Inn and Marketplace with retail space topped off by a hotel.
Incentives and backing from Rio Nuevo attracted a developer willing to build the project. Since the state took over Rio Nuevo 14 years ago, the development district has helped transform and wake up downtown with more hotels, restaurants and retail.
When Rio Nuevo incentives help turn a vacant lot or an empty building into an active business that brings in more sales tax. Rio Nuevo takes a share of the increased tax money, and plows it back into new development that brings in still more sales tax.
But state lawmakers are cutting Rio Nuevo from the state budget by removing the 19 million dollars earmarked for the district.
Rio Nuevo Chair Fletcher McCusker says Rio Nuevo doesn’t cost money—it makes money…
“It's not money that's been appropriated to us. It's our portion of the sales tax that we create; and 10 years ago, that amount was zero. It's now approaching $60 million a year.”
“I think if it's Tucson making the money, then that Tucson can pick up the payments.”
Republican State Senator John Kavanaugh leads the Senate appropriations committee. That means he swings a lot of weight with the state budget.
Senator Kavanaugh says the budget’s tight. He says Republican leaders are cutting all agencies five percent except for public safety and as part of the cuts, what he describes as the Rio Nuevo subsidy is going away.
The Senator says economic development like Rio Nuevo is good.
“The question is, who should fund it? And you know, to the people all over the state fund a development district in Tucson, and did it for a long time, but now we need the money, so we've decided to terminate that.”
Fletcher McCusker hopes Governor Hobbs will negotiate the budget and convince lawmakers killing Rio Nuevo is a bad deal for the state.
“They would lose all the future tax. That's the misunderstanding. I think we're trying to attribute this to a huge misunderstanding terminating us now the state would lose 10s of millions, hundreds of millions of dollars of future tax.”
McCusker says there’s no alternative if Rio Nuevo is cut, so many projects would just stop.
