Oro Valley Council weighs new business taxes to strengthen town services
At an October 15 study session, the Oro Valley Town Council once again heard community feedback and discussed a set of proposed business taxes that could help close the town’s growing budget gap. Town leaders say the move is part of a larger plan to maintain the high level of service and public safety that residents expect in Oro Valley, Arizona.
Chief Financial Officer Dave Gephart told the council that staff plans to return for a formal vote on November 5 to proceed with notification to local businesses about the intent to implement new taxes. The proposal would add three separate 2.5 percent taxes covering telecommunications, commercial space leases, and business use of equipment purchased outside jurisdictions that collect sales tax.
Town officials describe the move as a financial sustainability measure designed to address what they call a structural deficit, meaning future expenses are projected to exceed incoming revenue. Oro Valley’s existing 2.5 percent retail sales tax does not apply to groceries or gasoline, and many professional service providers such as medical and dental offices do not generate sales tax at all, even though they benefit from the town’s roads, safety services, and strong local economy.
Gephart told the council that Oro Valley’s aging demographic presents a challenge. “Because our residents and nearby communities skew older, there is a much higher use of medical and professional services in town,” he said. “Those services make significant income but generate little to no local sales tax. We receive revenue through utility taxes like water and electricity, but we get nothing from the services themselves.”
Under the proposed structure, the telecommunications, commercial lease, and use taxes combined could bring in between $930,000 and $1.88 million annually according to estimates from the town’s finance department. That money, staff argues, would help offset rising costs for essential services, maintenance, and infrastructure. Other southern Arizona communities such as Marana, Sahuarita, and Tucson already collect similar taxes.
The October 15 session was the second held this month on the subject. The first, on October 1, raised concerns from some councilmembers about whether the town should consider tapping reserves before imposing new taxes. Gephart responded that the town’s reserve funds are actively used for capital improvements such as roads, parks, and public facilities. “We are not sitting on the people’s money,” he said. “Our reserves are regularly deployed for projects that directly benefit residents.”
During the session, Mayor Joe Winfield and members of the council discussed the importance of balancing fiscal responsibility with fairness to local businesses. Winfield emphasized that the proposed taxes are only one piece of a broader plan. “These taxes are not a silver bullet,” he said. “Neither is belt tightening or bonding. We are combining multiple tools to strengthen our financial foundation.”
The mayor pointed to several factors helping stabilize the town’s finances, including the approval of roughly 900 new apartment units, the use of bonds to reduce long term police pension costs, and annexations of nearby commercial properties that expand the tax base. “It is about long term stability and ensuring Oro Valley can keep providing the services people rely on,” Winfield said.
Some local business owners have expressed concern that the timing could add pressure as costs for goods and services rise nationwide. Gephart acknowledged that challenge but noted that town operations face similar financial strain. “We’ve put this off as long as possible,” he said. “There’s never going to be a perfect time. We are at that rock and hard place moment where we must act to protect the community’s future.”
In recent public meetings, Oro Valley staff also shared background data showing rising infrastructure costs. Pavement maintenance alone has doubled in the last four years, climbing from $1.5 million to more than $3.1 million per year. The town says those costs are driven by inflation, aging roads, and higher materials prices. To avoid cutting back on core services, leaders are looking for modest, sustainable ways to add revenue while keeping Oro Valley competitive with neighboring towns.
Residents can view the town’s proposed tax information and provide comments through OroValleyAZ.gov. Community feedback will continue to play a central role in how council members shape the final version of the ordinance before it comes up for a vote in November.
Regional context
Nearby communities in Pima County have already adopted similar measures. Marana and Sahuarita levy commercial lease and telecommunications taxes at comparable rates, while Tucson applies business use and telecommunications taxes as part of its overall sales structure. Oro Valley staff say that matching those regional standards keeps the town from losing competitiveness while ensuring essential services are funded.
Why residents are watching closely
Oro Valley’s strong reputation for safe neighborhoods, well maintained parks, and reliable public infrastructure has been a point of civic pride for decades. The council’s deliberation over these proposed taxes reflects a desire to protect that quality of life even as costs climb. For many residents, the conversation has become a community wide discussion about the town’s identity and values: self sufficiency, fairness, and shared responsibility.
“This is not about adding burdens for the sake of it,” one resident commented during the public input session. “It’s about preserving what we already enjoy and ensuring the next generation has the same level of safety and service.”
Looking ahead
The upcoming November 5 meeting will determine whether the council authorizes notification to businesses and begins the process of enacting the new taxes. If approved, implementation could occur in early 2026. The town has committed to continued outreach and education to help business owners understand how the changes would apply and how revenues will be used to maintain roads, parks, and essential services.
For Oro Valley, this is a proactive step toward fiscal stability and future planning. By aligning with regional standards and keeping transparency at the forefront, leaders hope to strengthen community trust and preserve the town’s reputation as one of the safest and most well managed municipalities in Arizona.
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