Heads of all Phoenix city departments have been asked to submit plans for fiscal 2009 that include 20% budget cuts following a steep drop in sales tax revenue due to the region’s housing slump.
That’s the same amount by which departments were asked to cut their budgets following the tourism drop caused by the terrorist attacks of Sept. 11, 2001. The city eventually cut its budget by $117 million at that time due to declines in sales tax collections, and several of the cuts were restored only in early 2007.
Phoenix expects a revenue shortfall of $53 million over the next 18 months. Sales tax revenue accounts for 42% of the city’s general fund budget.