A sales-tax city
Scottsdale pays for itself mostly at the cash register. Since July 1, 2025 the city’s share of the sales tax (Arizona calls it the transaction privilege tax) has been 1.70%, stacked on the state’s 5.6% and Maricopa County’s 0.7% for a combined 8.0% on most purchases. Only the first penny is the city’s general money. The rest is dedicated by voters:
- 1.00% general fund: police, fire, parks, libraries, planning and the rest of City Hall
- 0.30% transportation: a 0.20% tax from 1989 plus a 0.10% tax added in 2018
- 0.15% McDowell Sonoran Preserve, from the 2004 vote
- 0.15% parks, WestWorld, Preserve upkeep and park safety, from Prop 490 in 2024
- 0.10% public safety, from 2004
Hotels pay a separate 5% bed tax, split between destination marketing and tourism events and projects. Voters approved each dedicated piece, which is why the voters guide and this one tell overlapping stories.
The other sources
State-shared revenue is a slice of Arizona’s income, sales and vehicle taxes handed to cities by formula, around $100 million a year to Scottsdale’s general fund. The state taxes guide explains the formulas. Property tax is minor: a primary levy of about $41 million for operations, and a secondary levy that repays voter-approved bonds; the county property tax guide covers the bill itself. Enterprise funds for water and sewer, solid waste and the airport are supposed to pay their own way through rates and fees, so your water bill funds Scottsdale Water, not the general fund.
How the budget gets made
The fiscal year runs July 1 to June 30. Work starts in the winter, when the city manager’s staff forecast revenue and the resident Budget Review Commission starts its review. For fiscal 2026/27 the proposed budget was released on April 3, 2026, the council tentatively adopted it on May 19, gave final approval 7-0 on June 9 and set the property tax levy on June 23. Arizona law makes the tentative vote a ceiling: the final budget can’t exceed the tentative total.
The headline figure, roughly $2.1 billion for 2026/27, overstates what the city spends on daily operations. It bundles the operating budget with the five-year capital plan’s current year, debt payments, grants and reserves. The general fund, the flexible money for police, fire and parks, is a fraction of the total and is where most council arguments happen.
The spending limit
Arizona’s constitution caps what each city may spend under a formula based on its 1979–80 budget, adjusted for inflation and population. Scottsdale’s voters have raised the base three times through permanent base adjustments, in 1998, 2006 and, as Prop 491, in 2024, which lifted the estimated limit to about $884 million. The limit is separate from taxes: raising it lets the city spend revenue it already collects.
Why tourism is a budget line
Because the sales tax is Scottsdale’s workhorse, the city’s fortunes rise and fall with people who don’t live here. The resorts, the Fashion Square crowds, the January rush of Barrett-Jackson and the WM Phoenix Open, spring training and Old Town’s restaurants all ring up city tax. The city’s own ballot materials for the 2018 transportation tax made the point: it would be paid by residents, by tens of thousands of commuters who work here and live elsewhere, and by millions of annual visitors. That spreads the cost of streets, parks and the Preserve well beyond the people who use them every day, and it explains why city policy bends toward protecting the tourism and retail base.
The dependence cuts both ways. Sales tax swings with the economy, as the Great Recession and the 2020 pandemic shutdowns showed. That volatility is why the city’s financial policies call for reserves, and why big one-time projects tend to go to voters as bonds or dedicated taxes rather than lean on the general fund.
Capital, water and the 2026 debate
The capital side of the budget is where long-term choices show. The FY 2026/27 plan put about $331 million toward water and wastewater infrastructure and $45 million toward pavement preservation, alongside money for a new fire station and a jail and police facility expansion. It also replaced about $233 million in specific water projects with a $100 million allocation for a future water source and supply, a change that drew sharp criticism at the June hearing even as the budget passed unanimously. The water guide explains the supply stakes.
Who decides
The city manager proposes; the council amends and adopts; voters hold the keys to new taxes, bonds and the spending limit. Residents who want a say should follow the winter budget sessions and the spring hearings rather than waiting for June.