Mayor Jonathan Rothschild dances with Amber Smith, president and CEO of the Tucson Metro Chamber Board of Directors.

Tucson Mayor Jonathan Rothschild challenged business and community leaders to help shape and define the future of the 33rd largest city in the country.

The two-term Democrat started his State of the City address Friday with the news the city was likely going to lose 400 manufacturing jobs related to the closure later this year of the Rockwell Collins Inc. plant, saying it was a reason to “double down” on economic development efforts.

“It’s a volatile world, and we can’t sit back and wait for employers to find us,” Rothschild said inside a reception hall at the Tucson Convention Center.

Highlighting a number of economic development successes, Rothschild said the city has added thousands of jobs locally as a number of employers announced expansions.

But Rothschild said the current incentives offered by the city — a collection of various tax breaks — are only one tool and due to statutory limitations placed on cities and towns by the state, it can’t be the main tool.

He also pledged more support for the Tucson Police Department, saying he will back changes currently being considered to help both recruit new officers and strategies to keep experienced police officers from leaving Tucson.

State asks for more, takes away revenues

The Tucson Democrat offered a detailed criticism of the Legislature, noting the handling of the state-run public safety pension system in the wake of the Arizona Supreme Court’s decision to reverse changes to the retiree increase formula has largely rolled down hill, forcing cities and towns to pay more into the system.

“For Tucson, this means the city’s contribution to the Public Safety Personnel Retirement System will be $83 million in fiscal year 2018 — 15 percent of the city’s general fund. By comparison, 20 years ago, our contribution to PSPRS was just $2 million” he said. “This is the hand we’re dealt. As I said, this is a state-run system. The state presents us with a bill and we pay it.”

At the same time, the Legislature is chipping away at revenue streams. Including what items and transactions can be taxed.

He noted a bill being considered during this session to exempt digital transactions from taxes could cost the city $2.3 million in sales taxes annually.

“Efforts like this, that seek to undermine the financial stability of cities, must stop,” he said. “We can’t keep asking city employees to do more with less, and less and less.”

Rothschild added Atlanta has 10 separate tax increment financing districts to help attract private development while the greater Tucson area only has one — Rio Nuevo, which covers the downtown area.

City tightens belt, but new revenues are needed

Rothschild said online shopping has taken a toll on both local merchants as well as the city, forcing the government to do more with less.

“Cities across the country are facing revenue shortfalls because they depend on sales tax, and sales tax is not being collected. Why? Because people are shopping online,” he explained.

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He said the Republican-controlled Legislature refuses to raise the income tax rate in Arizona — focusing more on using sales taxes to generate revenue.

“So when they do look at taxes, it’s always sales tax. We need a more stable funding model for cities — new ways to generate revenue,” he said.

He didn’t elaborate on what those new methods are but assured the audience that City Hall was tightening its belt through various reorganizations and partnerships with various local agencies.

City must define itself, make investments

Rothschild then hinted that Tucsonans will ultimately have to decide how they will define the community they live in and decide how to pay for investments into local infrastructure.

“Progress isn’t made overnight. But think back to where we were in the Great Recession, and look where we’re at now. We’re making our own future here. Let that future be one we envision for ourselves,” he said.

One area he focused on was city parks, hinting at asking voters at some point to back a tax hike that would be used to improve parks.

“For too long, our parks have been too far down on our list of funding priorities. I will ask my colleagues on the council and city staff to explore a parks initiative, that includes provisions for bike and pedestrian connectivity,” he said.

Contact reporter Joe Ferguson at jferguson@tucson.com or 573-4197. On Twitter: @JoeFerguson

Reporter

Reporter with the Arizona Daily Star. I cover politics as well as the city of Tucson and other municipalities in Southern Arizona.