Uncertainty over the future of federal grants is putting hundreds of millions of dollars and 200 city of Tucson positions at risk.
Tucson has $283.9 million in unspent federal awards that are currently at risk, said city officials Wednesday.
“In practice, we are paused on some of our federal grants,” City Manager Tim Thomure said.
He estimated that there are six grants on a de facto pause and the city would share details of those grants at the next meeting scheduled for March 4.
That uncertainty comes amid a widescale effort by the Trump administration to freeze federal grants while launching an ideologically-led review of whether money went to diversity and inclusion efforts, protections for trans people or environmental causes.
A federal judge blocked the effort in January, but the future of federal funding at the local level remains uncertain. The city has not yet joined or filed its own lawsuit.
The conundrum faced by Tucson is not unique, and shows the broad impact a stop in federal grants could have.
Pima County officials said this week that about $150 million of federal grants the county has obtained is now on the line, while 20 county departments face potential cuts because of federal funding freezes.
One area of uncertainty in Tucson related to federal funding discussed at Wednesday’s city council meeting is local projects funded under the Inflation Reduction Act, including Tucson’s plan to build a $86.7 million plant to purify wastewater into drinking water.
“We have signed contracts to do a number of things. Some of them we have completed and been paid for, some of them we have not yet completed and not yet been paid for,” Thomure said. “If that funding is frozen but we are still doing the action that’s an uncomfortable uncertainty for us.”
In addition, there are 200 positions in the city funded by federal dollars, including police officers, firefighters, and employees at Housing and Community Development and the Department of Transportation and Mobility.
The business services department is working with other departments to find a way to keep the federally funded employees in their jobs, said Angèle Ozoemelam, the city’s business services director. “We are taking steps to identify resources and/or possible alternate employment within the city,”
Council members gave City Attorney Mike Rankin authority to participate in litigation related to the federal funding freeze on behalf of the city during the Jan. 23 meeting. As of Feb. 19, the City of Tucson has not filed its own lawsuit or joined other actions as a party, Rankin said.
Besides that planning, say officials, they are watching and waiting.
“We will remain vigilant, monitoring the Tucson economy of course and potential financial impact to our current budget,” Ozoemelam said.
Wednesday’s meeting also included information about additional money coming to the city through fees; a 5.5% increase in water utility fees was expected to bring in $12 million in Fiscal Year 2026.
That money, however, couldn’t be used for projects beyond what it was allocated toward, even in a moment of budget uncertainty, said Thomure.
“These are not revenues that can be reallocated,” he said. “When you see revenues in the water fund they stay in the water fund.”
Amid budget uncertainty, city pushes Prop 414
The uncertainty amid federal funding comes as the city is working to convince voters to approve a new half-cent sales tax they say would fill a hole left by a state flat tax.
There are about 50 specific projects city leaders want to spend the money on. You can browse the full list here. Almost a third of the money would go into capital investments for first responders, including equipment, an airplane, vehicles and remodels for some buildings. Read more about how the police budget works, and how it would be impacted by Prop. 414, here.
If passed, the effort is projected to raise $800 million over the next decade, but it may have a steep hill to climb because the initiative has come up against a broad range of opposition, from a coalition of mutual aid and progressive groups to the Tucson Metro Chamber’s board.
Ballots were mailed Feb. 12. The special election is Tuesday, March 11 and Proposition 414 is the only thing on the ballot.
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