New RTA tax forecast provides long-term funding picture

An updated forecast of the Regional Transportation Authority’s transaction privilege tax shows the tax will generate a pessimistic estimate of $2.3 billion between fiscal years 2026 and 2045 for new regional transportation improvements.

A 30-year forecast, which was recently completed by the Economic and Business Research Center (EBRC) at the University of Arizona Eller College of Management, is typically prepared every three years to provide the RTA with the most recent economic conditions and anticipated revenue estimates for the half-cent RTA sales tax. Collected in Pima County, the tax funds the RTA’s 20-year, 2006 voter-approved regional transportation plan.

The forecast for fiscal years 2023 through 2052 also looks at the short-term revenue expected to be collected through the end of the current RTA plan.

When compared to a 2021 estimate,  revenues for the remaining life of the current RTA plan through fiscal year 2026 have increased by approximately $39 million. Prior revenue estimate updates were completed in 2019, 2017 and 2013.  The initial revenue forecast for the RTA was performed in 2005.

In anticipation of the RTA developing its next 20-year plan, the EBRC prepared new baseline, pessimistic and optimistic forecasts.

FYs 2026-2045 Forecast (in 2024 dollars)

  • Pessimistic:  $2,350,385  
  • Baseline: $2,668,148    
  • Optimistic: $2,969,121  

To date, $1,233,600,816 has been collected in RTA revenues through the end of FY 2022. The latest estimate anticipates an additional $475,392,000 of tax revenue will be collected during fiscal years 2023 through 2026, when the voter-approved tax expires.

Another $22 million, approximately, is expected to be distributed to the RTA from the Arizona Department of Revenue in FY 2027 from the final two months of tax collection, the result of a lag in the actual distribution of funds.

For budget purposes for the RTA Next plan development process, the RTA Board has directed its Citizens’ Advisory Committee to use the pessimistic revenue estimate of $2.3 billion for budgeting purposes for development a draft plan because of the current economic climate and potential for an economic recession.

This most recent estimate includes the impact of the coronavirus pandemic and associated economic stimulus activities. Also, long-term trends in population age are showing a continuing shift from the consumption of goods to the consumption of services, which influences revenue collections.

While the forecast recognizes a significant possibility for economic recession to occur, potential impact would likely be much less than that of the 2008 Great Recession during the early years of the current RTA.

The RTA Board is anticipating the citizens’ committee will have a draft plan ready by July 1. Following review and approval by the RTA Board, the draft plan will be presented to the public for review and feedback before heading to the ballot for voter consideration.