2010 State of the City Address

Mayor Robert E. Walkup

January 29. 2010
FINAL DRAFT

For generations, men and women from all over the world have chosen Tucson to be their home. They
choose Tucson for jobs, health, military service, climate, culture, safety, education and inspiration.

Now Tucson is a metropolitan region of over one million people. One of every three hundred
Americans is a Tucsonan. Our successes testify to our ability to balance quality of life and quality of
place—to balance our economic goals and our environmental goals. One without the other is
incomplete and unacceptable. This is our vision for Tucson.

Today a great recession is upon us. The causes are many. The solutions may be as bitter and difficult
as the hardships themselves. And its effects on people and families are devastating. When a person
loses their job or their home it can strike a blow at the heart of their identity. I grew up in the Great
Depression. I have seen it first hand. I see it today.

I have no doubt, and you should have no doubt, that our city and our nation will recover.

But we know that this recession is a call for leadership. Our challenge in 2010 is to strengthen our
local economy and create more jobs. More jobs mean more opportunity for our people, more freedom
and less dependence on government.

How do we improve our local economy? Government can only do so much. The private sector is
where economic development happens. And that dominant role will grow even more as local
government shrinks in size.

I call upon private sector leaders representing large and small businesses to get more actively involved
in TREO, the chambers, the MTCVB and the Southern Arizona Leadership Council. Retention and
expansion of local businesses are the foundation of economic development. And entrepreneurship and
strategic recruitment add new companies and new strengths to our economy.

The TREO Blueprint for Strategic Economic Development was written by Tucsonans from across our
community and deserves to be implemented.
It demonstrates the need to diversify our economy. We cannot continue to rely primarily on
population growth, land development and retail services to bring wealth to Tucson. We need more
biotechnology, logistics, environmental technologies and aerospace companies and workers. A united
business community must work with the UA and others to fund and develop the most innovative ideas
into solid businesses right here in Tucson. No matter what business you are in, your business depends
upon a strong and diverse local economy.

Local government has a role to play in improving our economy, too. A business-friendly city depends
upon both business and government. But government rarely does a good job at industrial policy.

Instead, I believe that government can best help improve our economy by improving itself. Any local
government that wants to serve the 21st century needs of citizens and businesses must be more focused,
agile, efficient, customer-friendly and effective.

My agenda for 2010 focuses on the fundamentals. Here are the specific issues and specific solutions to
make the City Of Tucson and all local government better:

FIRST, FOCUS ON THE CORE:

The City of Tucson’s core services are: public safety, streets, parks, water and garbage. Economic
development, job training, education, housing and health care are all critical services. But they are not
the City’s core services.

The recession has forced Tucson City government to distinguish between core and non-core, and make
the tough choices. We have cut more than 15% of the city’s general fund budget in less than two
years. We have had layoffs and furloughs. We have been forced to close facilities and shut down
programs. And more cuts are coming.

Tucson is not alone. Phoenix, for example, has a $240 million deficit—more than triple Tucson’s
deficit. They are cutting from all non-core services and considering cuts in police and fire. They are
even considering a sales tax on food.

Given the tough choices, local government must invest all available dollars in the core services that no
one else provides. We simply cannot afford non-core services.

We must review all of our city assets, land, buildings, equipment, etc. and sell what we no longer need.
And we must review our business model in total. Our primary dependence on sales tax revenues is
unsustainable.

Our Economic Recovery Plan should include fewer general fund subsidies, more enterprise
departments and more zero-based budgeting to lower costs and rates.

And we must provide an economic analysis of all our land use, water and other policies. We must
know the benefits and costs of city policies before new regulations are adopted.

I recommend that the City Council approve a city budget this spring that reflects this approach. And I
recommend that when economic times improve we get quickly back to the sustainability goals we
adopted in 2007 for our core services: 2.4 police officers per thousand citizens, enough firefighters and
paramedics to ensure 4-minute emergency-response times, and increased street and park maintenance
to improve public safety and reduce deferred maintenance.

These lean times require shared sacrifice—and new commitments. I ask everyone to help fill the gap
created by the reduction in city funding to outside agencies.

All agencies are important, but given the tough choices we face I recommend the community focus
upon organizations that:

• serve the needs of children and the elderly,

• assist public safety, especially in areas such as domestic violence services and prevention, like
Emerge; and
• have the greatest positive impact on the local economy, such as TREO, the Convention and
Visitors’ Bureau and TPAC.

SECOND, FOCUS ON THE GEOGRAPHIC CORE: DOWNTOWN REDEVELOPMENT & RIO

NUEVO

Downtown is the heart of our city and the core of our region. Its revitalization is critical for the
economic success of our city. Downtown must be a center of commerce, culture, education and civic
life if Tucson is going to compete for the best companies and the best workforce in the 21st century.

No economic development project is more important to our city’s future than downtown. It matters.
Cities such as Phoenix and Denver and Portland have invested billions in their downtowns over
decades. But no matter the ups and downs of individual projects and economic peaks and valleys, they
adapted and continued to invest in their downtowns. They know that a city without a vital center
cannot thrive.

Tucson has had its ups and downs, too. There were significant accomplishments and improvements
downtown in 2009. These include Madden Media and Maynard’s. New stores and restaurants serving
smoothies and sushi and sandwiches and steaks. Completed underpasses and overpasses. New
streetscapes on Scott. New nightclubs on Congress. A proud new Tucson Fire station.

On the down side, some downtown projects continue to struggle. Both public and private sector
projects, such as the Westside museums and the Post project on Congress, do not pencil out at this
time.

All of us want these projects to succeed. All of us are disappointed when they are delayed, over-
budget or rejected. But none of us will accept a second-rate effort. We expect the highest
professionalism and a passion for success from all involved.

In 2010, we will consider around $200 million in new construction on a downtown hotel and
convention center expansion. These projects would provide hundreds of new construction jobs for our
community in a down economy. The economic impact would be significant. But the deal has to make
economic sense. The City, the private sector and the Downtown Partnership will examine the numbers
closely when they are available and decide upon the viability of these projects.

Also in 2010 we hope to receive the federal matching grants for our modern streetcar project that
Congress has already authorized. Phoenix, Portland and Denver have seen large increases in property
values and private investment along their streetcar routes. Tucson will benefit as well by increasing
zoning densities along the route and on nearby arterial streets. If we can get our federal match soon,
we can expect to see the streetcars on the track by the end of 2011.

CITY INITIATIVES:

A more modern, focused, agile and efficient city government requires at least three fundamental
initiatives. These include reforming our outdated city charter, reforming our land use code and
increasing our use of technology.

CITY CHARTER REFORM:

The Tucson City Charter was ratified in 1929. Tucson was only two square miles and had only 30,000
people. Today Tucson is over 230 square miles and around 550,000 people.

The city has changed, and now the City Charter must change to meet the needs of our 21st century
community. I support our citizens’ committee recommendations and call for at least the following
changes to be placed on the ballot:

Ward Expansion: should large unincorporated areas annex to Tucson, they deserve their own seat at
the table.

Non-Partisan Elections & Ward-Only Elections: we must put our allegiance to our city ahead of our
political parties. And we must give each ward the final say over its own representative. Should the
new state law be voided by the courts, we should adopt these changes ourselves.

Mayoral Powers: at the very least, the Mayor should be able to vote on any matter in front of the
Council and should count as part of a quorum.

Full-Time Mayor and Council: it may have been a part-time job in 1929. It is more than a full-time job
today.

LAND USE CODE REFORM:

Two years ago, even in the middle of the real estate boom, I stood before you right here and called for
a comprehensive land use code reform.

Why? Because the land use code’s provisions are inconsistent with Tucson’s values.

Parking requirements are excessive—designed for suburban strip malls, not city business districts.
There are no zoning classifications for mixed-use development. Provisions that undermine density
have enabled more urban sprawl, more dependence on cars to get to work, shopping and school, and
more mini-dorms. Many code amendments were added over the years that make the code in some
places contradictory, in other places incomprehensible.

I am pleased that the hard work of reforming our code is underway. Citizens, business owners,
architects and builders are working with city staff to make sure a contemporary Land Use Code
embodies our values of both quality of life and place. Call us if you would like to participate.
A streamlined and sensible Land Use Code creates a market for quality infill development. Simple and
clear policies unleash creativity and innovation. That’s what we need in our city.

However, we must speed these reform efforts up. Building plan reviews must be faster. The rules
cannot change from one inspector to another. Regulations must be more transparent and consistent.
The department should help customers cut through red tape.

Helping businesses get off the ground more quickly, cheaply and fairly will help improve our economy
and create the jobs we need as soon as possible.

TECHNOLOGY:

I worked for 35 years in the private sector. I have been through many downturns. One key difference
I saw that distinguished great companies from good companies was their investments in technology to
improve productivity in bad economic times. Better technology helped save money in the bad years
and made the company more efficient and competitive when growth returned.

Government must do the same. New technologies can play a significant role in streamlining
operations, solving problems and saving tax dollars. Take a look at the following video.

INSERT VIDEO

Smart, strategic new investments in technology can improve services, lower costs, increase
accountability and open up city government to our people.

We must move in the direction of more transparency and more sharing of data with the public, not less.
The more we let our citizens inside, the more they can help government solve problems and the more
they can help themselves.

This is a glimpse into Tucson 2.0, the city government of the future.

REGIONAL GOVERNMENT REFORM:

We need focused, agile and efficient local government in our region, not just in the City Of Tucson.
However, our systems of local government are fractured and inefficient by design.
Our system of governing the metro Tucson region—one large city, four smaller cities and towns, a
Native nation, a Native tribe and a large unincorporated population in Pima County—is a Rube
Goldberg contraption. It has multiple and elaborate moving parts going in many different directions,
but it only completes small tasks.

Separate and multiple local governments mean unnecessary duplication and increases in the cost of
government. We do not need, and we cannot afford, multiple laws, multiple codes, multiple parks
departments, multiple development services departments, multiple planning departments and multiple
transportation departments in this valley.

Therefore, we must reform our local government structures. This includes pursuing more annexations
and incorporations, consolidating local government functions, and possibly consolidating local
governments themselves. Lowering the cost of government will lower taxes, free more capital for
private investment and improve our economy.

ANNEXATIONS AND INCORPORATIONS:

The unincorporated areas of Pima County must annex to an adjacent city or town—or incorporate and
form their own town.

The cost of having 350,000 people living in unincorporated areas such as Green Valley and Vail, Casas
Adobes and the Catalina Foothills, is outrageous and unsustainable.

Why? Tucson, Marana, Oro Valley, Sahuarita and South Tucson property owners are paying Pima
County to provide city services to non-city residents. These payments come in the form of incredibly
high Pima County property tax rates.

How high? Pima County’s combined primary and secondary property tax rate of $4.02 is now more
than four times higher than Maricopa County’s combined rate of 99 cents. Paying four times more is a
burden our residents and businesses cannot bear much longer.

Why are they so high? According to Pima County, nearly $2 of that $4 rate is due to the cost of
providing city services—streets, recreation centers, parks programs, urban-level law enforcement and
more—to these non-City residents.

Let me be clear: it is fair for all County residents to pay for County-wide services mandated by the
State, such as rural law enforcement, courts and indigent health care.
However, it is unfair—and unaffordable—for city and town residents to pay for city services to non-
city residents.

Moreover, the Tucson region loses tens of millions of dollars a year in state shared revenues that could
pay for those services. These revenues come from income and sales taxes you and I already pay to the
state. But we get a far smaller share of revenue for every non-city resident than city resident. The
cost, according to Tucson business community leaders, is at least $60 million per year.

And where does this $60 million of our tax dollars go? They end up subsidizing Phoenix and Glendale
and Scottsdale and other Maricopa County cities.

So they can have lower property taxes.

This is unjust and unsustainable. We need our full share of state revenues right away. And we must
lower the County property tax rate.

The time for unincorporated areas to annex or incorporate is now.

I call upon the residents of these areas to do the research and choose their own destiny.

Annexation to an existing city or town will cost less than setting up a whole new local government.

However, if an area would rather incorporate, I will support your petition provided that the costs and
benefits of both annexation and incorporation are provided to the citizens well before the election
through an independent study. People are smart and should have all the facts in front of them.

No one will decide for you. But you must decide. Property values are decreasing. The money is
going away. And citizens and businesses need relief. Tucson, Marana, Oro Valley, Sahuarita and
South Tucson residents cannot help pay your way any longer.

CONSOLIDATIONS OF EXISTING SERVICES & GOVERNMENTS:

How can existing cities, towns and the County become more focused, agile and efficient? I invite
anyone to meet and discuss potential consolidations of services or departments. Some have mentioned
parks and recreation and procurement. Let’s evaluate them and make a decision this year.
I join with the County Administrator, Chuck Huckelberry, and support efforts in the future towards
regionalizing transit. And I support increased regional cooperation on water and wastewater
infrastructure planning.

I invite the truly bold to consider full-scale unification of existing local governments. State law (ARS
9-122) provides for these mergers.

And I again call on our citizens to consider uniting this region into one streamlined metropolitan
government.

It would not be easy to do under current state law, it’s true. Many details would need to be worked
out. Politicians and local government bureaucrats would fight it. I understand. But let me speak
plainly and directly to the citizens of our region:

First, cities that have consolidated into a single metropolitan government—such as Indianapolis,
Nashville and Louisville—have had significant economic expansions. Why? They have been able to
marshall all the resources of their regions towards specific economic development initiatives. We
need more of that streamlined regional governance—and less Rube Goldberg—here.

Second, if you want less government—have fewer governments.

And finally, no matter where you live in this region, we share one valley, one economy, one aquifer,
one desert and one destiny. We ought to share one local government, too.

ATTITUDES:

Reforming our systems of government and improving our economy will be easier if we reform some
attitudes both inside and outside government.

We must be a city of can, not can’t.

Government workers must be of service to the community, always. And citizens must work with
government in an era of reduced staffing and services. Everyone—everyone—needs to step up.

I want to personally thank all my staff and the city employees who are all carrying extra loads due to
major cuts in staffing. They are doing a yeoman’s job. I also want to thank those of you who
volunteer on City commissions or at our many non-profits. You are serving the community, working
to build a better city. I can’t recall a time when our city has needed you more.

Now more than ever, we need to treat each other with dignity and respect. Our times call for focus
and maturity and insight and action.

I understand that it is human nature to get frustrated and blame others during difficult times. But we
must resist these destructive impulses. Every hand that points fingers is one less hand to do the work.

If we are fighting each other then we are not fighting for our city. I choose to fight for our city.

There is great passion for change in parts of our community. But the passion we have for change must
be tempered by the wisdom to make the right change. And wisdom must be matched with the hard
work required to make the right change real.

CONCLUSION:

My fellow Tucsonans, the time has come to address the fundamental issues facing our city and our
region. We cannot be diverted from this mission. In this great recession, if we choose to deal with
symptoms rather than causes, we do so at great peril.

Now I understand that fundamental change is hard. I understand that the status quo is familiar.

But I urge you to remember all the great efforts that have gotten our million-strong community to the
place it is today. We have built a great city in the middle of a harsh but beautiful desert. We turned
brown water into clear water and stabilized our water future. We put decades of failed transportation
plans behind us and passed the RTA plan. We have never failed our families or our city in its time of
need. We won’t now.

Thank you. God bless you. And God bless Tucson.