Gov. Katie Hobbs promised to veto any effort by the Republican-led state legislature to eliminate Tucson’s Rio Nuevo, a tax increment financing district working to revitalize the downtown.
Most Republican lawmakers have come to view Rio Nuevo as a money pit or crony capitalism, depending who you ask, since the legislature seized control in 2012. Residents critical of the district argue that its method of picking winners and losers, and subsidizing corporations over local businesses, has proved to be unfair to residents and more of a gamble than a stable pathway for success.
Sales tax dollars make up Rio Nuevo’s main source of revenue. With money tight under the Hobbs administration, Republican lawmakers are moving through their latest budget proposal to resume the long-suspended collections of the millions from taxes inside its district. The state anticipates resumed collections would yield $19 million to the state.
However, Rio Nuevo board chairman Fletcher McCusker offered an analysis that Rio Nuevo’s financial obligations would mean the legislature would only collect about $2 million annually.
McCusker said in this week’s Rio Nuevo board meeting that the legislature’s resolve represented a “huge misunderstanding” of how Rio Nuevo operates.
“I am convinced that this will all resolve because we’re just too important to the region, we actually generate a huge amount of sales leverage and sales tax proper,” said McCusker.
As of the end of March, Rio Nuevo reported total cash on hand at $5.5 million, with a projected monthly cash flow for the next year after debt and overhead amounting to $2.8 million. The district’s snapshot of estimated available cash for projects within one year amounted to $8.4 million.
On Friday, Hobbs released a response to the Republican’s budget, calling it “reckless and unbalanced.” Hobbs said the elimination of Rio Nuevo would kill jobs and drive away businesses, and put the state on the hook for $80 million in outstanding debt obligations by the district.
Tucson voters approved Rio Nuevo in 1999.
In the entirety of its history, from Tucson’s reign of control to the legislature’s, Rio Nuevo has a history of incurring new debt prior to paying off or addressing its hundreds of millions either in existing debts or disappeared through waste, fraud, or abuse.
Senate Majority Leader John Kavanaugh (R-LD03) also said the state’s tight budget has made it necessary to cut Rio Nuevo. Kavanaugh pointed to the rest of the budget cuts, which included all state agencies except public safety.
“The question is, who should fund it?” asked Kavanaugh in a statement. “And you know, the people all over the state funded a development district in Tucson, and did it for a long time, but now we need the money, so we’ve decided to terminate that.”
Rio Nuevo’s website promotes a turnout of $2 billion of economic impact over the last five years. Current projects include the Julia Drew Lofts, Leo Kent Hotel, Sunshine Mile, and Tucson Convention Center Hotel Doubletree by Hilton.
State Rep. Alma Hernandez (D-LD20) said it was “non-negotiable” to have Rio Nuevo touched, echoing Hobbs spokesman Christian Slater’s argument that the state’s cancellation of Rio Nuevo would mean the state would be liable for the district’s debt.
Rio Nuevo has approximately $80 million in debts and obligations. Commitments to projects amount to about $17 million. The district pays about $9 million toward debts annually.
RIO NUEVO SHOULD NOT BE TOUCHED. PERIOD. NON-NEGOTIABLE. https://t.co/L5yGtujO4j
— (((Rep.Alma Hernandez))) (@almaforarizona) May 2, 2026
Other Democrats argue that Republicans ought to eliminate tax incentives for data centers prior to targeting agencies and Rio Nuevo for cuts.
State Budget Battle (Part Three): Arizona House Democrats push back against this “data centers first, Arizona last” budget. Instead of cutting tax incentives for data centers, Arizona Republicans chose to cut funding for SNAP, AHCCCS, and Tucson developer Rio Nuevo. pic.twitter.com/WVgOCzfLrK
— Arizona House Democrats (@AZHouseDems) May 2, 2026
The only reason for Rio Nuevo is for the little darling children at the UofA.
They needed a place to party and a place for Mummy and Daddy to Stay when they come out to recharge their credit cards.
How does buying shuttle busses for Pima County increase sales tax revenue for the district? Just curious.
I wonder if Fletcher McCusker can explain how much sales tax revenue is generated by the shuttle busses Rio Nuevo purhcase for Pima County employees to get to their offices because crime is rampant downtown? Just curious Fletcher.
That will surely be one of her excuses to veto the entire bill. One better hope the b__ch gets voted out in November!
SSDD in the blue cesspool that is called Tucson. Got to protect all the graft that the liberals want to generate by way of the taxpayer. What has Rio Nuevo done you ask, the same as the RTA. Promises and nothing to show for the money or talk.
One has to wonder how much fraud has gone on over the years with this project and how much Katie is getting in her cut to keep it going
Not to mention McCusker’s et al salaries and how well the local media covers for it!
Not to mention McCusker’s (and others) salaries and, how well the local media covers for it!