Council Weighs Massive $103.9 Million Budget for FY26

The Sedona City Council concluded its budget work sessions on April 30 and May 1, presenting a preliminary budget of $103,930,000 for the fiscal year 2026. This figure would mark the third-largest budget in Sedona’s history, following the FY23 and FY25 budgets, pending approval.

Finance Director Barbara Whitehorn announced that the tentative budget adoption set for May 27 will establish an expenditure cap of $103,997,987 for FY26, reflecting a 2.1% decrease from the previous year.

In a bid to enhance city services, the Council has directed staff to initiate the hiring of at least 12.76 full-time equivalent positions. Detailed plans regarding new staff, salary increments, and consulting services will be disclosed in the May 16 print edition.

Assessments and Projections

Whitehorn forecasted a GDP growth of 1.9% annually for FY25 and FY26, alongside a decrease in inflation rates. She estimated a 1.4% increase in Sedona’s sales and bed tax collections for FY26, a projection she deemed to be conservative.

Vice Mayor Holli Ploog acknowledged the optimistic revenue forecast, highlighting that it represents the highest revenue the city has ever recorded. However, city budget analyst Sterling West raised concerns, predicting a potential $2.5 million revenue decline if a recession occurs in FY26. Additionally, Communications Manager Lauren Browne reported that hotel bookings in Sedona are expected to decline over the next few months, with March occupancy down 4%.

The Council discussed strategies for increasing revenues through the municipal court and Sedona Police Department operations. Councilman Brian Fultz questioned whether the court could impose higher fines to bolster funding.

Whitehorn also indicated that the city’s debt service is projected to be halved within two years.

Budget Allocation

Comparison to the FY25 budget reveals a 3% increase in allocations for finance, a 19% rise for the city manager’s office, and varying increases across other departments. The general services budget witnessed a notable increase of 21%, largely due to $2.5 million earmarked for contingencies. Conversely, the Sedona Police Department budget is set to decrease by 28% due to lowered state retirement system contributions.

For FY26, capital project expenditures are expected to total $46 million. The budget includes $350,000 for destination marketing and $80,000 for sending city staff to tourism trade shows.

The council approved specific expenditures, including a bulletproof bench for the municipal court and $1,000 for official communication devices used by Mayor Scott Jablow and Councilman Derek Pfaff.

Housing Initiatives

The Housing Department budget is projected to drop by 36%, attributed to the removal of funding for a proposed temporary camp for homeless workers and lowered support for the Rent Local program due to decreased interest. Council members expressed a focus on optimizing existing resources rather than acquiring new land for housing. The council allocated $2 million for affordable housing contingencies and $1.3 million for land preservation efforts.

Furthermore, the budget earmarks $105,000 for hiring a housing strategy consultant and $175,000 to develop an implementation plan for the new Master Plan for the Sedona Cultural Park, prompting a discussion about regional housing needs.

Concerns arose regarding the city’s permitting process. Citizens’ Budget Work Group member Christian Eaton suggested the introduction of standardized plans for building accessory dwelling units (ADUs) to streamline approvals, a sentiment echoed by fellow member Ed Kettler.

Transportation Projects

Questions regarding the necessity of a proposed bus barn project surfaced, with suggestions for a comprehensive business plan before proceeding. Councilman Fultz emphasized the importance of evaluating the project’s relevance, especially amid economic uncertainties. Nevertheless, the Council voted to carry over $1.44 million from the FY25 budget to continue designing the bus barn.

Jablow and Council member Melissa Dunn highlighted the importance of properly vetting future budget work group members, suggesting participation in the Citizens Academy course beforehand.

The tentative budget will be subject to approval on May 27, with final ratification slated for June 24.