Yavapai County proposes flat tax rate, staff pay increases and a measured draw on reserves in FY26 budget preview

Yavapai County Manager Maury Thompson on April 29 presented a proposed FY2026 budget that holds the county's property tax rate steady at 1.6443 and emphasizes employee compensation while relying on one-time resources and reserves to manage a structural shortfall.

Thompson said the proposal funds a 2.8% cost-of-living adjustment and a 3% merit pool for eligible employees and adds a new approach to "vacancy savings" that counts historically unfilled positions up front, producing roughly $4.7 million in assumed savings. He described the package as a mix of recurring and one-time choices intended to preserve service levels while the county works toward structural balance.

Why it matters: property taxes, shared sales taxes and state-shared revenue together determine how large the county's operating "box" is. Holding the rate flat preserves taxpayers' annual rate but allows growth in total collections as assessed values rise; Thompson told the board that if supervisors do not keep the tax rate flat the proposal would need about $2.2 million of additional cutbacks.

Key details

- Tax rate and timeline: The proposal assumes a flat property tax rate of 1.6443. Board members were reminded the Truth in Taxation (TNT) hearing and the tentative/adopted budget steps are scheduled for June (tentative budget) and the public hearings including the TNT hearing are set for June 25, with final levy adoption in August.

- Compensation and vacancy savings: Thompson said the recommended budget prioritizes employee compensation with a 2.8% COLA and a 3% merit pool because department leaders identified workforce pay as the top priority. The recommended budget also incorporates targeted "vacancy savings" (department-specific, calculated from historical vacancy rates) of about $4.7 million.

- Reserves and structural balance: The plan uses a combination of recurring and one-time resources. Staff described the FY26 budget as built with a $14.9 million draw from fund balance overall, of which roughly $10.2 million is recurring additions and $4.7 million is one-time spending. The county's reserve policy target remains 17% to 25% of budgeted revenues; staff estimated a $40 million reserve target and an estimated $74 million of fund balance in one of the presentations, leaving substantial but finite capacity for measured use of one-time funds.

- Debt and capital capacity: Thompson said the county plans to pay off about $1.9 million of a revenue-obligation debt instrument, freeing capacity and reducing general fund transfers; the only remaining county debt would be the jail district debt service (roughly $3.4 million annually). He described the early payoff as a way to improve capacity to finance future capital.

- Jail district transfers and statutory obligations: The proposed general fund includes transfers to the jail district that cover a statutory "maintenance-of-effort" payment and additional above‑MOE transfers; Thompson flagged an increase into the jail district of roughly $1.6 million from last year in the recommended plan and noted the jail district relies heavily on sales-tax revenue and general-fund backstops.

Process and next steps: The Board of Supervisors held a three-day study session beginning April 29 to review department presentations. Staff said they will track board questions and return answers during the study sessions and while preparing the tentative budget. Thompson urged supervisors to flag any fiscal direction (for instance, changing the tax-rate assumption) now because a decision not to hold the rate flat would require deeper cuts to recurring items.

Ending: The board will continue review at scheduled sessions; staff said they will post updated materials and specific follow-up figures (debt schedules, fee revenue breakdowns, and other supporting detail) in the coming weeks for the June tentative budget and public hearings.