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Jail district tax litigation and possible suspension could leave Cochise County facing a roughly $10.8M gap in FY26
Summary
Supervisors discussed the uncertain future of the county's jail district half‑cent sales tax amid ongoing litigation and potential settlement; staff said suspending the tax in July could reduce FY26 receipts by roughly $10,800,000 and the county must plan for the maintenance‑of‑effort transition should the district dissolve.
Cochise County supervisors spent part of the May 14 work session on the uncertain status of the county’s half‑cent jail district sales tax and the budgetary consequences of litigation and potential election outcomes.
County staff warned that if the jail district tax collection were suspended in July the county could forego about $10,800,000 in FY26 receipts. "Budget wise, Stacy's calculated for FY26 if we were to suspend the tax, let's just say July, we'd lose $10,800,000 for non collected out," a board member summarized from staff calculations during the meeting.
Staff described contingency planning: if the jail district dissolved or the tax were suspended, maintenance‑of‑effort (MOE) responsibilities for jail operating costs would shift back to the general fund. Supervisors discussed timelines tied to litigation outcomes, judge approval of settlement terms, and the practical process of notifying the Arizona Department of Revenue and point‑of‑sale systems to stop collection.
Supervisor Crosby stated he would not support adopting a budget that counts on disputed jail tax money while litigation remains unresolved. Staff said the county will proceed with a jail‑district MOE budget in the near term but emphasized the fiscal uncertainty and the need to model the general fund effects if the tax revenue ceased.
Board members also discussed potential ballot strategies to address the tax structure in the future and emphasized the need to refine language and modeling before any vote. The board took no formal action at the work session; the discussion was informational and directed staff to continue modeling scenarios and timing for revenue transitions.
