El Paso County budget officials on Thursday provided a third-quarter financial update and an early look at the proposed fiscal year 2026 budget, warning commissioners that the draft would rely heavily on fund balance and showing a projected reserve below the county's policy goal.

Budget and financial staff said revenues for FY25 through June were roughly $343 million collected year-to-date (about 89.5% of the year's estimate) with year-to-date expenditures around $282 million. The county's proposed FY26 general-fund budget totals roughly $469 million, with recommended personnel spending at approximately $314.7 million. Staff said those figures reflect several adjustments from FY25 and that operating restorations cut last year remain incomplete.

Why it matters: County staff told the court the FY26 draft uses an estimated 73% of the projected FY25 fund balance to reach a balanced budget, leaving a projected reserve of about 4.7% (below common policy targets of 6' 8%). Staff said certified property values and final revenue estimates to be provided by the County Auditor in early August could change the picture before any adoption votes.

Key numbers and context
- Year-to-date FY25: Revenues collected (through June) $343 million (89.47% of annual estimate); expenses year-to-date $282 million. June was an estimated month and is subject to final audit (Gabby Federal, Budget & Finance).
- FY26 draft: Proposed general-fund budget approximately $469 million with recommended salaries at $314.7 million and operating budget reductions of roughly $6.3 million compared with the FY25 revised budget.
- Fund balance/reserve: Using the current certified estimates, staff said FY26 would require drawing about 73% of the available fund balance; that would leave a projected reserve of about 4.68%, short of a 6% policy reserve by roughly $6 million and short of an 8% target by $15 million.
- Revenue drivers: The County Auditor's revenue update (June estimates) shows sales tax and federal-prisoner revenues driving some of the decline; staff said they expect revenue certification after property values are finalized in early August and that the draft budget will be updated accordingly.
- Expenditure pressure: Departments highlighted anticipated recurring needs for equipment, public-safety costs and contractual increases; staff noted specific pressures in public-safety and indigent-defense monitoring and recommended a $3.5 million reserve for higher-cost felony indigent-defense cases.

Commissioner/staff exchanges and next steps
- Commissioners asked for detail on public-works reductions and whether those were one-time transfers tied to capital projects; auditors and staff said much of the year-over-year decrease related to transfers to CIP or one-time items (e.g., a prior large transit-center transfer and a lesser CIP transfer in FY25).
- Staff said they will continue to refine numbers before the August 11 budget hearing and that certified revenue figures tied to property values will be incorporated. Budget staff also told commissioners they expect to brief the court on options to restore certain capital or operating budgets in future years.

Ending: Staff recommended the court await the county auditor's certified revenues after the tax-rate process in August, and return to the court for adoption-specific hearings; commissioners asked staff to continue exploring targeted restorations for public-safety and critical capital replacement where possible.