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Sierra Vista presents balanced $125 million FY2026 budget; no general tax increase
Summary
City staff told the City Council the proposed fiscal year 2026 budget is balanced at just over $125 million, reflects flat sales tax growth, no proposed general fund tax increase, and removes two large grant assumptions; tentative adoption is next week and final hearings run through August.
Sierra Vista city staff presented a proposed fiscal year 2026 budget to the City Council that is balanced at just over $125,000,000 and does not include any general fund tax increases. City Manager Chuck (city manager) opened the presentation and said, “The budget, before you is balanced at, $125,000,000,” and then turned the presentation over to Victoria (budget staff) for details.
The budget team told the council the city faces flat sales tax growth and legislative changes that have reduced parts of the local tax base, particularly rental taxes, putting pressure on capital projects and wages. Victoria described a series of last-minute adjustments to state-shared revenue and other carryovers and said staff made changes to carryover projects such as Fire Station 2 and the airport AWOS weather system to balance the plan.
Why it matters: the document sets the city’s spending cap for the fiscal year and defines the ceiling the council will use for tentative and final adoption. Staff warned that numbers could still change before final adoption but said next steps include tentative budget adoption next week, a property tax hearing and final budget adoption on July 24, and tax levy adoption on Aug. 14.
Major shifts in the draft budget include a $50,000,000 net reduction in the HEERF fund driven by removal of two large grant assumptions: the previously budgeted RAISE grant and a $25,000,000 Buffalo Soldier Trail appropriation. Victoria said staff removed the appropriations from the FY26 plan because even if the city were awarded those funds, they would not be received for several years. The general fund was reported to be only about $61,000 higher than last year’s general fund total.
City staff also reported updated figures from the League of Arizona Cities and Towns that lowered some state shared revenue estimates; staff increased the Vehicle Licensing Tax (VLT) estimate where actuals supported it. On debt, Victoria said a slide contained an error and that outstanding debt for fiscal year 2026 should be about $28,500,000; staff will correct that before the council adopts the final budget.
Staff described technical budget adjustments across funds: increased carryover for certain airport projects, adjustments to transit indirect-cost calculations that generated a small increase in federal funding match, and changes in how multi-year grant matches will be budgeted to avoid over-budgeting matches in years when projects are not yet spent.
Council members asked clarifying questions during the presentation about franchise-fee declines, the sources behind changes in shared revenue, and the timing of capital projects. Councilmember Rodriguez asked staff to verify franchise fee numbers and to provide further detail on specific capital project timelines. Mayor Pro Tem Humphrey asked about using state budget appropriations that might become available for the airport spaceport license; staff said the state House and Senate proposals differ and final amounts remain uncertain.
The council’s next formal steps are a tentative adoption on the following council meeting, the July 24 property tax hearing and final budget adoption, and the Aug. 14 tax levy adoption.
