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El Paso County projects tighter 2026 budget, orders 5% operating cuts and hiring pause
Summary
County leaders were warned of shrinking reserves after the legislature and revenue dips; commissioners directed departments to trim operating budgets and asked HR to extend hiring waiting periods to preserve fund balance.
El Paso County Judge Ricardo Samaniego and commissioners on Monday were told the county faces a tighter fiscal 2026 budget and were asked to order operating cuts and a longer hiring waiting period.
County Manager Betsy Keller told the commissioner's court that preliminary projections show a projected general fund balance of about $72.8 million for FY 2025 and that the county needs roughly $18 million in spending reductions to reach an 8% reserve target and move toward a 10% goal. Keller said staff is asking departments to cut 5% of their operating budgets and that Human Resources will propose a longer hiring waiting period to slow payroll growth.
Why it matters: The court's reserves have fallen from prior years as revenues and expenditures diverged. Commissioners and staff said state legislation and lingering declines in key revenues — notably sales tax and federal prisoner reimbursements — make the FY 2026 budget the most constrained in recent memory. The court must decide whether to accept a no-new-revenue tax posture or raise the maintenance & operations rate toward a voter-approval level to avoid deeper cuts to services.
Auditor and budget staff gave the court the numbers behind the request. County Auditor Barbara (County Auditor) reported that FY 2024 projections show general fund revenues around $396 million and expenditures near $397.9 million, leaving an audited fund balance estimate near $96.2 million that rolls into the FY 2025 projection. Budget and Finance staff said projected FY 2025 fund balance is now about $72.8 million after adjustments and current trends.
Budget Director Gabby Federo and Jessica Garza (Budget & Finance) walked the court through main revenue drivers: property tax (about 65% of general-fund revenue), sales and use tax (about 19%) and federal prisoner reimbursements (a much smaller but historically significant line). Sales-tax growth has slowed sharply since 2021, county staff said; state law also limits how excess sales tax may be used. Federal prisoner revenue has declined from roughly $20 million in FY 2022 to about $2.7 million budgeted in FY 2025, although staff said the FY 2025 projection may rise modestly as daily prisoner counts increased in April.
Keller told the court “we are asking departments for 5% [operating]” and said Human Resources will recommend a longer hiring waiting period — a pause before a vacant position may be refilled — to defer payroll costs. She said the county will try to avoid furloughs or layoffs but warned that if key revenue sources do not improve, personnel actions could be required in subsequent years.
The court took two specific procedural steps: it directed departments to return proposed FY 2026 budgets with the requested 5% operating reductions, and it instructed staff to draft a longer hiring waiting period policy to present for approval. The court also voted to send a formal thank-you letter to the county delegation for securing state appropriations for local projects, a motion approved by Judge Samaniego and seconded by Commissioner O'Guin.
The court asked staff to return with a clearer list of state-driven budget impacts and a simple, visible chart showing the historical growth of state mandates and how those mandates affect the county budget.
Ending: County officials said they will present detailed budget options over the summer; the court must adopt a tax rate and approve a FY 2026 budget later this year. Commissioners emphasized they want transparent, auditable presentations to show how legislative changes and revenue trends are affecting local services.
