Santa Fe council adopts FY26 budget after nine‑day review; $3M proposed for affordable housing

The Santa Fe City Council unanimously adopted the city’s Fiscal Year 2026 operating budget on May 14 after a lengthy review process that included nine days of departmental hearings, multiple amendments and extended discussion about reserves, transparency and the timing of one‑time allocations.

City Manager Scott told the council the budget is “a policy exercise” that reflects community priorities while noting it is effectively flat in revenue growth. He and department directors described investments in employee compensation, utility billing system replacement, wastewater planning, midtown implementation, parks maintenance, homelessness programs, and upgrades to the airport and capital projects. Scott said the budget “provides for” staffing and program changes while acknowledging the budget team expects to manage revenues and “may have to come back and make adjustments if revenues aren't coming in, as we anticipate them to or, if other things occur that impact the budget.”

Key funding and program notes discussed by the council:

- Affordable Housing Trust Fund: Councilors pressed the origin of a $3,000,000 line in the proposed FY26 book. Finance staff and the city’s budget team told the governing body the $3,000,000 was allocated from prior‑year unanticipated gross‑receipts tax revenue that the city had held pending appropriation; the council did not previously adopt a dedicated budget adjustment for FY26, so the amount was included in the proposed FY26 book for formal adoption. Councilors clarified that the allocation is not a duplicate spending authorization from earlier bar actions and will come to the Community Development Commission for competitive award processes.

- Parks maintenance: Finance committee members brought forward an amendment to add roughly $608,000–$630,000 (figures cited in committee discussion varied slightly) of one‑time funding to address park maintenance capacity. Staff described the funding as a pilot that uses internal crews and contracted support while the city examines recurring staffing and space needs at Siler Yard.

- Vacancy savings and staffing: The budget includes a vacancy credit tied to historically vacant positions; staff reported about 360 vacant positions citywide. City Manager Scott and HR noted departments would be able to fill “critical” vacancies when candidates are available, but the vacancy credit and multiyear hiring dynamics were identified as a balancing item for managers during the fiscal year.

- Audit, finance capacity and contracting: Councilors asked how the city will reduce reliance on contract resources used for audits and other finance work. Finance Director Oster said the department’s FY26 proposal continues investment in staff and reduces contract reliance.

- Homelessness and social services: The budget adds program manager positions in youth and family services, funds for at least two new micro‑communities, and funding for street‑level interventions; the council and city manager described these as an integrated package to provide transitional housing and services.

Council members spent considerable time debating budget process and transparency. Several councilors said the timing and format of the budget hearings and midyear allocations limited the governing body’s ability to propose and approve changes earlier in the cycle; the city manager and finance chair agreed to pursue process improvements for future cycles, including earlier goal‑setting and broader council participation.

Legal/charter context and compliance: Council members asked whether placing planned onetime allocations into the FY26 proposed book complied with Department of Finance and Administration (DFA) rules. Finance staff said the city was not in violation of DFA rules and that the allocation represented prior year unanticipated revenue held for FY26 purpose; the council also discussed how city charter grants the mayor budget authority and the council’s path to request changes.

Formal action: After discussion and several line‑item amendments adopted by the finance committee, the governing body voted 9‑0 to adopt the FY26 operating budget. Council members said they expect follow‑up bars and staff reports during the fiscal year if revenues or costs require midcourse corrections.

The budget adoption concluded with councilors urging continued monitoring of grants and federal funding risks and planning additional committee and study‑session work to refine revenue options and process improvements.