San Juan County presents balanced FY 2026 interim budget; commissioners briefed on reserves, grants and a potential midyear health-plan cost

San Juan County managers presented a balanced FY 2026 interim budget to the County Commission at an extended workshop, describing a mix of one-time grant funds, recurring revenue assumptions and a strengthened cash-reserve position intended to protect the county against federal funding uncertainty.

County Manager Mike Stark said the interim budget fully funds submitted operational and capital needs while maintaining “a strong cash reserve position” to weather possible federal funding changes or economic downturns. The budget uses a baseline tool, a five- and 30-year capital plan and priority-based budgeting, Stark said.

Finance Director Melissa Martin presented details and a calendar of steps: the interim budget will be considered for approval at the commission’s May 20 meeting, sent to the Department of Finance and Administration as the interim submission, and then brought back as a final budget in July after year-end reconciliations. Martin said the county is operating with a conservative gross receipts tax (GRT) projection — a 3% increase over FY25 budgeted GRT — and reported that GRT collections for FY25 had trended about 8% above the prior budget.

Martin also reviewed revenue composition: gross receipts tax is the county’s largest recurring source, grants are the second-largest and property tax is third. She noted opioid and cannabis funds are budgeted to supplement alternative-sentencing programs, but that cannabis point-of-sale taxation primarily benefits municipalities because most retail sales occur inside municipal boundaries; the county’s unincorporated cannabis receipts have declined in recent years.

The budget assumes a conservative oil-and-gas revenue line, classifying production receipts as a one-time revenue source due to volatility. Martin flagged Payment in Lieu of Taxes (PILT) as an uncertain federal revenue line and said the county budgeted $2.5 million but would rely on reserves if the federal payment were reduced.

On payroll, Martin said the FY26 budget includes: a 1% cost-of-living adjustment, a 3% merit pool and market-survey adjustments previously approved. Total salary-and-benefits for the county were budgeted at $60,463,058. The budget adds three safety and medical captain positions for the fire department; those will be fully funded by the fire gross-receipts tax, Martin said. Seventeen positions remain frozen; departments seeking to unfreeze a position must request a budget adjustment and commission approval.

Martin and County Manager Stark highlighted health insurance as a special concern. Staff reported they were advised at a county legislative forum that a state-administered health plan could impose a midplan-year 20% increase effective July 1, which would fall within the county’s current fiscal year. Martin said the interim budget includes a contingency to cover the employer side of a potential 20% increase (about $1.28 million) and a one-time estimated employee subsidy of about $158,000 for July 1 through Dec. 31 if the state moves forward; staff said they would revise the budget if the state does not enact the change.

Capital planning: the FY26 interim includes a 30-year capital list and capital purchases totaling roughly $23 million; Martin noted $5.5 million of that is for a San Juan Water Commission building and $2.5 million is a repayment to the City of Farmington tied to a Farmington Lake study. The debt-service schedule shows principal outstanding at about $20.43 million and planned principal payments of $3.3 million in FY26; staff said paying off refunding bonds over the next two years will reduce debt service and help fund capital replacement reserves.

Stark and Martin said the budget presentation is not final; staff will return with adjustments after the May 20 interim hearing and again for final approval in July. Commissioners asked staff to incorporate several items and confirmed they will review monthly adjustments as grants and new revenues are identified.