Alamogordo leaders review preliminary FY2026 budget with water-rate increases, landfill and dispatch changes on deck

Alamogordo — The City Commission on May 6 heard a presentation on the preliminary fiscal year 2026 budget that projects $69.9 million in revenues and $64.9 million in expenditures across city funds and asks the commission to consider preliminary adoption at its May 27 meeting, Finance Director Evelyn Huff said.

The presentation pulled together the city’s operating and capital plans and highlighted near-term decisions that will affect utility customers, public safety and capital projects. Huff told commissioners, “I think we have a budget that truly represents something that's gonna affect our citizens and that we can be proud of.”

Why it matters: the budget drives tax, fee and utility-rate decisions that affect households and businesses, funds police, fire and public works operations, and supports multi‑year capital programs such as the year‑out energy efficiency contract and ongoing water and sewer projects. The city must submit a preliminary budget to the New Mexico Department of Finance and Administration (DFA) and meet statutory deadlines later this summer.

Major financial picture: Huff reported the city began FY2025 with roughly $94 million in cash and is carrying a number of large, mostly one‑time projects into 2026. For FY2026 the administration proposed $69.9 million in revenues, $23.4 million in transfers and $64.9 million in expenditures, leaving an estimated ending fund balance of about $61.2 million across all funds before adjustments. Huff noted reserves and debt coverage needs raised the city’s adjusted fund balance concerns in some enterprise funds.

Revenue assumptions and timing: the finance team used a three‑year average for gross receipts tax (GRT) receipts with no assumed growth and used a county collection rate of 97.75 percent for property‑tax estimates, Huff said. The city still expects to submit the preliminary budget to DFA; Huff reminded the commission that the final budget must be filed with DFA no later than July 31, 2025 and that a May revision will reflect recent loan and grant draws.

Water rates and debt: commissioners discussed a multi‑year water rate plan the commission previously adopted to support a loan from the New Mexico Finance Authority (NMFA). The city confirmed the five‑year rate schedule approved earlier is 30%, 25%, 20%, 20% and 7% and that the next step — a July 1 rate increase — will be 25 percent unless the commission changes course and directs staff otherwise. Finance staff told the commission that staff would revise the budget and notify NMFA if the commission alters the rate plan.

Loans and capital: Huff said a recently closed $28 million utility loan (documented and signed) will be included in the May budget revision once staff identifies the correct expenditure lines. The presentation also reiterated that funds borrowed for the year‑out energy efficiency contract are being tracked in grants rather than loan proceeds for FY2025 and will appear in later revisions as drawdowns occur.

Staffing and departmental changes: the proposal includes a number of administrative and operational staffing moves rather than wholesale new head counts in many departments. Notable items presented: - City Clerk: the administration will consolidate public‑records work by moving the APD IPRA records clerk into the City Clerk’s office and adding one new IPRA specialist to handle growing public‑information requests. - Legal: the city increased contract legal services to cover specialized outside counsel for ongoing and anticipated litigation and ordinance work. - Engineering and safety: several safety functions were moved from Human Resources into the Engineering department and the commission approved a new safety training coordinator and a civil engineer/project manager allocation to support project oversight and on‑site safety. - Utilities and meters: utility billing will reclassify two positions into meter work and continue a multi‑year meter replacement/AMR/AMI planning effort; staff requested funding for meter replacement design and implementation planning in future revisions.

Public safety, dispatch and technology: the commission heard updates on several public‑safety activities tied to the budget. - Dispatch: the city continues a transition planning conversation around consolidation/contracting and will budget an initial $60,000 in contract services to hire a manager/consultant to analyze staffing and equipment needs for any dispatch change. - Police and fire: small operational adjustments and equipment purchases were included; municipal court budgets reflect increased fine revenue after a recent fee/ordinance change but indigent attorney costs were expected to rise and were increased in the court budget. - Cameras and surveillance: the Police Department reported implementation of Flock (license‑plate recognition) cameras is about 46 percent complete and additional integration work remains.

Landfill impact and cell development: the GreenTree landfill saw an unusually large revenue spike in FY2025 because of regional wildfire debris receipts. City staff cautioned that the debris accelerated cell use and the city will need to move forward with a planned cell development; Huff identified an estimated $1.6 million cell development cost in the proposed plan and said staff will manage a draw against the landfill cash balance and an existing cell development reserve. The landfill board will review the timing and the amounts.

Programs and community services: staff outlined continued subsidized operations for parks and recreation, the senior center, the zoo and the civic center. The budget carries over grant obligations, funds positions for the mobile crisis/peer recovery team (MCRT) partly supported by county funding, and includes smaller programmatic increases for tourism and special events staffing and outreach.

Process and next steps: Huff told the commission staff will return to request preliminary budget adoption at the regular commission meeting on May 27, and that the administration expects to present a final revised budget to the commission in July (the presentation said July 22 is the intended regular‑meeting date, with possible special‑meeting timing if necessary). Staff also noted the final budget must be filed with DFA by July 31, 2025. No formal vote on the FY2026 budget occurred at the May 6 workshop; the session was informational and directed staff to bring the budget back for action.

Quotes: Finance Director Evelyn Huff summarized the work behind the numbers: “We went a whole week and maybe a little more line by line. And so I think we're we have a budget that truly represents something that's gonna affect our citizens and that we can be proud of.” She also summarized the FY2026 revenue figure directly: “We're projecting $69,900,000 in revenues for next year.”

What to watch: the commission will be asked to act on the preliminary budget on May 27; any change to the adopted water‑rate path will require a budget revision and notice to NMFA; the landfill cell funding timing and the dispatch transition/contracting study are near‑term items that will affect FY2026 expenditures and possible subsidies.

Ending: The May 6 workshop was information‑heavy; commissioners and department heads spent more than two hours reviewing fund‑level detail, revenue assumptions and carryovers. Staff will return with a May revision reflecting the closed $28 million loan and other updates, then seek preliminary adoption on May 27 and a final adoption before DFA’s July 31 deadline.