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Coconino County manager proposes $15 million stability fund, raises reserves to shield services amid federal funding uncertainty
Summary
County Manager Andy presented a balanced FY26 budget package that formalizes a larger reserve policy, sets aside a $15,000,000 “stability fund,” and recommends a 5% CPI operating allowance for departments to preserve existing services while federal funding threats are monitored.
Coconino County Manager Andy opened the board's two-week budget sessions on June 3 by presenting a manager-recommended FY26 budget that aims to preserve core services amid what he called “uncertain times.” The proposal formalizes a higher general fund reserve, sets aside a $15,000,000 stability fund and builds a 5% Consumer Price Index operating increase into department budgets.
The manager told the Board of Supervisors the stability fund is intended “to address cash flows in case of emergencies and to create transition funding if there are cost shifts or federal funding cuts.” The proposed stability fund is a one-time set-aside drawn from accumulated, nonrecurring resources; it is not included as recurring revenue for department operations.
The package also recommends formally updating the county reserve policy from 15% of general fund revenue to 25% to align policy with current practice, and a 5% CPI operating increase to department general fund budgets to help cover rising utilities and operating costs. Chief Fiscal Officer Siri Mullaney told the board the 5% is applied primarily to general fund operating lines and that similar updates were incorporated for major funds such as transportation and flood control.
Why it matters: County staff told supervisors they already face possible cuts at the federal level — including potential reductions to disaster reimbursement, forest restoration programs and major health, human services and Medicaid-related funding streams. Supervisors repeatedly urged continued advocacy with federal representatives for programs such as Secure Rural Schools and warned that cuts to federal pass-throughs could quickly force service changes at the local level.
Budget structure, stability and planning: The manager and finance staff presented a 10‑year forecast with two scenarios — a “normal” outlook and a more conservative “uncertainty” (recessionary-like) outlook — and said both remain balanced under the recommended actions. The stability fund is treated as a three-year runway in the uncertainty model to allow time for the county to plan and, if necessary, phase program changes rather than make immediate cuts.
The presentation also described prior fiscal actions that lowered the county's recurring costs — notably pension financing and contribution-prepayment strategies — and recommended continuing those approaches to preserve long-term structural balance.
What the board will do next: The manager’s proposal is a starting point for the budget hearings. Staff noted the next formal steps include tentative budget adoption and statutorily required notices leading to the truth-in-taxation hearing (scheduled for June 24) and final budget adoption later in June. Mullaney and staff told supervisors they will return with midyear projections and a recommended check-in on a possible midyear adjustment tied to the Flagstaff minimum-wage update if conditions warrant.
