Council Approves Direction to Proceed on FY26 Budget Forecast and Health‑benefit Plan Changes; Manager Seeks Employee Enrollment Guidance

The Tucson mayor and council voted March 4 to proceed with the city manager’s recommended changes to employee health benefits for fiscal year 2026 and accepted staff’s five‑year financial forecast as the basis for further budget work. The motion to proceed — made and seconded during the study session — passed by voice vote.

City staff presented a multi‑year financial forecast that reduced the projected FY26 operating deficit to approximately $13,000,000 from earlier higher estimates. The forecast assumes base FY25 operating levels plus a potential $17,000,000 pool for contractual commitments and supplemental director requests. The forecast does not assume an economic downturn or shifts in federal funding and notes that unrestricted general fund reserves are projected to decline (an end‑of‑FY26 unrestricted balance was shown as approximately $7.5 million in the presentation).

The council considered the city manager’s recommendation on health insurance plan designs and employer contributions. Staff described a three‑part approach to reduce the gap between available funds (about $4.8 million budgeted for benefits) and estimated health…