Fountain Hills adopts FY2026 budget after council debate; Palomino reconstruction set for further review

The Fountain Hills Town Council adopted the fiscal year 2026 budget on June 3 after a day of public comment and extended discussion about capital projects, including a contested Palomino Boulevard reconstruction plan.

Town Finance staff briefed council that the final budget totals about $53.4 million across all funds, including approximately $26.05 million in the general fund and an increased capital program. The council set a general fund contingency above $1.1 million and retained a $5 million pavement management allocation plus a $5.4 million appropriation in the capital projects fund for a segment of Palomino Boulevard reconstruction that staff proposes to reimburse from the streets fund.

Town Manager Rachel Goodwin and Department of Public Works staff said the budget was designed to be at or just below the state expenditure limitation, while preserving funds for priority capital projects and a larger facilities reserve. The capital projects fund includes 22 projects discussed in a prior work session; staff said many expenditures are contingent on grants and future spending authorizations.

During the public comment period, more than a dozen Palomino Boulevard residents urged the council to pause or redesign a proposed plan that would narrow the driving lanes, install a temporary granite strip, and prepare for a future sidewalk. Residents raised concerns about: driveway extensions and matching existing driveway surfaces, the location and replacement of customized mailboxes, long temporary gravel sections that could last five to 10 years, slope and erosion control on steep front yards, safety for pedestrians on loose aggregate, and possible negative impacts on property curb appeal and value.

Public Works Director Justin Weldy told the council the town's concept calls for narrowing the curb by 5 feet on each side — an approach designed to calm traffic and reduce the square yards of base and asphalt required — and to leave room for a future sidewalk should grant funding become available. Weldy said no property takings are planned and that landscaping would be matched to existing materials. He also said an initial procurement for a surveyor received no responses and the earliest construction would be about 12–15 months away; staff recommended returning to council with additional alternatives.

Council members took public sentiment and staff input into account and agreed to adopt the budget on a 6–1 roll call, while directing staff to bring Palomino options back for a future agenda item and for further public outreach. The adopted budget preserves funding authority for Palomino in FY2026 but does not commit the town to a final design; council members asked staff to develop alternatives that would preserve driveways and existing landscaping, compare a plain resurfacing option against the narrower curb design, and show cost differences.

Ending: Council adopted the FY2026 budget after the public hearing and directed staff to return with additional Palomino design alternatives and community outreach plans; staff emphasized that some line items (including a proposed grant pass through for the International Dark Sky Discovery Center) would only be spent if grant awards materialize.