Coconino County releases manager's balanced budget proposal, including $15 million stability fund and pay adjustments

At a budget kickoff meeting, Coconino County officials presented a county manager'recommended fiscal plan that emphasizes continuity of services amid federal funding uncertainty, including a proposed $15,000,000 stability fund, a formal increase in general'fund reserve policy from 15% to 25%, and staff compensation adjustments.

The county manager said the recommendation "developed a balanced budget" after months of work by staff and the manager's office. Chief fiscal officer Siri Mullaney told supervisors the plan follows Arizona statutory budgeting requirements and will be carried forward into legally required public steps including a tentative budget adoption and truth in taxation notices.

Why it matters: The budget package aims to shield county services from possible federal funding cuts and increases in operating costs. County staff singled out the potential loss of Secure Rural Schools funding and proposed federal Medicaid reductions as major risks affecting local programs such as public health, meals programs and emergency management.

Key recommendations and context

- Stability fund and reserves: The county manager proposed establishing a $15,000,000 stability fund to provide a multi'year runway if federal revenues are reduced or emergency costs rise. Mullaney advised the board to formally increase the general fund reserve policy from 15% of revenues to 25%, a change she said "formalizes current practice" rather than immediately reducing available operating dollars.

- Operating adjustments and increments: The recommended operating adjustments include a 5% CPI increase applied to department general fund operating budgets to help departments cover rising utilities and other operating costs. Departments presented a mix of requests; some withdrew increment requests after seeing the manager's recommendation.

- Compensation: The county manager'recommended package for non'law'enforcement employees includes a 2.5% merit increase (recurring) and a $500 one'time payment tied to participation in the annual performance evaluation (nonrecurring). The recommendation also includes a midyear check'in to consider a $1'per'hour adjustment depending on the community minimum wage and how the fiscal year is tracking. HR director Krista Cedillo and staff said the mix of percentage and flat payments is intended to both move employees within salary ranges and provide immediate relief to lower paid staff.

- Law enforcement: Sheriff'related pay issues were discussed separately. County staff proposed restructuring detention officer classifications (a so'called "squish" of two titles into one) to raise entry pay and remove a firearms requirement that limited internal promotions; those who voluntarily carry a firearm would receive a stipend. For patrol staff the manager's office proposed a targeted pay plan adjustment (presented as a 10% plan adjustment in discussions) and said the sheriff has agreed to grandfather existing participants in a recruitment/retention incentive program while pausing new enrollments because that incentive has not been effective at recruiting in recent months. Supervisors asked the manager's office to return with clearer line'by'line funding and a breakdown of general fund versus other fund impacts before final decisions.

- Pension management and debt: Staff reviewed pension strategies that have reduced long'term cost, including prior refinancing and a contribution prepayment program with the Arizona State Retirement System (ASRS) that staff said has generated large projected savings for taxpayers (tens of millions over decades). The county also summarized recent capital financing: an $80,000,000 issuance in the prior budget to fund road and other capital projects (staff said expenditures will be nearly complete and that strong investment timing offset a portion of interest expense) and a separate financing to support a jail district medical facility (county officials said they plan to close that sale this week).

- Capital priorities and federal earmarks: Staff listed major projects including a Tribal Nations service center (Tuba City), a joint operations center/emergency operations center and ongoing flood control and road projects. County and government affairs staff warned that some congressional earmarks previously approved in earlier appropriations must be reaffirmed in the FY26 federal budget process and therefore remain uncertain: "we're not sure" until Congress finalizes a FY26 appropriation, a government affairs staffer said. The county has received some earlier directed dollars but described follow'up appropriations as still at risk.

Quotes from the meeting

- County manager: "This has been a culmination of months of work, by our staff, and, by the county manager's office ... so that we can be making the very best decisions for our community, and for this county."

- Chief fiscal officer Siri Mullaney on reserves: "The first thing we recommend is to formalize an increase in the general fund reserve policy from 15% of revenue to 25% of revenue. This reflects current practice."

- Economist Alan McGuire on the economy: "The economy is okay. It's not great."

- Supervisor comment on federal risk: "The safety net services will be in high demand... we only have so many resources available." (Supervisor Fowler)

Next procedural steps and audits

County staff said calendar steps include presenting a tentative budget for board adoption on June 3 and holding the statutorily required truth in taxation hearing on June 24 to notify taxpayers about levy changes. Mullaney and staff also said the board will be asked to adopt budget actions and any supplemental notices required by statute; staff will return with updated line'item detail, fund'by'fund breakouts, and clearer splits of general fund vs. special fund costs where supervisors requested them.

Ending

Supervisors praised the county's long'range financial planning and the presentation. The board directed staff to continue refining detail on law enforcement pay, capital projects and potential impacts of federal funding changes while moving the budget schedule toward the tentative adoption and tax notices required by state law.