San Juan County auditor warns of large 2026–27 biennium shortfall; council asked to set balancing priorities

San Juan County Auditor Natasha Warmenhoven and budget staff delivered a first‑touch briefing Sept. 23 on the 2026–27 biennial budget that showed the county faces a sizable shortfall by the second year of the biennium. Staff presented current‑expense fund estimates that assume status‑quo services and included departmental decision packages; both scenarios showed large multi‑million‑dollar deficits by 2027.

Auditor’s office figures showed an estimated beginning cash for 2026 of about $8.0 million but projected consumption of roughly $5.0 million in 2026 under status quo, leaving year‑end cash close to—but slightly under—the county’s minimum required 10% reserve. When departments’ decision packages are included, staff estimated the county would end 2026 with about $1.8 million in cash and 2027 with a projected negative balance, creating a budget gap the auditor quantified in the low‑ to mid‑seven‑figure range.

Dr. Molly Foote, lead budget analyst, said the county’s budget has widened in recent years because expenditures have grown faster than revenues; typical practice of conservatively budgeting revenues means cash often appears steadier at year end, but embedded fixed costs—Risk Pool insurance, rising labor costs, and negotiated pay increases—are driving future pressure. Foote said the budget team has begun reviewing decision packages and will present options, but requested council guidance on priorities for balancing: whether to prioritize mandated services, define a set of essential services, or seek structural fiscal relief from the state.

Council members asked staff for more clarity on what is mandated versus discretionary, whether cuts should be targeted by program rather than by across‑the‑board reductions, and how to involve departments in identifying efficiencies. Several members urged the staff to compile information about unfunded state mandates and historical shifts in county responsibilities as background for policy decisions. The auditor asked council to provide direction so staff can prepare a balanced preliminary budget; council voted to cancel two late‑September meeting dates and add an additional meeting between Oct. 7 and Nov. 4 for more budget discussion and direction.

Warmenhoven said the county must balance the budget across the biennium and that staff will return with proposals for how to close the gap; she noted year‑one gaps are more tractable than the larger structural shortfall now projected for year two. Council members emphasized transparency and community engagement and recommended that staff produce a clear list of essential services, mandated services and candidate reductions for public discussion.