Sedona adopts FY 2026–27 tentative budget, earmarks funds for school field repairs and pays down bond rebate risk

Sedona’s City Council adopted its tentative fiscal 2026–27 budget on May 26, setting an expenditure limit of $97,963,222 and approving several budgetary priorities and contingency allocations, including early payment of an estimated arbitrage rebate and provisional funding to support repairs to school athletic fields.

Deputy city manager and finance staff summarized the budget proposal and explained an estimated arbitrage rebate tied to unspent 2022 bond proceeds. Staff said approximately $4.8 million of 2022 bond proceeds had remained unspent and were invested; with rising interest rates that produced an estimated rebate liability between $655,000 and $700,000, and staff recommended paying the rebate early to reduce uncertainty in next year’s budget.

The tentative operating budget was presented as roughly 4% higher than the prior year in identified revenue categories (with sales and bed tax held flat). Staff also described policy reserves (about $62.7 million), contingencies, and a capital improvement program that prioritizes ongoing projects.

During the budget discussion councilors pressed for details and raised several items from the public forum, including the Uptown parking garage and a resident request for written confirmation about sprinkler design (which staff said they will supply and that the fire marshal had been asked to respond). Council also asked about dark‑sky ordinance implementation and whether staff had capacity to do outreach and enforcement ahead of the 2028 compliance dates; staff said outreach is underway and enforcement capacity would ramp up next year.

As part of the budget conversation councilors reviewed a proposal to partner with the school district on rehabilitating athletic fields. Staff presented four options: in‑house rehabilitation of three fields (one‑time ~$394,000), in‑house for a single field (lower cost), outsourced full reconstruction (higher one‑time cost and higher ongoing payments), and a menu of additional projects (batting cages, tennis court cleaning, turf brushing). Council discussed the public benefit, joint‑use agreements and procurement approach. After discussion the council indicated a preference to earmark funds initially for repair of the baseball field and for turf brushing/infill of the football field, and to pursue an appropriate joint‑use agreement and competitive bids or contracted options.

Councilor (speaker 4) moved to adopt the tentative budget and set the expenditure limit at $97,963,222; the motion was seconded and passed by voice vote. Staff will finalize the budget for final adoption at the end of June and return with further details on potential school‑district agreements, field procurement and the arbitrage prepayment.