Farmington council reviews FY27 preliminary budget, staff urges cautious 2.5% GRT growth assumption

City officials presented the Farmington City Council with a preliminary FY27 budget that planners described as balanced but sensitive to fluctuations in gross receipts tax (GRT) collections.

Jim Cox, who led the finance presentation, told the council the proposed interim budget budgets a 2.5% increase in the GRT applied to trended actual collections rather than prior budget amounts. “We are presenting a balanced budget,” Cox said, adding that the method produces an effective increase that is larger than 2.5% when compared with last year’s adopted numbers.

Cox said staff factored in a positive technical change from the 2024 legislative session that reduces the administrative fee on grocery‑type GRT collections, and he described contingency plans if actual GRT receipts fall short of the estimate: departments would be asked to cut expenditures or the city would reduce recurring outlays. “If it’s below what we expect, we start to look at how do we adjust the budget,” he said.

The package contains capital proposals alongside operating assumptions. Staff included a one‑time $1.25 million Community Transformation and Economic Diversification (CTED) bond issuance aimed primarily at funding the aquatic center project; the city would pursue a low‑interest loan through the New Mexico Finance Authority for the issuance and proceed through the normal ordinance and loan processes if council approves the interim budget. Cox said the city is also developing a 30‑year capital plan to prioritize long‑term replacements and major projects.

Cox flagged state hold‑harmless payments that have supported Farmington in prior years and are phasing down; staff estimate about $3.3 million in hold‑harmless aid for FY26 that will decline in future years. He also reviewed the split of a sales‑dollar where about 40¢ of each taxable dollar goes to the city and the rest to state and county governments, noting the political and practical limits on locally imposed GRT authority.

City Manager Shawna Reeves reminded the council that the workshop is preliminary: staff will present the interim budget for formal adoption at the May 26 council meeting, collect community input at a July 14 public presentation, and return a final budget for adoption on July 28. The state Department of Finance and Administration must receive the interim submission by June 1 and will have until the end of June to approve it.

The council took no final action on the FY27 preliminary budget at the workshop; a separate routine budget adjustment (Resolution 2026‑2041) was approved at the start of the meeting to record recent grant and outside‑services changes. The council’s next formal step is a May 26 vote on interim adoption, followed by the public presentation and the July final adoption process.