Nogales council votes to absorb 25% health insurance premium increase for city employees

At a June 23 special session, the Nogales mayor and council approved a recommendation that the City of Nogales absorb a 25% increase in employee health insurance premiums for fiscal year 2026–27. Council members were told the change would be handled through the city’s reserves and line-item shifts already in the adopted budget.

The item was introduced as a proposal from the Nogales Employees Benefit Trust for FY2026–27. Finance staff sought direction so payroll processing could proceed the first week of July. A member of the insurance committee confirmed the committee’s recommendation that the employer—the City of Nogales—cover the entire 25% increase rather than passing any portion to individual employees.

Council members pressed staff for budget details. Staff confirmed the city has roughly $1.4 million budgeted for the coverage line items and said the increase would be managed by moving funds from reserves and by relying on savings from unfilled positions and prior line-item adjustments. Staff also explained that the city budgets at the highest coverage level (family coverage) to avoid midyear shortfalls when employees with different coverage levels change during the year.

Members discussed whether future budgets should revisit employee cost-sharing. Staff said that while the city will absorb the increase for FY2026–27, officials expect to reevaluate contribution percentages for the FY2027–28 budget and could consider shifting some costs back to employees at that time.

The council voted on the recommendation to have the city absorb the 25% increase; the record shows the motion carried despite at least one voiced opposition.

Next steps: the absorption will be implemented for the coming fiscal year and staff will monitor reserve levels and the budget impact; the council said it will reexamine contribution shares when preparing the FY2027–28 budget.