The Sedona City Council emerged from its budget work sessions on April 30 and May 1 with a preliminary figure of $103,930,000 for the city’s fiscal year 2026 budget, which would be third-largest in Sedona’s history behind the FY23 and FY25 budgets, if approved.

Finance Director Barbara Whitehorn subsequently confirmed that tentative budget adoption on May 27 will set an expenditure limit of $103,997,987 for FY26, 2.1% less than last year’s.

Council also directed staff to move ahead with plans to hire at least 12.76 full-time equivalent new employees. A full breakdown of new staff, salary increases and consultants to be hired appeared in the May 16 print edition.

Incoming

Whitehorn told the council that she anticipated GDP growth of 1.9% each year in FY25 and FY26, as well as a reduction in inflation, and that Sedona’s sales and bed tax collections in FY26 would increase by 1.4% over FY25 collections, which she described as a “reasonable assumption.”

“You’re projecting a one-point-something percent increase over FY25 actuals,” Vice Mayor Holli Ploog said. “That’s the highest revenue we’ve ever had.”

City budget analyst Sterling West estimated that a recession in FY26 would cause a $2.5 million decrease in revenues. With regard to potential effects from the national economic situation, Communications Manager Lauren Browne said that advance bookings for the city’s sample of Sedona hotels are in the red for the next two to three months, and Tourism Manager Andrew Grossman told the council that occupancy for March was down 4%.

Discussion arose over whether the city could use the municipal court and Sedona Police Department to generate more revenue to pay for court operations, with Councilman Brian Fultz enquiring whether the court could “fine at a higher level.”

Whitehorn also predicted that “within the next two years our debt service will be halved.”

Outgoing

Compared to the FY 25 budget, departmental budgets are planned to increase by 3% for finance, 9% for the city attorney’s office, 5% for the city council, 10% for the city clerk’s office, 19% for the city manager’s office, 10% for arts and culture, 12% for community development, 13% for parks and recreation, 10% for public works, 9% for sustainability, 6% for wastewater, 3% for transit and 3% for human resources. The general services budget will include a 21% increase largely due to the addition of $2.5 million for contingencies, while the SPD budget will decrease 28% due to a reduced contribution to the state retirement system fund.

The proposed individual budgets for the clerk’s office, city manager’s office, arts and culture, community development, parks and recreation, wastewater and transit departments all indicated that office or operating expenses in these departments are expected to decline, while salaries and benefits are expected to increase.

Capital projects for FY26 are expected to total $46 million. $350,000 is currently budgeted for destination marketing, as well as $80,000 for sending city staff to tourism trade shows.

Among the specific items approved by the council were a bulletproof bench for the municipal court, as well as $1,000 for Mayor Scott Jablow and Councilman Derek Pfaff’s official cellphones.

“I’m turning mine in,” Pfaff said when the cost was revealed.

Housing

The Housing Department budget is planned to decrease by 36% due to the elimination of funding that would have been directed to the proposed car camp for homeless workers at the Sedona Cultural Park and a reduction in funding for the city’s Rent Local program due to lack of interest.

“In the near term I have zero appetite for buying more land for housing,” Pfaff said.

“We should build on what property we have before we go look for more land,” Ploog said.

“I’m looking to cut the budget down wherever we can. I don’t want to buy any more land at all,” Jablow said.

The council then agreed to include $2 million in the budget for affordable housing contingencies and $1.3 million for land acquisition for preservation.

The council also approved the inclusion of $105,000 to hire a housing strategy consultant and $175,000 to develop an implementation plan for the new Master Plan for the Sedona Cultural Park site, which Community Development Director Steve Mertes said would be “for somebody to say, here is the best way to take this master plan and actually develop it, whether it’s us selling the land, leasing the land, do we part it out? Do we go with a master developer?”

“You’re not starting to hire [a consultant] until July, and you’re coming in July to ask us to approve a plan,” Ploog said. “I’m not going to be happy about it, because I don’t think it’ll be complete.”

“I need to know before moving forward with the Western Gateway and whether it’s going to be three stories, four stories … we need to look regionally and see how much do we really need? Are we going to be overbuilding or building enough?” Jablow said.

“I’m not keen on blessing any plans for the Western Gateway saying, well, we need lots of housing, so whatever it is, it’ll meet some need,” Fultz said, adding that the consultant’s scope of work should be carefully defined to “make sure we’re getting what we think we’re going to want out of that.”

Citizens’ Budget Work Group member Christian Eaton said that “people are not generally happy” with the city permitting process.

“I’ve seen other towns rubber-stamp ADU permits,” Eaton said. “They could have free plans for building ADUs so they don’t have to get a draftsman … the city could just provide permits for ADUs that the citizens can then just take and have a builder build.”

Work group member Ed Kettler agreed, saying that the more times the Community Development department requires redrafts or modifications to plans, the lower the customer satisfaction of residents falls.

Bus Barn

“What is the need?” Kettler asked. “When we talk to [city] people about this, it’s, ‘Well, it’s inconvenient for two people to drive to Flagstaff or Prescott or Phoenix and repeat the cycle to bring the vehicle back.’ Well, $20 million buys a lot of trips and a lot of frustration. Given the economic uncertainty that was discussed earlier, this thing ought to be parked, and until you’ve got a business plan that says ‘I’m going to get the cities, Camp Verde, Cornville, Cottonwood, Clarkdale and the Verde Valley organized so this is a regional maintenance facility for multiple municipalities,’ you’re spending a lot of money to not piss off a couple of employees a couple times a month. You shouldn’t be doing this.”

“Totally agree,” Fultz said of the need for a business plan, while Ploog described the bus barn as a “controversial project” and said that Sedona’s Transportation Master Plan should be revisited.

Council subsequently agreed to carry over $1.44 million in remaining funding from the FY25 budget to continue the design of the bus barn.

Jablow and Councilwoman Melissa Dunn commented on the work group’s recommendations, with Dunn suggesting that the city require all budget work group members in future to first pass through the city’s Citizens Academy course.

Council will consider approval of the tentative budget on Tuesday, May 27, with final approval currently scheduled for Tuesday, June 24.