The Sedona City Council is considering a proposed $94.7 million budget for fiscal year 2026-27, a roughly 8% reduction from the current year’s $103 million spending.

The decrease is driven primarily by a 19% — or $8.177 million — drop in capital projects because of the completion of projects, such as the Uptown Parking Garage, and a 24% — or a $1.8 million — decrease in debt service after the city paid off its 2021 wastewater bonds and made one-time purchases of radios, Tasers and other Sedona Police Department purchases in the current budget.

The FY27 budget was introduced during the April 15 work session. Council heard an overview of the spending plan along with recommendations from the Citizens Budget Work Group and City Manager Anette Spickard, as well as presentations on several individual packages. The discussion continues with work sessions Wednesday and Thursday, April 22 and 23, including capital project updates and departmental budget reviews.

Breakdown

The $94.7 million budget includes $58.4 million in the operational budget and $33.9 million in the capital budget.

The capital budget includes $20.1 million in the Capital Improvements Fund, $9.2 million in the Wastewater Enterprise Fund, $3.7 million in spending drawn from the Transportation Sales Tax Fund, $686,000 in the Public Transit Fund and $35,000 for Art in Public Places Fund.

Personnel costs are at $24.9 million, operations at $22.3 million, debt service at $6.163 million and contingencies at $5 million.

Required government functions include police at $9.504 million; streets, facilities and stormwater at $6.96 million, wastewater at $4.1 million; Community Development at $3.26 million; Municipal Court at $1 million; and $489,000 for the City Clerk’s Office.

“Personnel costs are increasing with budget for a merit increase of up to 5%,” the proposed budget memo reads, which will add $1.1 million to personnel costs. “No cost of living adjustment is included in the proposed budget. Some other ongoing operational costs increased due to inflationary increases such as street and parks maintenance, technology, and utility costs.”

Other governmental functions are: General Services $13.6 million; Transit at $3.5 million; Information Technology at $3.1 million; Public Works $2.648 million, $2.15 million for the City Manager’s Office; $2 million for Finance; $1.85 million Tourism, $1.26 million Parks and Recreation and $1 million City Attorney’s Office.

“We’re budgeting for elections every year, instead of every two years, just in case we have initiatives and referendums,” City Clerk JoAnne Cook said about a 66% increase in the elections budget from $53,393 to a proposed $88,676 for FY27.

Revenue

The city is projecting over $68.5 million in revenue for FY27, anticipating that most income sources will remain flat due to economic uncertainty, with a 4% overall revenue increase. The largest sources include $33.2 million from city sales tax, $9.2 million in bed taxes and $5.28 million in state shared revenues, are all held level from FY26.

“Economic conditions at the national level remain uncertain as shifting federal policy, tariffs, workforce changes and now military conflicts contribute to declining consumer confidence,” the Proposed Budget memo reads. “Economists are projecting slower Gross Domestic Product growth and modest increases in unemployment through 2027, while inflation will remain the central conversation at the Federal Reserve.”

One notable new revenue stream is $1.3 million in parking revenue, due to the completion of the Uptown parking garage, up from nothing the prior year.

Zero-Based Budgeting

For the first time, the city built its budget from the ground up. Zero-based budgeting, a method requiring every expense by a department to be justified from scratch each cycle rather than simply carried over and adjusted from the prior year, was selected at the council’s December priority retreat in response to economic uncertainty.

One factor behind the shift to zero-based budgeting was the city’s historically low budget execution rate, which is the percentage of allocated funds actually spent by the end of the fiscal year. Sedona’s execution rate has been averaging 70%, with the goal of an 85% to 90% execution. The current estimate is the city has spent $76.4 million of its $103.3 million FY26 budget, or about 74%.

Council will decide what model will govern the following year’s budget process after the final FY27 adoption in June.

Decision Packets

Currently there are 15 decision packets totaling a potential $1.3 million in one-time and $300,000 in ongoing spending. Decision packets are briefing documents providing council the information needed to vote on specific budget items. Staff will likely introduce some new packets this week.

Highlights include $300,000 in an advertising contingency for destination marketing; $250,000 for a mini street sweeper for Public Works; $100,000 for a city celebration of the 250th anniversary of the Declaration of Independence; $75,000 to upgrade the city’s website; $157,000 for a full-time tech support employee for the police; $100,000 for the creation of pre-approved housing plans for residents; $103,951 for an electric police patrol vehicle; $84,000 for a residential tree planting program, $50,000 for door-to-door hazardous waste collection; and $20,000 for a door-to-door composting pilot.

The city is also exploring a potential support agreement with the Sedona-Oak Creek School District, and costs and final terms had not been determined. The areas being considered include landscape/fields maintenance, additional youth recreation/afterschool programs throughout the school year, and campus safety/security recommendations.

The council work packet outlines Public Works to assume maintenance of school facilities for public access and evaluate tennis court resurfacing options, at a one-time cost of $322,610 with an ongoing cost of $1,505,224.

The city could also hire a school security consultant to assess school safety and recommend improvements, at a to-be-determined cost, according to the packet.

The Sedona Charter School Governing Council also met with members of City Council after the print deadline on the morning of Monday, April 20, for similar discussions.

Public Comment

Public comment came largely from supporters of the Sedona Heritage Museum, both for the renewal of its service provider contract with the city and for its request for funding for small-scale capital projects — the contracts will be covered in a separate NEWS story.

Several bicyclists asked council to convert the current part-time bike coordinator position into a full-time role; Spickard recommended the change, while the Citizen Budget Work Group did not.

During council’s December retreat, councilmembers expressed a lack of appetite to add new staff in FY27, and at least more justification after FY26’s staffing increase — which largely held, other than the SPD IT staffer and the bike coordinator becoming full time. The CBWG also recommended a new part-time court specialist for a one-time cost of $21,603 and an ongoing cost of $47,748.

Currently, there are 201.65 full-time equivalent employees in FY26, up from 188.89 in FY25, which trends upward ever since FY16’s 126.51 full-time employees.